After my telemarketing call I phoned the FBI who took my information and told me there was nothing they could do, but that they get lots of these calls. They referred me to the Federal Trade Commission and Better Business Bureau, both of which said they get thousands of complaints and inquiries. But of course, there’s not much they can do either. According to the New York Consumer’s Board, the Federal Trade Commission has shut some of these down, but of course they keep popping up elsewhere. At work I got a voicemail of a recorded message that said “…if you want to get a piece of the American Pie, now is the time to act. The Foundations have until December 31^st to distribute their grant awards and we can help you get your share of free money.”

It’s clear the “grants for everybody” scam industry is getting more aggressive. One indication is the number of calls I get wanting help getting “free money”. As a grantwriting consultant for almost 20 years, I never used to get calls about for-profit businesses or home purchases, now sometimes I get two or three a month from poor souls who have paid dozens to hundreds of dollars to someone who told them about “free government money”. When it didn’t work out they did a web search and called me, thinking that they just need a more professional approach. Other consultants around the country tell me they get the same calls.

The grant scam artists are on every medium. Here are a few of the most visible:

• The best known is Matthew Lesko, the skinny guy in the question mark suit on late night TV ads. His specialty is books: “How to Write and Get a Grant”, “Free Money for a Better Home”, “Free Money to Quit Your Job”, “Free Money to Pay Your Bills” and a downloadable “Matthew Lesko Federal Money Finder for Business’. These run from $59.95 to $99.95 and are lists of hundreds of state and federal programs from food stamps to enterprise zones, all of which are of course very restricted and most of which aren’t  “grants” for which an individual can directly apply. There’s a long waiting list for these books at my local library. Lesko is also all over the web.

According to a 2004 report of the New York State Consumer Protection Board, Lesko spends $3 million annually on advertising. One of his subsidiary companies, Information USA, sells lists of customers to the telemarketers and  seminar presenters like National Grants Conferences.

• National Grants Conferences which tours the country doing “Free Introductory Conferences”. They’re also on late night TV and run full page ads in local newspapers, similar to the ubiquitous “Get Rich in Real Estate” meetings. I went to one and the speaker spent most of his time telling us how he’d moved into a bigger house and gotten wealthy using government grants, and how if we didn’t sign up we were losers. He also mentioned some grant opportunities which virtually nobody in the room would be eligible for, referring to them by acronyms and numbers. The pitch is to get you to pay for a two day workshop and buy a “membership” which of course keeps being charged to your credit card.

Again according to the New York State Consumer Protection Board, National Grants Conferences has been a source of consumer complaints for years and has an “unsatisfactory rating” from at least one Better Business Bureau.

• Then there’s the Internet, which is flooded with “free money” rip-offs. To get a taste of the variety out there, do a Google search for “grants” or “government grants” and look at the banner ads across the top and down the side. There are even a couple (Grants Exposed, Scammer Alert) that warn against the others and advise you to only buy their book.

This of course isn’t actually about ethics in grantwriting, but it’s unethical behavior attached to our profession. These con artists have nothing to do with legitimate grants. They’re in the same category as the Nigerian Oil Money and European Lottery scams, the promise of money for nothing to naïve and clueless citizens. As grant professionals we’re all hurt by this, if only by the wasted time of talking to the scam victims. But I think worse is the misinformation about grants it spreads and the slightly slimy feeling it gives the field.

UPDATE

With the stimulus funds, there’s been an uptick in this activity and there have been a number of mainstream news articles about grant scams lately. Here are a few:

http://articles.latimes.com/2009/mar/05/business/fi-stimscams5

http://abcnews.go.com/Technology/PCWorld/story?id=6993895

http://abcnews.go.com/Business/story?id=7004693&page=1

http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt134.shtm

Terminology of 501(c)(3) Organizations

Nonprofit (or not-for-profit). This term doesn’t mean that an organization can’t take in more money than it spends—what we usually think of as “profit.” If that were the requirement, most, if not all, nonprofits would soon fail. What it means is that profit can’t be the reason for its existence, and any surplus funds have to stay in the organization or be spent for charitable purposes. No owners or shareholders can share in these funds, and if the organization fails or is sold, the remaining assets must go to other similar nonprofit organizations.

Tax-exempt. This term generally means that the organization is exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code. To be exempt from paying state or local business sales, income, and property taxes, you must receive a separate tax exemption from the government involved. In most cases, receiving federal tax exemption automatically gets you state income tax exemption and makes it much easier to receive sales and property tax exemptions from state and local governments.

Not a private foundation. This is the least understood part of tax exemption. To be totally tax exempt and to receive grants, among other things, a 501(c)(3) organization cannot be a private foundation. When Congress laid the groundwork for modern private foundations in 1969, the IRS developed a better sense of what a private foundation is than a public charitable organization. As a result, public charities came to be described as nonprofit corporations that are not private foundations. On a nonprofit’s IRS determination letter, this is usually referred to as 509(a) status.

Federal 501(c)(3) Requirements

To qualify for 501(c)(3) tax-exempt status, an organization must meet the following requirements set by Congress:

• The organization must be organized and operated exclusively for religious, educational, scientific, or other charitable purposes.
• Net earnings may not inure to the benefit of any private individual or shareholder.
• No substantial part of its activity may be attempting to influence legislation.
• The organization may not intervene in political campaigns.
• The organization’s purposes and activities may not be illegal or violate fundamental public policy.

The first step in forming a nonprofit is to incorporate in some state as a “nonprofit corporation” under that state’s laws. Once incorporated, the nonprofit applies for tax-exempt status by filing a Form 1023 with the IRS. If approved, the organization receives a letter granting it 501(c)(3) tax exemption as a Public Charity (see Understanding Your 501(c)(3) Letter below). The organization must stay within the purposes described in its Form 1023, and the Form 1023 must be available for public inspection. If you are being asked to write grants that seem to be far afield from the organization’s mission, check the original Form 1023 to see if the grant project is within the scope of the original application. If it isn’t, the organization should not apply for that grant or, with much deliberation and after consulting an attorney, seek to modify its purpose.

Other Tax-Exempt 501(c) Organizations

There are many other types of organizations exempted under section 501(c) of the Internal Revenue Code, for example, civic leagues under 501(c)(4) and credit unions under 501(c)(14). Two important differences distinguish 501(c)(3)s from all the rest: Donations made to 501(c)(3)s may be deductible from the donor’s taxable income as charitable contributions, and 501(c)(3)s are eligible to receive foundation grants.

Sometimes an organization will set up parallel nonprofit corporations for related purposes. For example, a 501(c)(3) will be created to do educational and service work and to receive grants and contributions, and a 501(c)(4) will be created to do lobbying and support candidates. If you are working for such an organization, be careful to distinguish its grant-supported activities from its ineligible lobbying work.

Non-Private Foundation Status

The IRS assumes that all nonprofits are taxable entities until proven otherwise and that all 501(c)(3) tax-exempt organizations are private foundations until proven otherwise. The differences in proof are significant: Tax-exempt status is based on where your money goes, whereas private foundation status is based on where your money comes from.

Public charities are defined in the tax code by the things that distinguish them from private foundations. These can be either or both of the following:

• What they are: The Internal Revenue Code lists churches or associations of churches; schools, colleges, and universities; hospitals or medical research institutions; governmental units; supporting organizations; public safety organizations; development foundations for state or local colleges or universities.
• Where their funding comes from: Publicly Supported Organizations (PSOs) and Fee/Activity Supported Organizations (FASOs).

There are complex income tests for PSOs and FASOs, but as a general rule, they must receive a minimum percentage of their total support in contributions from the general public, with limited amount from any one person. If a nonprofit doesn’t meet these tests, the IRS can reclassify it as a private foundation.

Nonprofit 501(c)(3) organizations realize significant advantages by not being private foundations:

• They are exempt from paying federal taxes (except for income taxes on any unrelated business).
• They are generally exempt from paying state and local taxes.
• Donations from individuals and corporations are deductible from the donor’s federal and state income taxes as charitable contributions, with fewer restrictions than donations to private foundations.
• They are eligible to receive grants from private foundations.
• They are eligible to apply for certain restricted government grants and contracts.

Being classified as a private foundation means loss of most of these advantages. Of particular importance to the grant professional is the loss of eligibility to apply for and receive foundation and government grants.

Keeping on top of this information is vital to the success of your grants effort, but it receives little attention. While there are several decent fundraising software programs, their focus is generally on individual donors. I’m not aware of any that do a good job tracking foundation or government grants.

Local governments and large nonprofits have grants management offices[1] that may (or may not) track this sort of information. But in most cases the grantwriter or development department will want to keep their own records. Your needs are different and you want to have quick access to these records.

When I was a development director I developed a simple, paper-based system which I cheap and easy to set up and easy to maintain. It has four components:

A 3-ring binder with:

1) Pages for each foundation or funder,  and

2) Yearly grant pages.

Also a filing cabinet drawer with:

3) A manila file folder for each funder

4) A colored folder for each funded major grant.

Buy a 2” or larger 3-ring binder, a set of alphabetical tabs, and some 3-hole punched, lined paper.

1) Pages for each funder. For every foundation or funder you have contact with, or want to, set up a page. In the upper right hand corner write its name and the name, phone number and e-mail address of your major contact person. If you know that someone in your organization knows a foundation trustee, note that at the top. (When I originally set up this form it had foundation address, trustees names, staff, assets, deadlines, etc. However I found that this was redundant of information in the State funding guide, so I didn’t use it.)

Now, whenever you, or someone in your organization, has contact with someone in the foundation, make a note of it. Don’t limit this to formal contacts. Here’s an example:

W.F. Martin Trust

Dennis Hill 222-2222

Note: Our board member Julia Shaw Knows Martin Trustee Doug MacIntyre.

1/22/2004: Called for clarification of guidelines. Talked to Dennis (see notes in Martin Folder). He told me if we submit by 2/15 we could make the April trustee meeting.

2/3/04: Went with our Executive Director (ED) and Program Director (PD) to meet with Dennis and discuss proposal (see notes in proposal folder).

2/12/04: Delivered final proposal to Martin.

2/13/04: Call from Martin staff about our 501(c)(3) status. OOPS, someone put in old letter. Faxed permanent letter.

2/18/04: Julia Gamble saw Doug MacIntyre at Mac Club, talked to him about our pending proposal. He told her to also talk to Peggy Dole (another Meyer Trustee). She’ll set up a lunch with Ocilia. Good old Julia!

2/25/04: E-mail from Dennis asking about budget item. E-mailed response (printed out, put in project folder).

3/6/04: Dennis calls to set up site visit. He’ll come 3/12 at 2pm. He’ll e-mail a list of questions to be ready for.

3/9/04. Call from Julia. Peggy was very interested in project, but asked about old rumor about our agency. Julia reassured her. (WHEW!)

3/12/04: Met with Dennis, E.D. Program Director. Toured site. Answered questions, will e-mail him about 2 more questions (see notes in project file). After visit, ED, PD & I went out for a drink to calm our nerves.

3/13/04: Emailed Dennis additional information he requested.

3/20/04: Saw Dennis at concert. He says things look good for our grant, but it may be slightly smaller.

4/7/04: Dennis calls. We got Funded! YEA! — but for $50,000 less than we asked (boo). Can we send a revised budget?

4/10/04: Met with Program Manager and Fiscal Officer. Revised and sent new budget.

4/15/04: Received grant award letter to sign and return (got ED signature, returned it) and first check! Started a grant file for project and moved relevant notes.

4/16/04: Sent thank you letters to Martin CEO, Dennis, Julia.

You can see the advantage of this format. You can keep track of all contacts, formal or informal. You can refer to your files, keep track of relationships, etc. There may be years with only 1 or 2 notes about a foundation, but you’ll have them. When you come to the end of a page, start a new one and number it.

2) A page in your 3-ring binder for each year. This records basic information for tracking all grants applied for that year. At the beginning of a new year, start a new page. It doesn’t have to be detailed, just a running log like this:

This allows you to keep track at a glance of all the grants you’ve submitted and the results. This simple form serves several functions:

• As a reminder to yourself. Say it’s September and you haven’t heard back about some proposals you filed in march. You know Medina always takes at least 9 months to reach a decision, so you’re not worried about them (besides, you’ve been in contact with their staff because it’s a significant request.) Templin surprises you, they’re usually quick, so you make a discreet call to the family member who handles this small trust. Turns out you got turned down but not notified. Too bad, but it isn’t unusual for a small unstaffed foundation to not notify unfunded organizations. Union Pacific was a new try for you and you don’t know them. You call corporate headquarters and talk to a receptionist in the company foundation. You got bumped to their winter round, should hear in December.
• As a way of tracking job performance. If your Executive Director or Board wants to know what you’re doing, you can quickly show them the number of grants submitted, number funded, dollars raised. Of course you’ll want to expand on this with details.
• As a historical record. You can quickly look through the past years and look for trends. The Cowles Foundation funded you for four years straight, then this year they denied — You’ll want to know why. Smith only wants to be approached every other year, so you won’t go to them next year. Are your total annual grants funded up or down? How about request amounts? If you have several years you can graph it.

If you’re a new grantwriter or Development Director for an agency, check to see if any such records exist (Trust me, they probably don’t). One of your first tasks will be to recreate these records as best you can. Look in old file folders, accounting records, annual reports, newsletters, board minutes. Go back as many years as you can. It will be easier to track grants which were funded than ones which were denied. Do the best you can and add to it later as you discover new information.

Why is this so important? First, it prevents relationship damaging mistakes. There are few things more embarrassing than submitting a request to a funder introducing your agency and asking for startup for a new program, only to find that they’ve supported you for over 10 years and funded the startup of a very similar program three years ago. Second, it allows you  to look for trends (see historical record above). How much has your agency raised from grants in the past? Which foundations have funded you, for what and for how much. You’ll need all this for planning your grants budget and strategy for the year.

3) A file folder for each funder: This is where you keep correspondence unrelated to specific grants, newspaper articles about the funder or their trustees, guidelines, annual reports, etc. For major foundations you might also have a file folder on your desktop with Adobe Acrobat annual reports, guidelines, etc.

4) A folder for every funded major grant: I like to use red ones with tabs for 3-hole punched paper and pockets front and back. This folder contains all paperwork pertaining to the grant, as well as a floppy disc of the proposal and all other electronic material.[2] You put in a copy of the final proposal, a schedule of reports due, copies of reports, etc. You transfer notes from the working folder you had when writing the proposal. Keep this in your active files. If the foundation grants officer calls, or your Executive Director has a question, you can immediately respond. If (as often happens) information on a grant get spread among foundation and project files, its difficult to keep a coherent picture of an active grant. After the grant is completed and final reports submitted, move the file to an inactive drawer. You might keep parallel files on your computer desktop, with all the electronic information related to each grant.

This system works well for private funders, foundations and corporations. If you’re responsible for writing government grants, the system needs modified and expanded. You’ll want to coordinate with the grants manager and/or program director. You probably (hopefully) won’t be involved in contract compliance or grants management. Since governments operate through Requests for Proposals (RFP’s), you’ll want to keep those (electronically if possible — many are posted as downloadable Adobe Acrobat files these days). You should keep a complete paper copy of the proposal, including budget forms, compliances, attachments, etc., etc. In many cases you’ll have collected statistics, reports and documents related to the proposal. Keep them, in either paper or electronic format because you’ll want to be able to document any claims you made. Government work requires a paper trail. And it will often make your job easier to have you8r own copy, rather than having to ask for a copy of a 3 year old proposal from the new grants manager who’s only been on the job two months.

For all its simplicity, this paper system can serve most nonprofits for years. And when you move on from this job, you will have left a legacy for the organization. Your successor might even erect a small shrine to you.

[2] More times than I can count, I’ve worked with an agency that has had previous successful grants I could have copied sections from, but they haven’t kept the file or don’t know what computer it was on. This simple hint can save you or your organization hours of redundant computer entry — or even time spent recreating an organizational description.

• Administrative staff: the Executive Director, Finance Director, Human Resources, the receptionist, clerical staff not dedicated to specific programs
• Office space used by those staff, including costs of rent and utilities
• Equipment and services used by everyone: copiers, phone systems, janitorial service, IT support, etc.
• Board expenses
• Fundraising & marketing expenses
• Grants management, the audit, liability insurance, staff training, etc.

The federal government has a standardized, and fairly complex, method of determining your indirect costs, which results in a negotiated Indirect Cost Rate. As a grantwriter, you don’t have to know how to negotiate an Indirect Cost Rate, but you certainly need to understand how they work.

If you’re working on a federal grant proposal, ask the organization’s financial manager if the agency has a negotiated federal Indirect Cost Rate. If so, then in most cases you can just plug that percentage into your budget on the “Indirect” line. If you don’t have a rate, talk to the Finance Director and Executive Director about whether to apply for one. If  you decide your organization needs an approved rate, work with the controller or accountant to pursue an application. If your organization is not large enough to have a controller, you should think twice about whether the organization is large enough to successfully manage a federal grant.

Federal Indirect Cost rates are negotiated with one government agency, then that rate is honored in any federal grant from any agency. This may be the agency which is awarding your first federal grant, or (if you have multiple grants) the agency that awards the greatest share of your federal funding, or your “cognizant audit agency”.

There are several types of rates: Provisional, Final, Predetermined, Fixed Rate with Carry-Forward, and Multiple Indirect Cost Rates. The provisional/final rates are preferable for most nonprofits because they are easier to budget and account for actual costs.

There are two calculation methods: Direct Salaries & Wages and Total Modified Direct Costs. Which one you use will depend on your organizations finances.

Your program and staff people work together do develop a pool of costs by department, then allocate them according to a reasonable formula. Then they figure a proposed indirect cost rate by one of the two calculation methods and propose it to the appropriate federal agency. After negotiations, an official or the federal agency approves the rate and you receive an indirect cost agreement.[1] The approval will be formalized by a rate agreement signed by the an agency official and an authorized representative of your organization. Each agreement will include:

1. The approved rate(s) and information directly related to the use of the rates, e.g., type of rate, effective period, and distribution base;

2. The treatment of fringe benefits as either direct and/or indirect costs, or an approved fringe benefit rate;

3. General terms and conditions; and

4. Special remarks, e.g., composition of the indirect cost pool.

Other Considerations

Of course, it’s not always this straightforward. After all, we’re talking about the federal government. Here are a few exceptions or special cases:

If you don’t have a negotiated indirect cost rate, some agencies will let you use a temporary administrative fee, often 15%. In some cases, if you don’t expect to apply for many federal grants, you can just use this rate and not apply for a negotiated rate. If you’re doing this, be sure to exclude all indirect-cost items from the budget.

Some agencies will put a cap on the indirect costs they will pay, often 20%. A few agencies or specific RFP’s may not pay any indirect costs at all. If a funder refuses to acknowledge eligible indirect costs when negotiating a grant award, you have to be prepared to bargain or even walk away if absorbing the administrative costs is too much of a burden to your agency.

When figuring your indirect costs, refer to the appropriate OMB circular to make sure you’re only including allowable costs.

Using Line Items Instead of Indirect Costs

Some organizations assume that because they don’t have an indirect cost agreement, or a particular RFP doesn’t allow indirect costs, that they can’t recover any administrative costs. In fact, many of these can be included as direct “line item” costs. For example, figure out how much of your Executive Director’s or accountant’s time will be spent administering the grant and include them under personnel. If the grant will force you to pay for an A-133 audit, that’s a cost of the grant. Calculate a reasonable percentage of our telephone, copying, insurance, janitorial, etc. expenses and include them as line item direct costs. Make sure these are all legitimate costs and reasonable allocations of operating the grant project. In some cases you’ll recover most or all of what you would have received under a percentage using an indirect rate.

[1] This is, of course, not complete instructions for developing your indirect cost rate, which will vary from agency to agency. However, there is a good overview and instructions from the U.S. Department of Labor downloadable from: http://www.dol.gov/oasam/programs/boc/costdeterminationguide/main.htm. If you are involved in developing an indirect cost rate, contact the agency you’re working with and ask for guidance.

Reasons for using an outside evaluator

• The funder requires it: Many federal grants require you to budget 10% or 15% on evaluation, and may require an outside evaluator. Some larger foundations will also require independent evaluation.

• You don’t have evaluation capacity in-house: If you’re planning a quantitative evaluation with an experimental design and control groups, very likely you won’t have the expertise in your organization to do the instrument design, select control groups and handle statistical analysis.

• An outsider brings credibility: You may want to use an independent and credentialed outsider because your program is controversial, highly visible, rapidly changing, or because you need to establish (or restore) credibility to your program or organization. An evaluator’s credibility may come because of their independence or their expertise. In most cases you’ll be looking for both.

• An outsider may be able to get information your program can’t: If your organization provides mandated services where participants could fear losing services or being punished, they may not give their true opinions to your staff. An outside person who is able to prove their independence may gain access or get truer responses than your staff. (Examples could be a probation department or alcohol and drug treatment program).

Pros and cons of using external evaluators

How to find an external evaluator

If you plan to use an outside evaluator choose them early. Don’t succumb to the temptation to make the evaluator a “to be determined” person, if it can be avoided. Having the evaluator identified and involved will demonstrate your professionalism.

In addition to being able to use their credentials in your proposal, if all possible involve them in planning your grant proposal. You want to make sure that your program design is structured so that the evaluation can be statistically valid. Sometimes a professional evaluator will write the evaluation section of your proposal on the understanding that you’ll hire them if the grant is funded. If you can’t involve the evaluator in grant planning, get them on board as soon as possible after you’re funded.

• Academic: Evaluators can often be found in local Universities and medical schools (or hospitals for health care grants). Formal evaluation is similar to research, and in fact most evaluators formal training is in research design and statistics. Until a few years ago it was rare to find classes called “evaluation”. When looking for a university evaluator, you can contact the department that works with your field (like social work, sociology, education or public administration), the Office of Sponsored Research (who oversee faculty research) or see if there’s an evaluation office on campus. The Regional Research Institute at Portland State University often will provide evaluators for nonprofits.

• Professional: There are professional evaluation firms, as well as individuals, in most cities. Ask other organizations in your community who they have used and liked working with. Check with the Oregon Program Evaluators Network or the American Evaluation Association for members in your area.

• Ask the Funder: Some large foundations and government agencies have lists of evaluators with expertise in their field. Or you can call agencies who have been funded previously and ask them who they worked with. If a particular name emerges as having worked with the grantees of a particular funding agency, that firm could add credibility to your proposal.

• Federal agencies or national trade or advocacy groups: Many federal agencies have technical assistance websites with lists of evaluators.

Choosing an evaluator

Once you’ve identified some potential evaluators, you should call a few of them and get general information. Then you might interview a few that you like to start making decisions. Here are a few things to look for:

• Do they favor a particular type of evaluation? If an evaluator starts recommending particular evaluation methods before learning what you need to know, or how you plan to use the findings, it may indicate a preference for, or experience with, a particular evaluation design. If that’s not the kind of evaluation you’re looking for, or you haven’t decided, they’re probably not a good match for your project.

• Do they have an agenda? Check to see if a researcher you’re considering brings their own reasons for doing your evaluation. A professor may be writing a book or conducting long term research, a doctoral student may want to fit your evaluation into a dissertation. Or they may have their own theories that could influence what they expect to find. If their needs mesh with yours, then it’s win-win. If they don’t, you need to ensure that their work will meet your needs, not just theirs.

• Can they communicate with your staff and board? If the evaluator only describes the process in highly technical jargon, it may make it hard for your staff to work with them — either because of comprehension or intimidation. It may also be an indication that their reports will be full of jargon and theory, and hard to interpret and implement changes.

• Cultural sensitivity: If you work in a diverse community, the evaluator needs to be acceptable to the community and able to understand or learn the culture in order for the evaluation to gather accurate information.

After screening to get a good match, you will probably identify one or two possible evaluators you’re most comfortable with. You can then have a more detailed interview, with such questions as:

• How much evaluation have you done, especially in projects similar in size and content to ours?

• Who would be doing our evaluation — a senior staff, junior staff, a grad student? What are their qualifications?

• What are your ownership and confidentiality policies? Do you want or intend to publish an article based on our work? If so, how would our organization be identified? Could one of our senior staff be listed as co-author?

• Please provide us with some names of past clients we can talk to. (And be sure to check references!)

Once you’ve decided on an evaluator, you need to write a contract which should include the following:[1]

• Scope of Work. This includes defining the organization’s information needs and purpose of the evaluation, defining the Program Theory Model, identifying constraints (time, money, data availability, politics) and how they will be addressed.

• Evaluation tasks. Who does data entry, transcribing interviews, correlating interview answers, writes up reports and similar tasks?

• Who owns the data? If articles are published, does it need both parties approval and who is listed as authors?

• Fees. For a full, formal evaluation in a federal grant, 10-15% of the total is reasonable. For a smaller proposal to a private foundation, 5% may be more likely. To lower costs, the scope of work can be reduced or some work done by the organization.

• Timeline. This should include major steps in the evaluation process, data collection schedules, reports or other work components and billing deadlines.

• What will be included in reports: Narrative, charts, literature review, comparison to national or other statistics, number of drafts and who edits them.

• Definition of responsibilities.  The chart below shows some typical responsibilities.

Working with an outside evaluator

The Association of Baltimore Grantmakers has this list of tips for managing your evaluation on their website.

• Establish a desired communication pattern early and in writing. One person should be the point of contact for the consulting team—that person should facilitate contact with others, provide advice and guidance to the team, and gather additional information and/or resources to support the evaluation when necessary.
• Maintain communication throughout the project—you’ll need to know how the work is coming along and the consultant needs to be informed about things that arise at the foundation.
• Develop strategies for monitoring the work of the consultants (not just deliverables). You may want to accompany the evaluation team on select site visits. Are they organized? Do they work well with grantees? Are they doing everything that they said they would and in a manner with which you are comfortable?
• Seek input from grantees or other sources. Were they comfortable with the evaluator’s approach?

Don’t be a terrible client! Remember that consultants get paid for their time—every call, meeting, and presentation “uses up” valuable contract time. Do what you can to facilitate their work—don’t make it harder on them. If you want or need much more than was anticipated, expect to PAY more for it!

Yet we have doubts. Most of us aren’t trained researchers and approach the subject with some skepticism. We know it’s going to take time and energy, and it’s not clear what it gets us. Let’s look at the pros and (perceived) cons of doing evaluation.

The primary reason for doing evaluation is that it gives you reliable information to improve your program and services to your clients. Evaluation can provide data on whether a program works and why, which parts of it are effective and which need improvement, whether it is the best use of your organization’s scarce resources.

The primary reason for including evaluation in grant proposals is that funders require it. Proposals with good evaluation sections score better and are more fundable than ones with poor (or no) evaluation. Being able to cite a positive prior evaluation of your existing program increases your chances of receiving future or continuation funding.

Notice that these are not the same. Fortunately, the stick of funder requirements and the carrot of program improvement both lead to the same place. The job of the grant professional is to take advantage of the requirement and use it to improve your grant proposals and therefore your programs and possibly your organization itself.

Beyond these two fundamental reasons for doing program evaluation, there are several more advantages to your organization both during grant development and during program implementation.

In grant proposals:

• Evaluation provides a framework for improving both your grant proposal and the project you’re seeking funding for, by providing measures to make your goals and objectives more meaningful.

• Evaluation provides a way to involve key stakeholders and direct service staff in program planning, increasing buy-in in your program. A positive evaluation can help your organization attract new staff, volunteers, funders and collaborators.

• Doing your own evaluation reduces the chances of funders or other outsiders undertaking their own evaluation of your program, which might be less informed and more detrimental to your organization.

• A strong scientifically based evaluation can turn your innovative project into a research study, and could lead to it being named an “evidence based practice”.

In program operations (after you get funded):

• Evaluation gives immediate feedback, allowing you to identify and fix problems in existing programs while you still have grant funding to implement the changes.

• Evaluation gives a mechanism/vehicle and techniques for getting feedback from your client/participants about their perceptions of your organization and project, and a way of letting them know how the project is working. An evaluation showing that your program works can motivate your existing clients and attract new ones.

• Evaluation provides valuable information for your organization to use for longer term strategic planning and program improvements.

• Evaluation provides solid data for disseminating information about your program, and for others who may want to replicate it elsewhere.

Resistance to Evaluation

Despite these advantages many nonprofit organizations and their staffs are resistant to, or suspicious of, evaluation for a variety of reasons. The grantwriter must often respond to these concerns, and even advocate for evaluation, in order to be able to develop a successful proposal. Here are some common objections to evaluation and responses you can use in overcoming to them. If these are your own beliefs, you’ll need to think them through before trying to convince others.

Objection # 1) Evaluation is a way to judge us, to label our program a success or failure, and perhaps punish us (i.e. cut our funding).

Assumptions:

• Evaluators are looking for a perfect program and if we don’t have it we’ll get marked down.
• Many people’s only experience with evaluation has been employment performance reviews and college board tests. They are reluctant to be judged and ranked.
• If we can keep our program results fuzzy, “they” won’t notice and we can keep doing what we’re doing.

Response:

• By looking at what works and doesn’t work in a program, evaluation can be used to improve your services, not to punish your organization. Evaluation also helps you learn “for whom, where and under what circumstances did it work?”
• Funders, management and governing boards are looking for results. The lack of good program evaluation is worse than finding things that need improvement.

Objection # 2) Evaluation is forced on us by the funders for their own purposes (like punishing us, see # 1.)

Assumptions.

• Evaluation is something we wouldn’t want to do funders didn’t make us. It has no intrinsic value to our organization.

Response:

• If you design your own evaluation you can have control over it, rather than ceding the control to others (like funders).
• If you do a good evaluation, it will help your organization improve its program, improve services to your clients, meet the funder’s needs and help you attract future funding.

Objection # 3) Money spent on evaluation is diverted from direct client services where it could be helping people.

Assumptions:

• Evaluation is expensive.
• Evaluation is always competing for the same funds as services.
• Evaluation doesn’t help our clients.

Response:

• Evaluation doesn’t have to be expensive, and sometimes has separate funding.
• A positive evaluation can help you raise more funds in the future.
• Evaluation can improve services and outcomes for your clients, making direct service dollars more effective.

Objection # 4) We’re “people people”, not “science people”, and we don’t understand or like statistics.

Assumptions:

• Evaluation is all abstract, dry statistical stuff, not relevant to the actual work we do.
• The outside evaluator will look down on us or manipulate the data to make us look bad.
• This is complicated and we can’t learn it.

Response:

• While evaluation was once heavily statistical, program evaluation is increasingly moving to qualitative measurement which looks at people’s actual experience and the impacts of programs on their lives.
• Getting clarity about the uses of data and intentions for using findings in advance can help both the evaluator and program staff do a better job.
• A good evaluation process is designed to include program staff, and a good evaluation report is written for lay people to understand.

Objection # 5) Evaluation will take staff time away from providing direct services.

Assumptions:

• The program staff only want to do their regular jobs and aren’t interested in improving their services.
• The best use of staff time is working directly with clients, even if the work is less effective than it could be.

Response:

• Evaluation data collection will take some of your program staff time — how much depends on the evaluation design.
• Staff time spent on a good evaluation will improve their worklives and the lives of their clients.

Objection # 6) This is different than the way we’ve always done things and we don’t understand or like it.

Assumptions:

• If we change, it may be uncomfortable.
• The way we do things is the best it could be, it doesn’t need improvement.

Response:

• This feeling may be the underlying basis for some of the first 5 issues.
• Doing evaluation may lead to change and may be uncomfortable, but it’s worth it if the resulting improvements are real.
• With new information, nonprofits are discovering better ways of operating.

If you embrace evaluation and incorporate it into your grant development process, it will strengthen your whole proposal. You’ll develop more compelling needs statements, create stronger goals and objectives, and write a better narratives. Your proposals will be more fundable and once funded, the grant programs will be more successful.

In fact, your whole organization will benefit, because evaluation is becoming more important not just in grant proposals but to all aspects of operation. The organizations that survive and thrive will be the ones that understand, measure and work to improve themselves and their programs. And the way that’s done is through program evaluation.

While a fiscal sponsor relationship can be beneficial to the sponsor, the funder and the ultimate recipient, it must be approached carefully to avoid both IRS problems and misunderstandings among the parties involved. In the past this has been called a “fiscal agent” or a “pass-through” relationship, but these are not good terms to use — they raise questions with both the IRS and auditors, and they can create misunderstandings among the partners.

If a nonprofit is considering entering a fiscal sponsorship, as either the SPONSOR or the sponsored group (referred to as the PROJECT), there are a few conditions which must be met:

• The sponsor must maintain fiscal control and some degree of program control.
• The project must be within the sponsor’s mission as set forth in its articles of incorporation, bylaws and original 501(c)(3) application papers (Form 1023).

Examples of fiscal sponsorship:

1) A small organization asks a larger one to sponsor a project which is too large or complex for the small one.

The amount of money involved may be so large that it could “tip” the small organization into private foundation status. The project may have complex bookkeeping, administrative or evaluation requirements that the small organization doesn’t want to undertake. Or the project organization wants to use the larger organization’s reputation, size and management expertise to reassure a funder.

Sally’s Mother (a homeless youth shelter) has learned of a large national foundation with an interest in programs for street youth. The staff have been aware of a growing problem in Jefferson County and has been trying some innovative approaches, but thinks a realistic program would have to be multi-year, several hundred thousand dollars and would be more fundable if it had a solid program evaluation. Sally’s Mother approaches Jefferson County Community Action (JCCA) about acting as fiscal sponsor for the project, handling the accounting and working with the state university on an evaluation. Sally’s Mother volunteers who are close to the street youth would be hired to operate the program from the church owned houses, giving the project the “street cred” that Sally’s Mother has earned.

2) A donor may be interested in giving money to a particular individual, but cannot take a charitable deduction for the gift.

The Evans Family Foundation (which is in effect the private giving vehicle of the Evans family) would like to sponsor a talented local oboist. However, the foundation cannot give directly to individuals and family members can’t deduct any such private contributions. The foundation approaches the Jefferson Baroque Orchestra to accept the gift and give it to the oboist. While the JBO cannot accept funds to be passed to a specific recipient, they can set up criteria for individuals to apply for funding and they can pre-qualify the oboist. As long as any other person meeting the criteria could apply for and have the same chance of receiving funds, the deal is acceptable. They contact a lawyer to set up the arrangement.

3) An individual or group has an idea for a project, but isn’t ready to undertake applying for tax exempt status.

They approach a large nonprofit to take the project under it’s wing, apply for funding and either hire or contract with the first group to carry out the project. This is not infrequently done by community foundations, United Ways and Councils of Churches, and is the way many community social service organizations get started.

Bob Smith and Ron Jones start an after-school basketball program for youth in their neighborhood as a way of keeping them off the streets, playing in the local YMCA and calling the project “Teambuilders”. After two successful years they decide to add an academic component, requiring an hour of homework with volunteer tutors before practice. They also would like to expand the program in the summer. They approach the Jefferson Council of Churches (JCC) to sponsor the project and receive some small grants.

This relationship could be handled two ways.

• The simplest is that Teambuilders is a project of JCC with no separate legal existence, and Bob and Ron are employees of JCC.

The other model is for JCC to accept grant funds and re-grant them to Teambuilders. But JCC cannot just write a check to Teambuilders (pass through). For the process to pass IRS scrutiny:

• Teambuilders must make a formal request to JCC
• The JCC board must approve the grant.
• JCC & Teambuilders should sign a contract setting grant terms and reporting responsibility.
• JCC must inform the original funder of its control of the project.

After ten years the project has grown so large that Bob and Ron form their own nonprofit corporation, apply for tax exempt status and arrange with the JCC to spin the Teambuilders program off as an independent organization. Because they foresaw this possibility they have a written agreement with JCC describing the process, including what happens to any property and funds acquired by the project.

4) An individual or group wants to donate and solicit large contributions for a particular project, but doesn’t want to create a private foundation.

Three wealthy business people want to preserve the old Davis Estate in East Jefferson County and establish it as a museum and nonprofit conference center. However, they and their friends would be contributing so much of the funding that the IRS would qualify the Friends of the Davis Estate (FDE) as a private foundation. They approach the Jefferson County Community Foundation (JCCF) and establish a “Supporting Organization” which has independent 501(c)(3) status as a separate corporation, but as a 509(a)(3) organization. Friends of the Davis Estate has its own office, staff, checkbook, investment manager and letterhead, but contributions are made to the JCCF which has legal (if not in practice) control. This naturally requires legal assistance to establish and strict reporting requirements.

5) A foundation with a particular interest may want to establish and fund a new program, but doesn’t want it subject to private foundation restrictions.

The Murray Foundation has a particular interest in homeless elderly and wants to establish a housing and counseling program for this target group. They ask Jefferson County Community Action, which operates both homeless and Meals on Wheels programs, to create and operate the program with Murray Foundation support.

Issues of Fiscal Sponsorship:

Lost grant opportunity: This is a serious issue for many potential sponsors. Many foundations operate on a “one grant to an organization at a time” policy. If a sponsor applies for a grant for the project, they may be giving up he opportunity to approach that funder for their own programs for the life of the project. Organizations should be clear with foundation staff before entering a sponsorship relationship — and watch foundation behavior, sometimes foundation trustees will perceive relationships differently than their staff.

Conditions of original grant: The funder can make an unrestricted grant to the sponsor, with the informal understanding that it will be used for the project. Or the funder can make a restricted grant, specifying that funds must be used for the project. In order for this to not be an illegal “pass-through” transaction, the sponsor must pre-approve the project before funds are received, must exercise expenditure and oversight responsibility.

Record keeping: If the project itself is a 501(c)(3) organization, project funds will not show up on the sponsors financial statements. If the project is not tax-exempt, both grant revenues and project expenses will be shown in the sponsor’s formal financial statements, audit and 990.

Property: At the end of the sponsorship relationship any property and funds acquired with project grant funds must go to a 501(c)(3) organization. This can be the sponsor, the project organization (if it is exempt) or an agreed upon third party 501(c)(3) organization (if for example the project moves to a new fiscal sponsor).

Payments to the Sponsor: A sponsor can and should be appropriately paid for its services. If the project is tax exempt the sponsor is not handling funds, it might take minimal or no fees. If the project isn’t tax exempt or if the sponsor is handling funds or managing the project, they need to agree on compensation. Amounts up to 15% are common. Project organizations should be careful about working with large sponsors like universities which have high overhead and “indirect” costs.

Liabilities: The sponsor should get legal advice concerning responsibility and in some cases consider additional insurance.

Public Relations: The project will be associated with the sponsor, and both parties need to consider whether the relationship helps or hurts their reputation. They might set up agreements on press relations and printed materials.

Misuse of Fiscal Sponsorship:

Fiscal sponsorship can be knowingly or unknowingly misused, with serious consequences for all concerned.

• Acting as a conduit for gifts or grants to specific individuals.
• Channeling funds to an organization without tax-exempt status, without proper controls.
• Avoidance of the “public support test”, allowing large donors to contribute more than allowed to the project organization.

Consequences of Misuse of Fiscal Sponsorship:

• Foundation can be subject to penalty tax.
• Project organization could be reclassified and lose “non-private foundation” status.
• Damage to reputations of all concerned.
• Sponsor could be subject to unrelated business income tax, or in extreme cases lose tax-exempt status.
• IRS could impose excise taxes on boards of both organizations for misuse of funds.

For more information, a good resource is “Fiscal Sponsorship: 6 Ways To Do It Right” by Gregory Colvin, available from http://www.studycenter.org/.

The need for evaluation of grant projects has increased over the years, as funders and nonprofits have become more sophisticated and focused on results. Before the 1960’s, it was possible to get funded by saying “There are young people living on the streets and really in need of help. We care about them and want to help them”. This wasn’t specific enough for funders to know if their grants were having an impact, so they started to ask “How many?” “There are 2000 homeless youth living on the streets of Portland and we will provide 500 of them with emergency food and 100 with emergency shelter in the next year.” Gradually funders realized this approach wasn’t making lasting changes, so they asking “So what?” and looking for results, which is where we are today. “There are 2000 homeless youth living on the streets of Portland and we will provide 500 of them with emergency food and 100 with emergency shelter in the next year. While they participate in our programs, staff outreach workers will interview them to determine needs and will refer them to counseling, alternative schools, and job training programs. As a result of this program, at least 50 will be reunited with their families or moving to transitional housing and 200 will be in school, job training or employed.” Evaluation is how you collect this information.

Evaluation serves two purposes for your organization and your funder. First, it monitors the success of your project. Second, it provides information for improving your project and overall program. The Kellogg Foundation Evaluation Handbook says “Effective evaluation is not an ‘event’ that occurs at the end of a project, but is an ongoing process which helps decision makers better understand the project; how it is impacting participants, partner agencies and the community; and how it is being influenced/impacted by both internal and external factors.”

As a grantwriter, you will often be involved in the early planning of a project — which may mean there hasn’t been any planning for it done at all. Because the work of the project won’t happen unless the grant is funded, and that could be months away, it may be difficult to get program staff to focus on the eventual evaluation. At the project planning stage, you don’t have to force them to design evaluation criteria. You just need to decide how complex of an evaluation to describe in your proposal, and if further detailed work is needed to develop it.

Remember, when you’re writing a large grant proposal, you’re developing somebody’s job for the next few years. You don’t want to waste their time and your organization’s resources by creating unnecessary work. It is important that you align your project goals and objectives with your evaluation questions, so that the evaluation becomes a part of your project and not a separate set of tasks.

What kind of evaluation you need to do, and who you will involve, will depend on your project and your organization. In your planning you need to ask these questions:

• Why are you doing this evaluation? To better understand your program? To judge its success or improve it? To satisfy funder requirements? To produce data for agency to use for public relations or in seeking future funding?
• Who is the audience for your evaluation? Funders? Your board? Management? Program staff? The public or the press? Government officials?

I’ve identified five distinct types of grant evaluation, which can be defined by who needs to be involved.

1. Short term project with staff evaluation. The obvious case is a one-time purchase. You apply for funding to buy a van to take kids on outings. Evaluation consists of “Did you buy the van?” and “Are you using it to take kids on outings?” You could provide the funder with a copy of the bill of sale and vehicle title and a list of outings. You could spice it up with a picture of the van with happy children at the beach, maybe with the funder’s name printed discretely on the van under your logo. This evaluation can be performed by the program or development staff. It doesn’t create any extra work since it fits within existing program activities.

2. Board evaluation: I like to use board evaluation for straightforward projects which have significant impact for your organization. Your board’s job is to oversee the work of your organization, so the regular program reports at board meetings should allow them to evaluate the project and implement improvements. An example would be the marketing and audience development program for Portland Baroque Orchestra in Attachment A. If you’re mailing out brochures and your audience is growing, the board can measure and evaluate the results. Often I will break board evaluation down into 1) Were the objectives accomplished — on time and in budget? (Did we do what we said we would?) and 2) Did we reach the goal, fulfill the need? (Did the project accomplish its purpose?)  Having the evaluation done by the board rather than staff adds some credibility. It also ties the grant project to other board work such as policy and program decisions. This is a good model for local foundations who like to fund direct program activities and who may already be familiar with your organization.

3. Inside Evaluation Team: For more complex projects, you may want to form your own evaluation team of stakeholders in both the project and your organization. Say you’re opening a new health clinic serving a different population than you have previously. This is too big an undertaking to leave to routine staff reports to your board. You might put together a team from the clinic: The clinic manager, a doctor, nurse, receptionist, records management staff. But don’t stop there, you should have at least one patient, someone from a major referral agency, maybe the local public health commission. Finally, how about a board member or your finance manager? If anyone in your agency has evaluation experience, invite them too. The idea is to represent all of the significant groups impacted by your project. The team will meet regularly to assess progress and use it to make project modifications.

In this case, you need to put some real thought into the evaluation design you’ll include in your grant proposal. You might decide on a theory-based outcomes evaluation and use a logic model to outline your project and outcomes. If you’re seeking government funding, the funder might have evaluation criteria you’ll need to include. You’ll have to decide at this stage what data you need to collect to perform an effective evaluation. I suggest looking at some of the books at the end of this article to use in planning your evaluation.

4. Outside Evaluator: In many cases with complex projects you’ll want or need to hire an outside evaluator. Some federal grants require you to budget 10% or 15% on evaluation, and you won’t have evaluation capacity in-house. Sometimes you’ll want to prove the effectiveness of a program and need someone with specialized skills to oversee control groups, do statistical analysis, etc.. You may want to use an independent and credentialed outsider because your program is controversial, highly visible, rapidly changing, or because you need to establish (or restore) credibility to your program or organization.

If you plan to use an outside evaluator choose them early, and if all possible involve them in planning your grant proposal. You want to make sure that your program design is structured so that it can be statistically evaluated. Sometimes a professional evaluator will write the evaluation section of your proposal on the understanding that you’ll hire them if the grant is funded. If you can’t involve the evaluator in grant planning, get them on board as soon as possible after you’re funded.

Evaluators can often be found in local Universities and colleges (or hospitals for health care grants). There are professional evaluation firms, as well as individuals, in most cities. Ask other organizations in your community who they have used and liked working with. Check with the Oregon Program Evaluators Network or the national American Evaluation Association for members in your area.

5. Research: Research grants are different from grants designed to implement programs. With research grants, a scientific question is being explored and the evaluation is itself the purpose. Most research grants are government funded. Many Federal agencies are engaged in supporting research through grants or contracts to universities and profit and nonprofit institutions. This support is offered to encourage research activities that are expected to have a favorable effect on the mission of the government agency. Some agencies have a general mandate to support basic research in scientific areas related to their primary mission or that are in the national interest.

Most research grants are highly technical and require knowledge of the science involved, as well as of research methods. In my experience the researchers themselves, or grantwriters attached to their institutions, develop most research proposals.

Do you need to budget for evaluation and how much? You probably don’t have to include funds for evaluation for numbers 1 and 2. In fact these kinds of projects are often funded by local foundations who don’t want any of their money spent on evaluation. They want to fund projects or direct service, and being told that the project goals were accomplished is as much as they want to know. For number 3, you might want to include evaluation funds in your budget for such things as staff for data collection, entry and analysis; computers and software; interviews or focus groups; and supplies and printing. For numbers 4 and 5, you definitely want to budget for evaluation. With some government grants, there’s a defined percentage (often 10 or 15%) required to be spent on evaluation.

ONGOING EVALUATION Some agencies have ongoing evaluation programs, which can provide the framework and information for planning your grant evaluation.

Organizational Commitment: A national organization I work with, the National Indian Child Welfare Association, evaluates all of its programs including services, products and events. This helps them guarantee quality services in support of their mission and assures their diverse constituencies and funders that their programs are effective and produce results. While unusual in nonprofits, this commitment has helped NICWA build and maintain a national reputation as a leader in their field.

Quality Assurance (QA): In health care, mental health, substance abuse treatment, and related fields quality assurance staff or committees are often required for licensing or accreditation. They review program practices to make sure services meet required standards. Quality Assurance may be included in a grant as part of contract compliance. If your agency has a quality assurance program, the information it is already gathering will be invaluable for developing a program evaluation — or it may be all you need.

Continuous Quality Improvement (CQI): CQI was developed by Japanese industry, based on the work of W. Edward Deming in the 1940’s. Instead of collecting information centrally and periodically implementing major program changes, CQI involves the line staff and managers in constantly identifying problems or opportunities, and implementing them at the operating level without having to go to top management. Many nonprofits have started using CQI, and if your organization has a CQI program it can be the basis of your evaluation section. Sometimes Quality Assurance programs incorporate CQI.

Resources for Evaluation:

W.K. Kellogg Evaluation Handbook, available free for downloading as an Adobe Acrobat file or ordering a paper copy. This 117-page volume gives both theory and practice of evaluation, from one of America’s largest and most evaluation-oriented foundations.

Outcomes for Success! Judith Clegg & Jane Reissman, Organizational Research Services (Seattle, Washington). How to develop your own outcome-based program evaluation, including using a logic model.

Grant Winner’s Toolkit: Project Evaluation and Evaluation, James A. Quick & Cheryl C. New, John Wiley & Sons, New York, 2000. A good “how to” overview, with lots of charts and forms for data collection.

Budgeting is another way of telling your story through the process of translating your project into fiscal terms. It’s important that it describe the same project, and the reader should be able to guess what the project is, just from reading the budget. This works in two ways:

• A single theme should run through your whole proposal. The written narrative, goals and objectives, timeline, evaluation and budget should describe the same project and include the same items.

• Your budget categories should tie to the narrative. Since in many nonprofits personnel can be 80% of your costs, “personnel” shouldn’t be just one budget line — “line item” out each position. Be sure that you use the same job titles in the narrative and the budget — not “counselor” in one section and “case manager” in another. If you attach job descriptions, they need to use the same titles too.

SHOWING TOTAL FUNDING

Use the budget to put your best foot forward. If you’re only requesting partial funding for a project, show the project whole budget — especially if you’re spending your own funds. If you have or are seeking other funding, tell where it’s coming from. Showing other funds for the project always strengthens your position, even when no match is required.

The budget below was for a small performing arts organization to expand its marketing efforts and build audience. The group was already spending 10 % of its budget on marketing, so the “other funds” didn’t require any extra expense.  But it showed that the foundation was only being asked for 60% of the project cost, even though the other sources of funding aren’t identified.

Also look at the budget categories. This is pretty obviously a marketing grant. You could get an idea of their project strategy without even looking at the narrative. If you knew this was a performing arts organization, you could guess it was for audience development.

SUSTAINABILITY

Increasingly, funders are asking about project sustainability. They want to know how your project will continue to be funded after their grant period and how the grant project will help strengthen your organization. Since this is often a question in the funder’s guidelines, it’s generally addressed in the narrative (with some hemming and hawing). If you know how you’re planning to continue funding, you can strengthen your case by showing future funding in the budget.

The example below was for a multi-program Community Action Agency. In a common scenario in recent decades, as their government funding was cut they were looking to preserve programs by aggressively seeking private funds. The proposal was for a 3-year grant to develop fundraising capacity — strengthen their development program and increase their private funding across the board. We wanted to show how the development program would not only pay for itself, but strengthen the agency’s social service programs during and after the grant period.

The budget layout for this 3-year grant covers 8 years. The two years before, three years of declining grant funding, and two years afterwards. Aside from a big jump in corporate giving (which they had already been working hard), there isn’t a huge income increase in the first grant year (2000). But by the end of the grant period, every category has been incrementally strengthened, building a diversified funding base that continues to support the agency’s services. (By the way, in 2003 they raised $1.1 million in private funds).

COMBINING BUDGET WITH PROJECT PHASES

You can also develop a functional budget, which allocates funds to project phases for funders who reimburse for milestones, or if you want to show your cash flow needs. You’d probably also want to provide a conventional line item budget. This example also allows you to tie your budget to goals and objectives and to the timeline.

DEVELOPING THE BUDGET TO SUPPORT YOUR STORY

In good practice you design your grant project, establish staffing, then develop the budget. But don’t stop there. Take the budget to the program manager who will implement it and see if they have any additions or see any holes. Then use the budget categories to judge your narrative. See if everything in the budget is included in your program description and goals and objectives. You may have to go back and add wording to make them consistent. Of course, turn this around and be sure everything in your narrative is budgeted for, even if it’s to be paid from other sources.

When writing your budget narrative or justification, don’t just include basic information. Briefly tell what the major project staff will do and show how you arrived at significant numbers (Staff will be paid at agency rates, equipment bids from suppliers, rent prorated according to FTE project personnel, 400 chairs @ $5 each, etc.).

Finally, make the budget easy to read. I like to present a complete budget on one page so the reader can get an overview of the project and see relationships at a glance, even if its just a summary can just be a summary. In some cases such as complex projects or construction you may need to include a more detailed budget breakdown as an attachment.

Developing the grant budget can be part of your grant strategy. Can you strengthen your case for funding through your choice of budget format? Does the budget make the project easier for the reader to understand? By thinking of the budget as another narrative element which helps tell a story, like the needs statement or evaluation, you can add interest to the dry numbers at the end of your proposal.

But those clever evaluators have been developing tools that can be very useful to us in doing grant project planning and presenting goals and objectives. One major evaluation tool which is gaining wider usage is the Logic Model. Used correctly, a Logic Model can help in writing the body of the proposal, improve services and provide all of the ingredients for making evaluation a snap.

As funders increasingly move towards wanting specificity and results, we see RFP’s and guidelines asking for things like “outcome-based evaluation”, “best practices” programs, and “sustainable” organizations. Describing these parts in a narrative can get pretty complex and boring, the death of fundable proposals. We’ve all had examples of RFP’s that required so much detail that the heart of our program gets lost in verbiage. Wouldn’t it be easier if you could just draw a picture?

You can! A logic model is a visual presentation of how your organization does its work — the theory and assumptions underlying the program you’re seeking to fund. It shows the relationships among the resources you have/need to operate your program, the activities you plan to do, and the results you hope to achieve.

Drawing # 1 shows the components of a Program Logic Model.

Resources

Activities

Outputs

Outcomes

Goals

Each component is linked to the next in a conditional logic “If-Then” relationship, like computer programming in Basic. If you have access to resources, Then you can carry out program activities. If you carry out program activities, Then you can deliver program services (outputs). If you provide program services, Then clients will benefit (outcomes). If your clients benefit, Then hoped for changes will happen in your community (impact).

In the familiar grantwriting format of developing goals and objectives, goals may become outcomes or impact, and objectives can roughly translate into outputs. The following two examples show the theory and practice of developing a program logic model. They also include a feedback loop (the arrows at the bottom) for Continuous Quality Improvement programs.

Drawing # 2 defines the components and examples of each one.

© 1995 The Evaluation Forum  - Used with permission

Drawing # 3 is a sample Program Logic Model for a School and Community Violence Prevention Project.

© 1995 The Evaluation Forum  – Used with permission

The obvious advantage of a logic model for the grantwriter is that one simple graphic shows the funder how their grant works with other community resources to carry out your program, and provides the basis for evaluation. Talk about a picture being worth a thousand words!

When developing a Project Logic Model, evaluation professionals recommend starting with Impacts/Goals and working backwards through outcomes, outputs, activities and resources. If you’re working with an organization’s program staff, this helps them focus on what the funder wants (results) rather than what they want (funding). This can result in thinking of new ways of doing things and leaving behind practices that may only loosely be linked to the program’s intended outcomes.

In this brief article I’ve covered the basics of a Program Logic Model, which is perhaps most useful to a grantwriter. There are other types of logic models with other uses, a Theory Approach Model that is useful for internal planning and “making the case” for a program, and an Activities Approach Model that’s most useful for implementation. There is, of course, much more to the subject. Fortunately, there is a wonderful and easily accessible resource on logic models that goes into more detail, including forms and step-by-step instructions. On the Kellogg Foundation website www.wkkf.org, on the left hand side of the home page, is their free 62-page Logic Model Development Guide, downloadable as an Adobe Acrobat (.pdf) file.

If you get further involved and want to start using logic models for evaluation, check out The Evaluation Forum, a program of Organizational Research Services in Seattle, www.organizationalresearch.com. They have several affordable publications on outcome-based evaluation.