Our highest priority is delivering value, expanding capacity, and securing funding for our clients every single day. An important way we accomplish this is by staying up-to-date on fundraising trends, accessing landscape trends across our client base, and adapting to the ever-changing challenges. After evaluating the results of the Annual Report and gathering feedback from our Grant Writing Team, Spark Point has identified three main fundraising trends that will affect our work with clients this year.
Spark Point is especially adept at advising our clients on what opportunities are realistic for them to pursue, offering achievable roadmaps to their highest probability of funding. This is especially important given the trend we have seen this past year of funders transitioning to vastly different styles of funding.
On one hand, we have seen foundations embrace “trust-based philanthropy,” focusing on how to rebalance power and decision-making amongst many stakeholders. Examples of this are funders leaning into multi-year funding opportunities, nixing site visits as a requirement for continued support, no longer requiring logic models, having a more flexible evaluation structure, and acknowledging burnout across the industry by baking self care dollars for staff into their opportunities. Although this model is rooted in the desire to advance equity in the sector, it can actually make access to funding more inequitable, as the funders do not typically make themselves available to new grantees, choosing instead to focus on their existing partnerships. Even for existing grantees, the competition is fierce. Overall, recent trends indicate that “foundations will have a difficult time maintaining their grant-making levels unless they dig into their endowments.”
For organizations looking for new opportunities, this landscape can get really tough, as we have also seen more and more funders who will not accept unsolicited proposals, as well as anonymous mega-philanthropists who are inaccessible to the average nonprofit. Further restricting access to funding is the growing number of billionaires who are getting into philanthropy as an investment opportunity. By focusing on quantifying impact of the social return and requiring highly intellectualized academic reports, by default, their dollars funnel to larger organizations with well-established infrastructures and the robust staff needed to meet such stringent requirements.
With these trends in mind, Spark Point employs a two-pronged strategy, helping our clients focus on nurturing (and growing!) their existing relationships while simultaneously evaluating new funders who are likely to support their work. This ensures every minute spent on proposals and LOIs is used with intention, focus, and the highest probability for success.
Another shift we have noticed is the downshot from the pandemic response. The onset of the COVID-19 pandemic in 2020 forced funders to trust their grantees more quickly than in the past, and they moved towards offering flexible General Operating Support funding as opposed to project-based funding. This flexibility also extended into reporting requirements, with phone calls being accepted for reports and the process overall being simplified. Funders also moved from transactional relationships with their grantees to viewing them as partners in an emergency response, even offering to connect them to other grantees who were doing similar work.
This shift was a welcomed change for direct service organizations who could execute direct crisis response, and organizations that asked for this type of funding sometimes got double what they asked for. One of Spark Point’s own clients received $2 million additional dollars above their highest projected budget for pandemic response. However, nonprofits in the arts and humanities space took a backseat, struggling for funding in a grantmaking space that did not prioritize their work.
Although many funders are continuing the trajectory of flexible funding three years later, our Grant Writing Team has noticed that, in general, pandemic response dollars are in the rearview mirror. Funders are pulling back on their pandemic response, shifting to long-term recovery as a priority, and recalibrating their funding priorities. As funder priorities shift, this creates both opportunities and challenges for the nonprofit sector. On the one hand, many organizations grew quickly to meet urgent community needs during the pandemic, and that growth was fueled by vast increases in institutional funding — funding which is now drying up. At the same time, as funders lessen grant funding for emergency response, those dollars are now available to be invested in new organizations. This shift means that there are new opportunities for nonprofits to engage with funders, a situation that hasn’t existed since the pandemic began. With smart decisions and strategic investments, direct service organizations can navigate these challenges, and nonprofits who have been shut out of new investment can seize this opportunity to sustain their missions.
Spark Point has accommodated for these shifts by strategizing with direct-service oriented organizations to clarify the reasoning behind their funding asks so they don’t outgrow their ability to sustain an opportunity. Simultaneously, we work with them to plan for future potential health crises while staying true to their mission and values. For those not in the direct service field, Spark Point assists their development teams by refreshing their mission and vision language and reframing the importance of their work in the “post-pandemic” funding landscape.
FROM MOVEMENTS TO MOMENTS
As funders shift focus away from immediate pandemic response, we have seen their giving move to two key areas: The most visionary funders who led pandemic response are now shifting dollars to support advocacy and structural change, with the goal of supporting long-term recovery efforts, and addressing systemic inequities that disproportionately impacted people of color. This shift has also included an increase in policy and advocacy funding at the state level (as opposed to the federal level). Other funders, especially smaller and family foundations, are monitoring current events and adjusting their giving accordingly. For example, in the wake of George Floyd’s murder in 2020, we saw funders focus on racial justice work. Now, though, the movement for Black Lives has moved out of the funder spotlight, and they are instead moving to issues of the moment – like the war in Ukraine or fighting anti-Semitism. In addition to societal pressure and the 24/7 news cycle, another reason these changes are occurring is that some family foundations are starting to encounter generational shifts, which can severely disrupt funding priorities and open the door for dollars to move in the direction of more “hot topics.”
The main area in which we have seen this type of shift is with respect to reproductive health via the Dobbs decision. Funders that previously divested in reproductive health are now reinvesting in it at both the foundation and individual giving level. In general, this signals to us that funders are realizing their past investments are not accomplishing what they had hoped, and they view these new funding priorities as an emergency to be planned for.
Spark Point assists organizations with navigating the ebb and flow of funding priorities by focusing on what matters. We help our clients pursue their missions, and not chase headlines and dead-end leads. Additionally, Spark Point helps clients diversify their fundraising streams in ways that make sense for their particular mission. Part of this diversification is ensuring strong relationship building, and we provide the capacity and project management systems that enable our clients to proactively build and maintain the contacts they need to be successful.
Across all of these trends, the topline is this: Things are changing rapidly in the philanthropic sector, and nonprofits need strategic guidance to navigate these changes successfully. As foundation’s tighten their purse strings to preserve their endowments in the face of decreased stock market performance, securing funding will become increasingly competitive. This economic downturn comes at the same time as funder priorities are already shifting, and nonprofits need to be thoughtful in their programming, communication, and relationship strategies in order to remain relevant — and that’s where Spark Point comes in. If nonprofits can manage these challenges successfully while continuing to be good stewards of their missions, they will be able to access new opportunities — however limited — that have the potential to grow into sustained funding over the long term.