September 19, 2016

In The Mix When It Comes To Obtaining Grants (Part 2 of 2) (PODCAST)

Grants2Continuing our earlier podcast discussion with Dawn Meader McCausland, in today’s podcast we go more in-depth about the logistics of obtaining grants.  Please note, in this podcast we refer back to material mentioned in Part 1 of this podcast series.  You can listen to/read the transcript that podcast interview by clicking here.


Jennifer:We are going to continue talking about grants today and going to a little bit more detail. As a reminder, Dawn 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 mission driven private sector clients working to expand housing and economic opportunities in their communities.


 In her own community Dawn is actively involved in the food entrepreneur network and various nonprofit projects. Dawn holds a master’s 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 for a variety of trade association programs. Fueled by chocolate, Dawn is also the chief chocolatier of her new food venture Firebox Chocolate LLC. Continuing on our discussion from earlier, could you give us a little bit more insight into who is eligible for grants?


Dawn:Yes. Grants are given out to a couple of different categories. Predominantly, most grants are given to nonprofits. You’ll see them mentioned by the 501c3 as a requirement. That’s the federal designation for a nonprofit entity. That means it has to be fully incorporated as a non profit. Not just that you don’t intend to make a profit. If you were to incorporate it as an LLC you wouldn’t be eligible. It’s really important to do some homework about how to form a nonprofit if you were thinking about doing a lot of grant based work because it’ll be really important. One way to get around that is to get a sponsor. That would be to collaborate or affiliate with another nonprofit. Then that nonprofit applies for the grant on behalf of the project that you are doing together. They’ll sometimes take a cut of that money as a management fee but then the rest of the program support money can go to what you are doing.


 For example, if what you really wanted to do was to teach healthy eating classes to children or to certain groups of people that had health risks, then you might collaborate with other health oriented groups in your community. Maybe there is a community hospital that has a foundation that has a shared mission. May be there is a community center that is also trying to do healthy living activities. You might approach them and say, “This is my mission, this is what I want to do. Can we come up with a project together, and could you apply for the grant on my behalf, and then fund me to do it?” There is also a subset of grants that support entrepreneurial programs. What I mean by that those are support organizations such as incubators or small business development centers, training programs, that support other entrepreneurs.


 If what you want to do is create more opportunities for other entrepreneurs, then you might qualify as one of those. Those sometimes need to be nonprofits, sometimes they don’t. Then there are a very small number that fund actual companies and entrepreneurs directly or that fund individuals directly. Again, very small number. You’ll find them sometimes from the USDA as a producer grant or as an agricultural business. Sometimes the grants will be for a cooperative or a network of businesses. If you have other peers that are interested in the same sort of activity, you can come together and sometimes be eligible as a group. Most grants are interested in funding, something that benefits more than one person or more than one entity. That’s one of the key requirements.


 They also don’t like to fund startups, which is part of the problem that most of the time the people interested in grants, they want it as startup capital but the grant writers see that as very risky. They want to know that you have some sort of track record. Again affiliating with an organization that has some of that credibility can make it easier if you are a new project. Then eventually you can spin off on your own if that’s part of your goal but at least kind of incubating under another project can be helpful.


Jennifer:That’s very interesting and very helpful to know especially for anybody listening who is in the startup phase. Can you talk also a little bit, and I know this is a continuation of what we were talking about in the last podcast, but just get us a little bit more into what projects qualify for grants?


Dawn:The qualifying project is going to be specific to the actual grant. One of the first things that you want to do, like we talked about is think about who is going to benefit from your project and make a ladder list and then drill down into grants that are focused on what are called outcomes from that. What’s the big change that you are going to create? Is it that you are going to help people to eat healthier? Is it that you are going to help conserve farmland or that you are going to run a kitchen incubator that’s going to help create a bunch of jobs in your community? All of those things are what are often called outcomes.


 What’s the good that you are going to do? At the end of the day if you did all the activities involved, what would be the big benefit? The grant’s going to be focused on that outcome, not on how you get there as much. Some of those things could be starting some sort of an enterprise like we mentioned, trying to start some sort of a nonprofit or what are sometimes called social entrepreneurship adventures of enterprises. What they are is, a social enterprise is sort of the blend of a for profit business with a nonprofit mission. They are sometimes called double or triple bottom line enterprises.


 The idea is that you are going to have a self sustaining or sometimes even profitable business but at the same time you are going to create returns as it’s known, social returns or environmental returns that help these larger problems that our society is facing. A social entrepreneurship or social enterprise would again be focused on a particular goal. I’m going to provide job training for young at risk youth. We are going to start a cooperative farming venture and we are going to train new farmers, because we know farms are aging and there needs to be a new generation of farmers. There is a number of grants out there to help train farmers or to help start a cause for that.


Jennifer:In our last podcast we talked about where people could go to look for grants and information about that is on the website. Can you give us a little insight into how does one go about applying for a grant, what sort of steps are typically involved?


Dawn:As we talked about the biggest challenge is finding the right grant and understanding really what they are going to fund. We mentioned before it’s good to look at what they funded in the past and to study their terminology. It can also help to take a grant writing class so that you understand what’s really being asked by the questions. There are these ways that they talk about outputs and resources and outcomes that may not be the same way you are used to using those words and knowing really what they are expecting to see. They may be expecting you to come up with specific numbers about how many jobs you are going to create or what those impacts are going to be.


 You want to read the requirements really careful, like we talked about the grants can be focused very narrowly on certain things or be very broad. Both of those situations can be kind of confusing. Especially when it comes to federal grants, if you are thinking of any of the USDA ones, just spend a lot of time reading and re-reading it and ask other people to read it and how do they understand it? Make sure that you get what those requirements are. Then it’s also important in the grant world to look at who else in your community is doing this work. Funders really don’t like to reproduce things already happening. They may expect you to combine forces with another nonprofit or to be affiliated with them in some way. They may need to hear from you how you are different from other things that are already going on in the community. How is there a gap in what already exists?


 You want to do your homework. Then there is a lot of work that goes into outlining your proposal and making it persuasive and gathering all the documents together. The federal grants in particular, they are very specific and you want to follow those instructions very carefully because you’ll get disqualified. There isn’t a lot of allowance for that. Registering and other online systems and stuff like that can also be kind of tricky. You want to do that really early. You may also need to create a fairly detailed project budget and some resources on the foundation center website and those kind of places can help you understand how to do that. Then you actually write it and submit it. Then you usually have to wait quite a while to find out if you got it.


Jennifer:This isn’t something that you can sort of turnaround overnight and expect an answer the next day?


Dawn:Right. Unfortunately most grants, a lot of them are only open at certain times of the year. You may have to wait six months or nine months until they are accepting applications again. Then once you submit it, especially the federal grants and stuff, it may take another six months to hear back. Like we talked about it earlier, it’s really important to think about this as a long term strategy for your overall mission and not as a quick and easy source of capital when you are first starting out.


Jennifer:Thank you. That’s really useful to know.


Dawn:One point on that that’s also helpful to point out is that some grants, especially private foundations, they don’t allow you to submit applications with, some of them don’t allow you to submit applications without being invited. When you are looking at a funder, looking carefully at that. If they are not posting when the grant is available and what the application procedures are, then they are probably doing it by invitation only. That means that they are probably working with larger, more established causes and organizations. You have to have affiliate with one of those in order to get funded by that funder, but it being a new project they may not be interested.


Jennifer:That’s very helpful. You’d also, you’d recommended and I thought this was, I hadn’t even thought of this as something being available but about taking a grant writing class. That sounds like it’s absolutely kind of a must if you are going to seriously dive into this process. Can you give us a couple of tips on what it takes to write a good proposal?


Dawn:Yeah. There are a lot of great resources on the community colleges for example have that, and websites like The Foundation Center and some of the other non profit websites can give you some more detailed information. Mostly it’s important to think about your project from the lens of the funder. How does what you are doing fit with what they are trying to achieve in the world? That’s really how you write it. Again, you want to be thinking about the good you are going to be doing and the large impact that you are going to be having and the need that you are servicing. What is it that’s missing or what problem is it going to solve? That’s the core of the persuasive writing that’s involved in a grant.


 It’s helpful as we talked about earlier to know the funder terminology. Use that terminology but to tell it as a story, to make it compelling, showing that you did your homework in the community and that you really understand the problem that you are solving, whether it’s that new farmers are unable get started in the community because the land costs are too high. We’d want to include that data, what are those cause, what would it take? It’s great to have testimony as well to say, “This organization or this person has really done this great thing.” Or, “If this project, the funding it’s asking for, if they were to get funded it would have this great impact. Where are the folks you are trying service providing that testimony or other organizations or knowledgeable people? That can add a lot of credibility.


 Mostly when you are writing a grant, the best tip I got was from a colleague who mentioned that the three questions that you want to ask are why, why, why? Every time you put something on paper, press yourself to dig deeper. Why is that a problem and why do you know that that’s a problem and then why do you know you have the right solution? Why we are doing that activity that you are proposing, why will that bring about a solution to this bigger problem? That would really guide good grant writing. Again, you want to highlight any of the connections that you have in the community or to other groups or to the stakeholders that you are trying to serve in order to add credibility and to show that you are not doing something that’s redundant.


Jennifer:You’ve given us a lot of great insight. Can you tell us, do you have any words of advice for food entrepreneurs who might be considering looking at grants as a means for funding their businesses?


Dawn:Sure, one of the important things is to think about whether or not it’s going to be worth it to go into this. Like we talked about, it is kind of a complicated endeavor, there is a lot to learn, preparing a grant with the help of somebody else can be costly. You really want to weigh out whether or not you feel like you have a good chance of getting it. The folks who have the best shot are going to be those who have some sort of a clear social or environmental mission that are involved in agriculture or animal welfare in some way or that are in a community that has various kinds of impacted groups, whether be a low income community, or you are trying to improve the lives of someone who is homeless or in need in some sort of way.


 Those missions are really going to be the most persuasive as opposed to just I want to start a business myself and support my family. That’s unlikely that you are going to get much funding or that the funding that you get would be worth that effort. Part of it is because it takes so much time to find and to learn how to do it, to prepare and then to wait. Grants come with a lot of strings attached. There are a lot of restrictions often on how you spend that money and what you spend it on. Many grants won’t let you spend it on certain capital improvements or construction cost. For example, they might not pay for general overhead expenses like insurance or something.


 Sometimes what happens is people end up creating work for themselves in order to fit what the mission of the grant is and what the allowable expenses are for the grant. Then you might have to hire more staff or take a lot of your own time to do something to then get reimbursed for it and again you have to ask, “Is this core to my mission and to what I’m really looking to accomplish?” If it is, then it can be worth it. They also often require a lot of tracking and reporting.


Jennifer:I was going to ask about that some time.


Dawn:Yeah, a lot of book keeping and receipt keeping and all of that.


Jennifer:You’ve given us a lot of things to think about in terms of why entrepreneurs might not be interested in looking at grants. What are some of the positives involved with grants?


Dawn:There are a lot of benefits to it. I think the exercise of applying for a grant, in a similar way to writing a business plan or a pitch to an investor, it really forces you to distill not only what you want to do but why it matters. I think the more practice we have in honing that vision and really outlining. A lot of grants require you to create a work plan where you break down all the steps involved and how long it’s going to take and whose help you need to do that? That exercise in itself may be worth some of the time you put in regardless of whether or not you get the grant. If you approach it from that perspective, then it can be more rewarding.


 They also will, like we talked about, often want you to look at, what the landscape is around this issue in your area. Are there other people doing similar work? How is your project going to be different? How do know it’s going to make an impact? That homework is also extremely valuable because it may mean that you need to get out of your head and out of your office, and get your feet on the ground and meet other people.


 That will expand your network. If they are asking for letters from supporters or you need that testimonial like we’ve talked about. Then that may get out of your comfort zone to really make those connections, make your case to other people. In the end those community relationships are what are going to sustain any kind of a social mission or environmental mission project. It’s really important to build those and that can be valuable. Also funders sometimes, they talk to each other a lot. Once you do get one grant, sometimes you’ll get an invitation from an invitation only funder on the basis of the fact that you’ve been funded by somebody else. It can, once you have some credibility in the grant world then it can also grow additional opportunities for you and for others in your community or your customers. They may also see it as a kind of endorsement. The grants themselves can be quite valuable to build community reputation.


Jennifer:You’ve given us a lot to think about and that for some entrepreneurs, this going down the grant path is not going to be the right path for them. You mentioned that there might be some other options that they can think about? Do you mind to sort of quickly highlighting what some of those might be?


Dawn:Sure, yeah. In addition to small business loans which you may have already discussed in other times. There is also micro loans that there is online platform for them and then there is also local community lenders, they are known as community development finance institutions. Those can be lenders that might have easier requirements to get the loans than your typical business loan. They may give you a smaller amount but do it at a better interest rate. For example, the provider that kind of supports.


 Looking for those CDFI lenders or leveraging things like Kiva Zip which is an online platform where you can collect donations from the community. Then use that it compile a loan together. Crowdfunding is also a really good option. The benefit of crowdfunding searching for grants is that you can also at the end of the day walk away with what is essentially free money and that you don’t have to pay it back. It provides a lot of publicity. It’s also an opportunity to kind of test the market for a product and see if your assumptions about the support for the idea are there.


 The trade-offs there can be helpful. There is also a number of different opportunities that the government and other agencies offer that in a sense function like cash, even though you are not getting cash. You really want to be thinking about the whole picture of your finances. If you are reducing cost, then does that essentially have the same value as getting some sort of a cash grant? Some of the things that might do that would be tax credits. There could be certain kinds of business tax credits. In certain neighborhoods you might get tax credits for employing people or for starting a business because they are trying to revitalize an area. Those will be something to look at. Then there is a lot of technical assistance and training programs that you can get for free or low cost that can really help you scale faster, and kind of get you that income faster.


 There are incubators that can reduce the cost for startup. A lot of colleges and other universities have entrepreneurial clinics where you can get some free help. I wouldn’t undervalue those. There is also business plan contest. Those are sometimes run by a small business development agency locally or other economic development groups. Then there are some by topic that are run internationally or that sort of thing but basically you submit your idea, and your pitch. Then sometimes at the end of the day, the contest will award one or more people cash, which essentially acts like a grant. There is also a number of different social service programs that have benefits that they can act kind of like cash. If you are a veteran for example, really sitting down and looking at what kinds of veterans benefits might be used to help a start a business, or again to get the training that you might need to do it.


 If you have a disability, sometimes vocational rehabilitation programs will cover cost, for example, equipment for you to start the business. In lower income communities there are often nonprofits that do what are called individual development accounts. Those are matched savings programs. If you joint up with one of those efforts, you might get some job training and entrepreneurial training from it. Then in addition every dollar you save and they’ll match it. That can often be used to start a business. Similarly other kinds of social service programs like public housing, have self sufficiency programs that are essentially match savings. At the end of the program you then walk away with quite a bit of money. I’ve seen some of those people have $25,000 to start a business with at the end of those programs. I wouldn’t write those off.


 If you fall in any of those groups, whether a disabled or might have limited economic means, then it’s really worth looking at some of those. Then of course there is always investors to think about. In the food world there are some that are mission based investors, meaning that they are focused on sustainable agriculture, they are focused on food systems as we call it. There is healthy local food. Looking for a chapter of your local slow money for example, it’s a great way to find out who might be interested in giving you either a low cost loan for your food project to take a stake in your company in exchange for some capital. Those are also great options for someone that’s expanding. Then the crowdfunding platforms that we touched on. There is one called Credibles for example that’s just for food. They function like a get certificate program but if you were just starting out and let’s say you needed to build a new barn because you are going to take on more goats for your goat cheese.


 You could resell your goat cheese basically, you are selling credits to your customers and that allows you to get all that capital at that time that you are running the campaign. Then over time they’ll cash in on those benefits like give certificates and that allows you to get the capital when you need it for the expansion and then repay it back over time to your customers and it builds up support.


Jennifer:That’s really helpful to know about. We really appreciate you sharing all of this information with us. Once again, we’ll put a lot of this information on the website, certainly links to websites that Dawn mentioned. Then one of the big ones that we will definitely make sure is highlighted if any of you listed to this and are still interested in going down the path to determine what grants might be available to you. We’ll include them there, that American Freelance Grant Writer Association link that Dawn mentioned as well because it sounds like given all of the pieces that go into creating a successful grant application, it might be helpful to have a professional help you through that.


Dawn:That can really helpful and there are some nonprofit support organizations in your area that can provide some coaching around that or asking around to find other people who have applied for grants or partnering with an organization that’s done it before. Those can also be low cost ways but hiring a professional is really helpful. I’m sure there are local groups, for example out here in Seattle, there is a local freelance writers group and they also have some great tips about how much you might expect to pay and how those contracts work.


Jennifer:Perfect. Thank you. Again, we really appreciate you taking the time to join us and share your expertise. Thank you so much.


Dawn:Always my pleasure.


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