Traditionally the nonprofit sector has received support from three distinct revenue streams:

• 50% from earned income, such as fees for service, admissions, enrollments or seats;
• 30% from government, from local municipalities to federal agencies;
• 20% from contributed income, including foundations, corporate giving and individuals.  (The New Nonprofit Almanac & Desk Reference, 2002)

Government

•  Scope and character of government support is changing
•  Reduced federal spending, state and local government deficits
•  Governments diminished role as provider of safety net services and core community benefits
•  Government priorities have shifted away from social spending while needs have increased
•  Nonprofit sector being asked to fulfill increased demand for services
•  Nonprofits have less access to government support
•  Funding programs have been reshaped by new priorities, altered values and philosophies, changing constituencies and increased requirements, especially documentation and evaluation.
•  Nonprofits eligibility for support can change from year to year

Corporations

•  Corporate giving has been hard hit by economy
•  Many corporations are aligning their giving with marketing and business goals

Foundations

•  Many foundations have suffered from several years of significant reductions in their assets
•  Total dollars awarded by the nearly 65,000 U S foundations decreased 2.5% in 2003
•  Foundation assets have dropped an average of 10% since 2000 but recent asset growth is encouraging
•  The number of new foundations being created has slowed since the bubble of 1990s

Increased Competition for Funding

•  Competition for limited government, corporate and foundation support is intensifying
•  Many nonprofits are attempting to diversify or expand their revenue streams
•  The overall number of nonprofit organizations recognized by the IRS has grown by 5.3% each year since 1993 and by % between 2002 and 2003, to a total of 964,418 nonprofits in the US
•  According to Charity Navigator, new charities are being created at a rate of 50,000 per year

The Value-add of Foundation Support: 

Money, Influence, Time

Foundations add value to a community by selecting the best grantees and helping them obtain a higher social return.

Foundations bring additional resources to a community by identifying effective projects and attracting other funders to support the work.

Foundations create value when they work closely with a grantee as a partner bringing information, an outside perspective, and management assistance to improve effectiveness of a particular organization.

All foundation have a framework within which they do their decision-making:

    * Mission of Grantmaking Organization
    * Focus general, issue specific
    * Philosophy conservative, risk taking, traditional, entrepreneurial
    * Geographic Limitations
    * Asset Size Payout requirement of 5% of assets
    * Type of foundation -  public, private, corporate, family, operating
    * Governance Structure
    * Process for Grantmaking

What do funders look for?

    * Legal tax exempt status
    * Mission match
    * Organizational strength and qualifications to carry out program
    * Leadership board and staff
    * Demonstrated need
    * Community support
    * Planning & realistic business model
    * Financial health
    * History and track record with programs
    * Application of best practices
    * Outcomes
    * Collaboration, no duplication of services
    * Sustainability

Click here to read about the different 501(c) organization types from Wikipedia:  http://en.wikipedia.org/wiki/501%28c%29#Types

Click here to read about nonprofit laws in the US from Wikipedia:  http://en.wikipedia.org/wiki/United_States_of_America_non-profit_laws

Amy Sample Ward and Megan Wentworth