What You Will End Up With
A funding focus you can state in a sentence, and a plan for grant sizes that covers what the work really costs. You will also have an application process sized to the money on offer, and a clear view of which tools besides grants you will use, if any.
The plan rests on three commitments: multi-year support that is unrestricted where you can manage it, a realistic allowance for indirect costs, and a fair way of telling applicants where they stand.
Before You Start
Do three pieces of groundwork first. Each is quick, and each changes what you decide.
- List your whole funding toolbox. Grants are the monetary tool. The others include funder-plus support, convening, advocacy and lending your brand. A stronger foundation decides on purpose to use or not use each one, so decide before you fix your focus.
- Learn to read public records. They can tell you a prospective grantee's purpose, programs, leadership and financial standing before anyone writes to you.
- Check your own rules if you give through a donor-advised fund. Once you contribute, the sponsoring organization has legal control over the money, while you keep advisory privileges over how it is distributed, so ask the sponsor what it will and will not pay for.
Steps
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Look at who you already fund. Collect and review data on applicants and recipients on a regular basis, and look in particular at who receives multi-year unrestricted support. If the answer is a narrow band of organizations, you have found a blind spot. Look beyond your usual circles for groups that implicit bias has kept off your radar, for example by asking people who work closely with grassroots groups who is missing from your list. Ask the same of your criteria: write down who they would turn away. If they favor established or well-funded organizations, change them.
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Choose a focus you can serve. Take stock of the groups you most care about, then check that your application, assessment and decision-making processes let individuals and communities in those groups reach the money. If they do not, change the process. Foundations are not required to have a fixed method for receiving applications, or to accept applications at all, so you have room to design this to suit the people you want to reach.
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Size the grant to the real cost. Underfunded overhead is the quiet problem here. On average, charities' true indirect costs were 33% of their overall costs, while charities often believed funders would not pay more than 20%. When funders hold inaccurate expectations of overhead, charities under-report their costs and the sector is starved of core funding. That cycle raises risk, makes charities spend time hunting for untied money, and can push them into deliberate inefficiency. Case-study organizations spent half as much per employee on training, IT, quality and marketing as a corporate benchmark. So when you set an amount, include the costs of running the work, not only the project line. Picture a small community health group asking for a grant that covers its outreach workers and nothing else. Someone still has to do the bookkeeping, keep the computers running and train the new staff, and if the grant ignores those jobs the group pays for them out of money meant for outreach, or does without.
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Decide how the money moves. Paying in arrears can place an unnecessary burden on grassroots groups with limited or no reserves. Pay up front or in stages instead, and ask yourself how a group with an empty account would manage the first month.
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Give unrestricted, multi-year money where you can. It encourages risk-taking and innovation, because organizations are not forced to keep to proposal outcomes that may have gone out of date. It also changes the relationship. Unrestricted support starts from trust where restricted support starts from implicit distrust. You are not an expert at running the organizations you fund, so let the people who are decide how to spend it.
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Cut what you ask for before the proposal. Reduce pre-proposal requirements, because early vetting eats a lot of a small organization's time. Use the public records you gathered to do some of that vetting yourself. One private foundation invites applicants to send a proposal they already submitted to another funder in place of a formal application. Another spends time up front getting to know prospective partners, meeting at their offices and attending sessions they lead. A heavy process attached to a small pot of money can draw critique or even a direct challenge, so keep the burden in proportion to the funds.
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Tell applicants where they stand. Say how long the decision will take and when they can expect to hear back. If you can, give an indication of the proportion of applications that receive funding, so people can decide whether the effort is worth it.
Using AI Safely
An AI assistant can summarize public records on a prospective grantee, such as its purpose and programs. It is a poor judge of who deserves money, and it can state wrong things with great confidence.
- Keep confidential material out. Do not paste a grantee's financial data, internal strategy papers or board notes into a public tool.
- Check every name, date and figure. Because you are leaning on public records for leadership and financial standing, compare each point in the summary with the original document before you rely on it.
- Treat the summary as a starting point. A wrong assumption about a group's standing or capacity can cost it a grant.
Common Mistakes
- Underfunding indirect costs. Funders' inaccurate expectations push charities to under-report what they spend, which leaves them vulnerable and can reduce their effectiveness.
- Making the application heavier than the grant. A long, time-consuming form for a small grant is a barrier for exactly the groups you hoped to reach.
- Staying inside your usual circles. If your network alone supplies the names, implicit bias decides who gets support. Revisit your criteria and look for overlooked groups.