September 6, 2016

The Basics Of Grants For Food Businesses (Part 1 of 2) (PODCAST)

food business grantsAre grants really a way for small businesses to get free money that doesn’t need to be paid back?  This is just one of the myths about grants that we cover in today’s podcast along with information about how to find whether or not grants may be applicable to your business.  Join us for this first in a two-part discussion with Dawn Meader McCausland.


Jennifer: Hi, Jennifer Lewis here from Small Food Business. Today I’m with Dawn Meader McCausland. She is a community development consultant with a special interest in food entrepreneurship and culinary business incubation as a strategy for community economic development. In addition to grant writing, Dawn provides strategic planning, management consulting, evaluation and community analysis services for public, nonprofit and machine driven private sector clients, working to expand housing and economic opportunities in their communities. In her own community, Dawn is actively involved in a food entrepreneur network and various nonprofit projects.


Dawn holds a masters of city planning from the University of California Berkeley and a bachelor’s in ethnic studies from Mills College. She earned a certificate in business incubation management from the National Business Incubation Association and has studied best practices in food system funding and food business planning through a variety of trade association programs. Fueled by chocolate, Dawn is also the chief chocolatier of her new food venture, Fireworks Chocolate LLC. She’s with us today to talk about grants and if they are a possibility for food entrepreneurs as they look for additional capital to start and run their businesses. Thank you so much for joining us, we really appreciate it.


Dawn: I’m happy to be here.


Jennifer: Tell us first, for those of us who might not be familiar, what exactly is a grant?


Dawn: A grant is money that’s given either by a private foundation or a company or a public entity for the purpose of achieving some larger goal or mission that they have. The key point about a grant that everybody is attracted to is that it generally doesn’t have to be repaid as opposed to a loan. It’s money that you can keep and use for that goal that you have.


Jennifer: That’s pretty enticing for food entrepreneurs. What are some of the myths about grants that some people may have especially those who are looking to start a business and might be interested in getting a grant to help them do that?


Dawn: I think one of the main things is that people think that there are a lot of grants out there and that it’s just a matter of finding them. When it comes to starting a business and being an entrepreneur there aren’t a lot of grants. It’s a limited pool. Most of the grants are for a particular social purpose or some larger purpose that they don’t really fund individuals or businesses themselves. They generally fund nonprofits or some other social enterprise. The other thing is that, people think of it as free money.


The reality is that finding a grant, applying for it, all of that takes a lot of work. It’ll take a big investment on your part. The grants are also, people tend to think of them being great for startups because they can be used for general capital expenses or general sort of expenses. That’s not true either. Most grants are not designed for general operating cost. They are designed for what are called program costs which means they are specific direct costs to achieve a particular mission. They don’t offer a lot of flexibility.


Jennifer: It certainly sounds that there are a lot of pieces in there that people need to consider. How though are grants different from business loans? That’s something that most entrepreneurs at least are familiar with as a concept.


Dawn: As we touched on one of the main differences is that grants don’t need to be repaid. It’s something that you are granted. You are given it as, it’s sometimes called an award. That allows you to use it to promote some sort of like local agriculture project or it’s granted to support say a low income entrepreneurial endeavor in a community. It’s really that you are making a promise to do something and someone is giving you money to fulfill that promise. You don’t have to give that money back.


In addition, grants are focused on the impact that that work will do for some larger good. That could be the environment, it could be a community. It could be certain types of people, like providing jobs to homeless people for example. When you are being evaluated for a grant, the criteria that’s being used is really very different than a loan. They are looking at how will our investment in your project make the biggest difference towards these larger goals that we have and towards making a positive impact in a community or on the environment. They are not evaluating in the same sense of profitability that a lender would look at. They are looking at, will you make the biggest difference and will that investment pay off for us?


Jennifer: You mentioned a minute ago, talking about the fact that grants typically are funding very specific things and may not just be for every day operating capital. What type of things or what kinds of things do grants fund?


Dawn: Grants fund a number of different things. It really goes to the mission of the funder. That might be an environmental mission like we talked about a little bit. It could be for new green technologies, it could be for conservation of land, or farm land, preserving open space, those sorts of things. There are also a number of grants that kind of blend over into the food world that are oriented around health and healthy eating. Trying to lower obesity rates for example. Some of those grants go to people who are doing healthy cooking classes or doing food programs in schools and those sorts of things.


Then there is a whole set of them around youth involvement in food and then agriculture, doing school gardens for example or trying to do job training programs for youth. Job training itself is something that a number of different grants for, if you were running a nonprofit bakery for example whose purpose was to employ disadvantaged people, then that would be something you might get a grant for.


There is also in a local level some grants around what we called brown field remediation and that would be contaminated sites. Sometimes there is funding available to turn an empty lot into a community garden for example. That would be around fixing the environmental damage that’s been done on that property. Then there is also some local sources around downtown revitalization goals and tourism. If someone wanted to put together a food festival for example that might revitalize a declining neighborhood, then that might be a project that they could go after funding for. There is some stuff around cultural heritage, around food particularly in Native American food sovereignty kinds of issues. There are some grants there.


Then on the economic development side there are a couple different types of grants that focus on trying to help farmers, whether it’s conservation on their land, developing new products or certain kinds of crops that might be more profitable and in transitioning those businesses towards exports. Sometimes the states will provide grants that will help you position yourself to export your products.


Then as we talked about a little bit around the healthy food. There is a number of grants right now that are focused on healthy retail, trying to get corner stores to offer more produce or opening up grocery stores and other food markets in food deserts. Sometimes people will get funding for like a mobile food truck that takes fresh produce into an under-served neighborhood, or a food hub which is an aggregation center for local produce, or food incubators which help people process those local foods into finished products.


Jennifer: Who gives grants? Because you’ve mentioned that sometimes it might be states, sometimes it might be the federal government. Can you quickly highlight for us who actually gives grants?


Dawn: Yeah. Government agencies give a number of grants, some of the biggest ones that food entrepreneurs might look for would be the USDA. They are involved in a lot of agricultural related grants, some conservation grants, and some healthy food grants. The department of health and human services also has some health oriented food related grants like for a healthy retail and school lunch types of programs. On the economic development side for business and job development, the sources there might be the economic development agency or the community development block grant. The block grant is a little bit unique in that it’s a federal grant but it’s administered at the local or the state level. You’d actually be looking to see if your jurisdiction gives out its own community block grants which are known as CDBG grants or if it’s something that you would go to the state for.


They are focused on trying to create jobs and trying to improve the well-being of incoming and marginalized communities. Then also the local foundations. It could be a community foundation, there are also corporate foundations. Some of the companies that have a larger social mission. They have grant making activities as well. They might be interested in promoting school gardens, like Annie’s Homemade has a school gardening grant program, or Ben & Jerry’s is really interested in kind of the system change and advocacy around food.


Then the states, they have some farmland related and value added and grants and also some that are focused on job creation. The trick is that on a state and the local level, it really depends on where you are living. There is no, it’s not as if every city has the same opportunities. There are some cities and some regions that are really focused on promoting local food and on environmental sustainability, or on these health goals. They make the funds available but they are not necessarily available to everyone. You kind of have to check with all of those different sources.


Jennifer: Just as a note, some of these resources that Dawn was mentioning, we are going to put links up on the website so that you can check those out for yourself.


Dawn: I think one of the helpful things to keep in mind when you are trying to find a grant is to really think about in the project that you want to be doing. In grants they often call it a project. People might be thinking of it more in terms of a non profit or a business. If you take all of the activities of that enterprise, we’ll call it and you break them into pieces. Those would be projects. Part of that project might be that you want to like I said do a food festival or that you want to have a fresh fruit stand or that sort of thing. You are going to break those into projects. Then the question is, who is going to benefit from that. If the answer to that question is that you are the only beneficiary, meaning that at the end of the day I’m going to make a profit that’s going to support my family, and that’s fantastic. There will only be a limited number of grants that will really get involved in that.


That would be a couple of the farm grants for example that the USDA does that are focused on helping farmers survive in such a tough enterprise. Other than that, if the answer to the question is, there is an entire community that’s going to benefit. There are certain people that I’m really targeting to benefit. I really want to employ at risk youth. Then you would look at grants that are focused on solving those problems. What’s the problem that your project is going to solve and who is going to be impacted in a positive way from it? That will lead you to thinking about what kinds of grants to go after. If it’s that you want to do some sustainable agriculture, then you would look at more of the environmental or the organic focused foundations.


Jennifer: Then how do entrepreneurs actually find grants? After they’ve gone through that thought process to determine who would benefit, how do they actually find what grants might be out there?


Dawn: There is a number of different websites that are helpful in doing it. Some of them require you to subscribe and the subscription sites, for example The Foundation Center has some, it’s a clearing house for different grants. They have some of them that you can access for free, but they also have directories that you can purchase. For example they’ll list all of the different grants by different kinds of causes and topics. You might get one that’s all about environment and animal welfare, for example if that were in your focus area. You can also get a subscription to it and search the complete database that they have. A lot of libraries have those as well or there might be other nonprofit support centers in your community that would provide some access to those lists, so you don’t have to pay for it. On the federal level, is the clearing house for federal grants. You would go in there and search based on topic.


Jennifer: Is that a free website?


Dawn: Yes, that’s a free website and then also the USDA I mentioned is a great source for grants. They have a number of ways to get out their information on their website. They have guides that summarize all their different programs which include lending and other kinds of financing and then also the grants. They have an ad list, it’s called the know your farmer, know your food ad list. It allows you to look and see what they funded in your area. In general when you are looking at a funder you always want to look and see what have they funded in the past, and do I fit in what they funded? That will give you the best indication.


You can read the eligibility requirements but at the end of the day it’s kind of what they’ve done in the past that will give you the best picture. For the federal and state listings, there is a website called and it allows you to search for different kinds of financing and grants. You can look at it from the state and from the federal level. It allows you to drill down based on certain kinds of industries or demographics that you might fall into.


State and local governments will also have things posted on their websites. Again, we can list more of this on your site but there is also some good resources for agricultural grants. Some good clearing houses for that. Some communities also have what are known as food policy councils or food systems groups. Those are advocates for local agriculture. They are usually a consortium of local government and non profit and actual producers. They would know a lot about what might be available. Getting in touch with them would be really helpful. You can also hire a professional grant writer and they can do a search for you like the American Freelance Grant Writer Association can give you some referrals about that as well.


The main thing is, just it takes a fair bit of work to do the searching and a little bit of Googling with some keywords. To that point, part of it is figuring out what the terminology is for what you were trying to do. The nonprofit world and the government world are kind of famous for making up cool little terms for what they do that aren’t the same as the private business world. Learning for example with value added. We might call someone who takes an agricultural product and turns it into a finished product. We’ll call it by what that product is but in the government world they tend to call it to value added. Understanding those terms will help you find the grants.


Jennifer: This is all wonderful information and I have a few more questions for you. Rather than turning this into an incredibly long podcast, I’m going to keep talking to Dawn and record that separately. Be on the lookout for part two of our podcast about grants for food businesses.


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