Rants About Grants

Streamlining Grants Management - Why More Foundations Are Using LOIs

  

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I've noticed an interesting trend among PhilanTech's clients and the sector at large in the last few months - more foundations are using two-stage application processes, and requesting a letter of intent/inquiry (LOI) from prospective grantees before requesting a full proposal.

I think this is a good thing, and reflects a couple of realities in the grant seeking and grant making worlds.

LOIs are a relatively low investment way for both the prospective grantee and the prospective funder to see if there's a good fit. Think of it as going for coffee, but not for dinner (more to come in future blog posts about grant dating). If the fit isn't good, neither party has spent too much time, or invested too many resources. If the fit is good, the grantmaker can request a full proposal, which takes the nonprofit much longer to put together and takes the funder much longer to review. But that proposal will be a better use of both parties' time, since the preliminary fit was already established.

This shift reflects, I think, two trends:

• Increased competition for dollars
  • Nonprofits are submitting more funding requests
  • Foundations are receiving more requests (and generally funding fewer) and are therefore looking for ways to save time and focus their efforts on the proposals they are most likely to fund
• Funders are thinking increasingly about the administrative burdens placed on their grantees and trying to reduce them. One of the best practices suggested by Project Streamline as part of relieving the burden placed on grantees in grantseeking is to include a two-stage application process.

I predict that we'll see more of this, even as the economy continues to recover. Foundation grants remain an important source of funding for many nonprofits, and both parties will continue to streamline the process by shifting resources and processes and by using tools like PhilanTrack for online LOIs and proposals.

Photo credit: http://www.flickr.com/photos/shamjolimie/