Lessons Learned from Our Small Grant Program

Vy Nguyen, Program Director
Weingart Foundation

December 2013

Small nonprofits typically access Weingart Foundation funding through our Small Grant Program (SGP), where we make grants of $25,000 and under to organizations with annual operating budgets under $1 million, focusing on small, community-based, and developing organizations serving low income communities. Our goal is to increase access to institutional funding for these groups and help strengthen their capacity. As a point of comparison, grants in our Regular Grant Program are typically $150,000 or over and go to larger organizations.

Not many foundations of our size have devoted a similar level of resources to these types of grants, and we sometimes get asked about the value of funding smaller organizations given common questions about how sustainable and effective these groups are. Some also wonder about the impact of such small-sized grants, from both the nonprofit and foundation’s perspective. These are worthwhile questions and ones that we consider carefully. In this context, we wanted to share some of our lessons learned from the SGP and how the program continues to be an important part of our overall grantmaking.

Although the Foundation had always awarded small grants, the SGP officially started nearly 15 years ago when Belen Vargas, now our Vice President of Grant Operations, joined the Foundation as a program associate to formalize the program. Over time, Weingart continued to invest in the SGP (for example increasing maximum grant size from $10,000 to $25,000) in order to enhance its impact, and to formalize its goals and guidelines.

While Small grants have historically had an important role at the Foundation, it is especially over the past five years that our grantmaking in this area has really grown. In FY-2007, we made nearly $550,000 in Small grants at an average of $10,000 a grant. By FY2013, Small grants totaled $2.29 million and averaged $15,000 a grant. Demand sky rocketed during the height of the recession - for several years it was not uncommon for us to receive over 600 applications a year, though we were able to fund only a third of these requests. Though the SGP is a small percentage of our overall grantmaking dollar-wise, last year we made 200 Small grants, more than half of the 360 responsive grants made by the Foundation as a whole.

Today, the SGP is staffed by two program associates, Patricia Rivera and Eric Medina. While the due diligence process is streamlined compared to our Regular Grant Program, associates conduct a thorough review of each application and in addition spend a considerable amount of time on the phone providing technical assistance, guidance about our guidelines, and explanations to those who are declined. In a process that takes two to four months for each application, our president and board chair approve the grants, which are then ratified later by the full board of directors.

As the program has evolved, we continue to learn valuable lessons about supporting small nonprofits and making Small grants (including that the term “small” is relative). Through our ongoing engagement with applicants and by conducting grantee perception surveys, listening tours and focus groups, we have also come to better understand the perspective of these organizations in relation to the SGP. Here is some of what we’ve seen:

  • Small organizations have distinct strengths. There are common perceptions that small nonprofits are weak, unsophisticated, or unsustainable. After many years of funding these groups, we find that the reality is much more nuanced and that small organizations are sustainable and effective in several key ways. These organizations often have a high level of community trust and engagement, build indigenous leadership, and demonstrate racial/ethnic diversity. Staff and volunteers are passionate and committed, allowing organizations to persevere with great creativity and resilience. They are nimble and can more easily take risks, pursue innovation, and respond quickly to emerging community needs. Because they are small, many of these groups also embrace collaboration and networks as key to achieving impact. While these groups undoubtedly face challenges given their limited organizational capacity and infrastructure, their accomplishments are often impressive in the context of large-scale public and private divestment from their communities.
     
  • Small organizations play a critical role in underserved communities. Most nonprofits based in low income communities are relatively small. According to the UCLA Luskin School of Public Affairs, the median revenue for human services agencies in LA County’s poor communities is $430,000. In the SGP last year, nearly half of grantees had budgets under $350,000. In many cases, these organizations are among the very few service providers in their area. In addition, beyond their role within their communities and constituencies, these organizations are valuable for the important voice they bring to the table as advocates and the critical partnership role they play both with public sector agencies as well as with larger nonprofit entities.
     
  • Supporting small nonprofits allows us to better reach low income communities — many of them communities of color. Small grants allow the Foundation to reach organizations in highly underserved communities that, as a responsive funder, we would not likely reach through our Regular Grant Program, where grantees typically have annual budgets of $2-5 million. Having a discreet grantmaking program focused on small organizations levels the playing field for these groups and allows them to effectively compete for dollars. It also allows us as a foundation to increase our reach into poor and underserved communities.
     
  • Supporting small nonprofits allows us to fund different types of organizations, including community organizing and arts education groups. In addition to the many health and human service nonprofits we fund, the SGP allows Weingart to better reach particular sectors where organizations may tend to be smaller. For example, there are many arts education groups that, while small, play a vital role in the context of cuts to school programs. Community organizing nonprofits are often smaller as well, given that fewer philanthropic and government dollars are directed toward their work, yet they are important drivers of civic engagement and systemic social change. Small organizations in these and other sectors have been able to access Foundation dollars through the SGP.
     
  • Small grants can be especially impactful if they are unrestricted. While they have many strengths, Small grantees often face significant challenges around organizational capacity and infrastructure. Funding is usually restricted to specific programs, but organizations often take on unfunded work given their vital role in communities. All this leaves little time and money for longer term strategic thinking and capacity building. Grantees have shared with us that unrestricted support, even at the $10,000 or $15,000 level, has helped them sustain core operations and programs in critical times, as well as strengthen infrastructure. Not surprisingly, most SGP applicants request general operating support, and in response 61% of our dollars go to this category.
     
  • Small grants can allow for more “risk” taking. Many Small grantees are still developing, with lean financials, informal infrastructure and limited capacity. They are often doing impactful and innovative work but may not yet have the formal evaluation tools to demonstrate measurable outcomes. On paper these groups might not appear conventionally competitive as applicants, but the SGP creates a space where we strive to gain a deeper understanding of organizations and to some degree are able to make “riskier” grants.
     
  • Small grantees can become Regular grantees. We are extremely pleased that a significant number of Small grantees have successfully “graduated” to our Regular Grant Program. From 2009-2012, a third of SGP grantees have subsequently been able to secure a larger, Regular grant. By familiarizing themselves with our guidelines and processes, establishing a positive track record with us, and continuing to strengthen their organizations over time, Small grantees with budgets of $500,000 and over have begun to successfully access larger Foundation grants. They share that they are also able to use these dollars to leverage grants from new funders.
     
  • Small grants need to be both efficient and high touch. Given the relatively small size of these grants, it is important that the application process be appropriately streamlined. We continually look for ways to simplify, most recently creating a faster renewal process for general operating support grantees. At the same time the program strives for efficiency, it is also proudly high touch. Because many applicants have less fund development capacity and/or experience with institutional philanthropy, Weingart staff devote a substantial amount of time on the telephone providing them with technical assistance and guidance.
     
  • The SGP serves as an internal “R & D” department and staff training ground. Beyond its core grantmaking function, the SGP has also played a useful role internally for Weingart. For example, we piloted our online application process in the SGP and eventually plan to expand it to all of our grantmaking. The SGP is also experimenting with new ways to streamline our internal application review process, cutting down on paperwork and allowing us to respond to nonprofits faster. In addition, the SGP has proven an effective training ground for Foundation staff, who build knowledge about the field and empathy for nonprofits through their work in the program. Five out of our eight senior program staff began their careers at the Foundation as associates working in the SGP.

For all these reasons, grants to small organizations continue to have a prominent place at Weingart Foundation as we strive to support nonprofits doing important work in low income communities. Author and management consultant Margaret Wheatley has written that in this “exquisitely connected world,” it’s sometimes less about critical mass than it is about critical connections. While small is not necessarily more beautiful, our SGP grantees continue to inspire us with their hard-won accomplishments and teach us that impact cannot always be correlated to size.

Moving forward, we remain committed to making sure the SGP stays effective and responsive to the needs of the sector. For example, grantees have shared that unrestricted support is more effective when it is multi-year. While our Small grants are currently one year long, we have recently created a streamlined renewal process for general operating support grantees to more easily access two consecutive years of funding. We welcome your suggestions for additional ways we can improve our grantmaking, as well as your thoughts on this article in general. To send us a comment, click here. For a detailed report on our SGP grantmaking in FY13, click here.