Typology of Proposals

Once the initial submission has arrived, you can use a typology of proposals as another guidepost for review. Some foundations have strictly defined areas of interest, which limits the types of proposals they receive. At foundations with broader interests, proposals come in a bewildering array of varieties. Even in the latter case, however, we can discern some patterns.

All proposals can be divided into at least two broad categories: those that are calculated to provide a personal benefit to individuals and those that would provide a public benefit. An example of a proposal for personal benefit would be a request to a foundation from an incarcerated person asking assistance to appeal his or her sentence. This level of personal benefit is disallowed by law. When the individual in question is the grantmaker or a close relative, the issue becomes one of self-dealing. If the grantmaker chairs the board of the local symphony, a large grant to the orchestra, especially one that would pay the grantmaker's honorarium, would constitute self-dealing and likewise be illegal. Nor can a foundation make grants to that class of individuals known as for-profit corporations (unless it is willing to undertake what the Internal Revenue Service calls expenditure responsibility). You can therefore decline personal benefit requests quickly and unambiguously.

Proposals that would provide a public benefit make up the vast majority of those you receive. Traditionally, this category is divided into three types of grant requests: capital, operating, and programmatic.

Capital Proposals

Capital proposals seek support for what might be called, in the language of accounting, durable goods and services. One of the most common of capital proposals is for assistance in constructing or renovating buildings (in foundationese, bricks-and-mortar requests). Another is for the purchase of durable equipment, such as heating, ventilating, and cooling apparatus, furniture, or vehicles. Still a third is for funds to augment or begin an organizational endowment.

For various reasons, most foundations have traditionally been cool toward capital requests. (A conspicuous exception to this general disdain is the Kresge Foundation, which has created a distinguished record of support for bricks-and-mortar campaigns.) Building construction and renovation is an ongoing—in fact, never-ending—need for most organizations and is likely to appeal to other types of funders, such as individuals. The same “bottomless pit” argument is employed to disallow requests to buy equipment and is also often used regarding endowment requests. There is a strongly held belief among many foundation leaders that foundation funds, which are generated by an endowment, should be reserved for supporting programmatic activities and not merely transferred to another organization's endowment. There are several exceptions to this widespread tendency, the most notable being those foundations that make program-related investments instead of grants in response to capital requests; but as any seasoned grantseeker will affirm, securing capital grants from most foundations is an uphill struggle.

Operating Proposals

Operating proposals seek support for what might be called, again in the parlance of accounting, recurring charges. An organization must pay its bills every month, and certain classes of expenses recur: heating, lighting, cooling, and maintenance of the building; rent and insurance; supplies; and costs of ongoing programs. Many grantseekers argue that operating costs are the biggest expenses they face, and criticize foundations for being, virtually across the board, reluctant to support them. Foundation leaders counter that, according to research done by the American Association of Fund-Raising Counsel Trust for Philanthropy (Kaplan, 1999), only about 7 percent of the charitable dollar in any given year comes from foundations; clearly the big money in philanthropy comes from other sources. In addition, according to research done by Salamon (1992), charity provides only about 18 percent of the nonprofit sector's total income. Combining these two pieces of data yields the fact that foundations provide only about 1.2 percent of the total income of the nonprofit sector. If it were used to support ongoing operations, this modest amount would quickly disappear without a trace. When this money is used judiciously, however, to support innovation—the novel, the untried, the promising—it can make a considerable impact. Moreover, foundations are the only reliable source of dollars for innovation. Very few individuals are wealthy enough to provide such funds; corporations tend to support projects that are more certain of results; and units of government have been, since the 1980s, reducing their role in funding innovation in the nonprofit sector. The 1.2 percent of the sector's income that foundations provide is thus very precious and must be earmarked for programmatic innovation. With this rationale in mind, it comes as no surprise that foundation support for operating expenses is even rarer than grants for capital support.

Programmatic Proposals

Programmatic proposals seek support for innovative ideas. Accountants would liken such grants to investing venture capital in the for-profit realm. Getting new programs up and running, and testing their practicality, requires support for such activities as attending meetings (including travel and lodging), and for such costs as salaries, space, and materials. It quickly becomes obvious that many of the items that fit under the rubric of operating requests also fit under the heading of programmatic needs: salaries, space, supplies, meetings, and so forth. Indeed, what distinguishes the two is not so much the type of activity as the tenure of that activity. If the activity is of long standing, then it is “more of the same” and classed as operating. If it represents a novel approach, then it is “innovative” and classed as programmatic. Foundations often make grants specifically to build the capacity of an organization; these developmental grants are generally considered to be programmatic as well. Like it or not, most foundations are in the business of supporting innovation, and it is under the heading of programmatic grantmaking that they focus nearly all of their intellectual and financial capital.

A special type of programmatic proposal is the request for what is known as a planning grant. Typically, this would be an effort to research the practicality or feasibility of launching a major project. In some cases, a planning grant explicitly lays the groundwork for undertaking a major effort, including such activities as hiring the first staff or setting up an office in the field. On the one hand, there are sound reasons to make planning grants, not least among them being the opportunity they provide to identify unworkable ideas before a major grant is made. They also can jump-start projects by taking care of some of the organizational work before the project is launched. On the other hand, planning grants can introduce complications, particularly in the case of those grants that lay the groundwork for a larger project. These planning grants amount to a virtual promise to fund a larger grant; even if the planning process reveals serious problems, it is often very difficult to decline interest in a larger project. Planning grants are thus a valuable tool for studying feasibility but are dangerous when used to jump-start a project.