Proposal Review & Analysis: A Workshop for Better Grantmaking

1. Proposal Review & Analysis: A Workshop for Better Grantmaking Presented by Louis J. Beccaria, Ph.D. President/ CEO Phoenixville Community Health Foundation

2. Guidelines: You Get What You Ask For!

3. Guidelines: You Get What You Ask For! Why Have Guidelines? • Improves the foundation’s stewardship • Enables more efficient proposal evaluation • Promotes more fairness in proposal evaluation • Allows for exceptions, when required • Promotes grantmaking impact and effectiveness • Protects trustee/directors and staff from inappropriate requests • Projects an image of professionalism and organization

4. Guidelines: You Get What You Ask For! • Components For Guidelines • Geography • Primary area • Secondary area • What’s “IN” – What’s “OUT”: You decide • Founding principles of your foundation • Changing needs of the community • Foundation’s asset size • Fields of interest of the foundation

5. Guidelines: You Get What You Ask For! • Components For Guidelines (cont.) • What’s “IN” – What’s “OUT”: You decide • Types of grants awarded/not entertained: • multi-year • matching/challenges • capital • program specific • general operations • capacity building • other

6. Guidelines: You Get What You Ask For! • Components For Guidelines (cont.) • Grantmaking Process • frequency of distribution meetings; determines deadlines • by invitation or open-access • letter of intent or full proposal • common application form or not • phone calls/office visits/site visits • frequency of grant request submissions • turndowns • decision making process • grant agreements

7. Analyzing the Proposal

8. Components of a Good Cover Letter • Should be properly addressed • Can serve as transmittal letter or proposal summary • Summary should include brief statement of: • identifying organization and its credibility • problem(s) to be addressed • goal(s) and objective(s) • program approach/length • amount requested • number of people served

9. Components of a Good Cover Letter (cont.) • Should be asking for something within the realm of possibility from your foundation • type of grant • size of grant • area of interest • Should be signed by the top authority: the Executive Director, President, or Chairman of the Board • Should be brief (1 page)

10. Components of a Good Introduction Section • Should contain the organization’s brief mission statement • Should have a brief history of the organization • how, why, and when it was started • Should contain information that enhances the organization’s credibility • activities • accomplishments • credible people associated with the organization • Should point out the organization’s niche or special place in the service delivery network • Should point out briefly how clients/community benefit from the organization’s work

11. Components of a Good Need or Problem Statement • Should make a connection to the previously explained organizational history • Should define the problem locally as well as nationally, if relevant • Should support the existence of the problem with evidence both statistical and anecdotal • “why” the funds are needed • Should note the community assets upon which solutions to the problem(s) can be built • Should be capable of being addressed within the resource constraints (time, money, staffing, available expertise) of the organization and the funder

12. Components of a Good Program Goals and Objectives Section • Should answer the questions: • What is the solution to the problem you have just explained (goal)? • Is the problem, as outlined, being addressed in full? • How will we know if you have addressed the problem (objective)? • Goals should be broad (e.g., promote physical, emotional, social, and spiritual wholeness for homeless families) • Objectives should be specific, measurable and time-limited (by June 30, 2008 provide services to 12 homeless mothers with 3 to 6 children…including case management, rental assistance and a parenting program for 12 to 18 months) • “what” you are going to do • Both goals and objectives should be realistic, attainable, and worthy of your money

13. Components of a Good Strategy/Methodology Approach Section • Should describe the specific activities taking place • Should give you a clear idea of how the activities will produce the desired result • Should be specific about what staff or volunteers are doing with clients and when • Should be realistic • show how this approach can be less time consuming, less costly, and more effective

14. Components of a Good Strategy/Methodology Approach Section (cont.) • Should be within your guidelines • Should be directly related to all aspects of the need/problem statement • Should directly address the goals and objectives developed in the proposal • Should be practical/reasonable/doable • Should be based upon sound and accepted service delivery principles or model

15. Components of a Good Evaluation Section • Assessment measures should be built into the program at the program design stage • Evaluation measures should be directly related to each objective noted in the proposal • Evaluation measures should be outcome/results/product-oriented – not just process-oriented • Ideally, evaluation should address qualitative as well as quantitative aspects of the program • General concepts being evaluated (e.g., self-esteem, independence, respect for authority, cleaner environment) should be addressed via specific social indicators of the concept • Should demonstrate some prospect for meaningful practical impact on the problem(s) being addressed • Should indicate how the results will be disseminated in some way

16. Components of a Good Budget Section • Should contain two major sections: • salaries/benefits • operating expenses • Should be as specific as possible • Should include any in-kind contributions involved in the program • Should contain an allocation of expenses across the line item • total cost • amount requested of funder • in-kind contributions from other sources • amount of dollars from other sources • in-kind contribution from requesting organization

17. Components of a Good Budget Section (cont.) • Questions the funder should be able to answer in the affirmative: • Will this be a good social investment? • Is there a leveraging opportunity here? • Is a match or challenge grant appropriate for this grant request? Reasons for a match/challenge requirement: • broaden funding base • encourage funding stream diversity • encourage community support • save fdn./corp. funding dollars • test organization’s fund development capability • Is this a good opportunity for financial partnership with other public or private funders?

18. Components of a Good Budget Section (cont.) • Should include a budget narrative as an attachment to explain difficult-to-understand or “red-flag” items • Should reflect reasonable costs in your market area • Should be realistic in addressing the stated problems and objectives • Should contain a reasonable amount (e.g., 10-15%) for administrative overhead expense

19. Components of a Good Future Funding Section • Should demonstrate some strategic and creative thinking for the program’s future financial sustainability • Should include, if possible, mention of self-generated income; e.g., fees, special event income, annual fund allocation • Should include, if practical, mention of contract-related future income from public sector or third-party groups • Should include some thought about efficiencies that have been realized after the start-up cost are no longer a factor

20. Components of Attachments Section

21. Components of Attachments Section • Statement that the IRS public charity tax-exemption is still in effect (IRS letter) • Should expand upon issues mentioned in other sections (studies supporting claims made, additional statistics, previous reports produced by agency, critical reviews on organization’s productions, samples of publications • Should include support letters from other agencies indicating plans to cooperate (if applicable) • List of board of directors and their community function

22. Components of Attachments Section (cont.) • Copy of organizational budget • Copy of project budget (if applicable) • Articles of incorporation and by-laws • Copy of most recent independent audit and 990 form • List of public/private funding sources in past fiscal year • Copy of strategic plan (if available) • Copy of PA Charitable organizations registration certificate (if applicable)

25. Looking at the Whole Organization Governance

26. Components of a Good Board Governance Structure • Should demonstrate indicators of organizational strength (choose those with which you are comfortable) • e.g., diverse, active, structured/organized • “Diversity” indicators of board strength • age • race • gender • available professional expertise • appropriate board size

27. Components of a Good Board Governance Structure (cont.) • Indicators of having an “active” board: • have standing committees • each board person serves on at least one committee • frequency with which board meets • frequency with which committees meet • support by board members • donating money • cultivating fundraising contacts • providing in-kind gifts/services

28. Components of a Good Board Governance Structure (cont.) • Indicators of having an “organized” board: • written mission statement • written vision statement • written values statement • written conflict of interest policy • written strategic plan for organization • written whistle blower policy

29. Looking at the Whole Organization Fiscal Health

30. Indicators of Strong Organizational Fiscal Health Structure • Should have diversified funding streams, e.g., • Should demonstrate efficiency in the use of financial resources (i.e., program expense ratio percentage of 70-75% or more) • Should demonstrate a good degree of asset liquidity • current ratio (current assets ÷ current liabilities) (+ = >/= 1) • investment ratio (long term investments ÷ total assets) (+ = >/= 25%)

31. Indicators of Strong Organizational Fiscal Health Structure (cont.) • Should demonstrate long-term financial viability • equity ratio (net assets ÷ total assets) (+ = >/= 2.0) • long-term debt ratio (long term debt ÷ total net assets) (+ = </= 50%) • fixed asset ratio (property, plant & equipment ÷ total assets) (+ = </= 50%) • Should show indication of financial sustainability via: • operating reserve fund of at least six months (goal) • operating surplus at year-end • net margin ratio (net surplus ÷ total revenue) (+ = >/= annual cpi) • Should demonstrate manageable debt service that is not a financial drain on operating budget

32. Indicators of Strong Organizational Fiscal Health Structure (cont.) • Should demonstrate an increase in net assets from previous year • net asset growth ratio • Should not have significant litigation as a financial drain on the operating budget • Should have an independent audit that is recent and clean • Should have an auditor’s management letter included with audit • Should not have an inordinate amount of financial dependence on any one funding source or source category • overall source dependence ratio (largest revenue source ÷ total revenues) (+ = </= 65% of total revenues)

33. Indicators of Strong Organizational Fiscal Health Structure (cont.) • Ideally, should not have an inordinate reliance on charitable giving • contributions ratio (contributions + grants ÷ total revenues) (+ = </= 70) • Should have reasonable expenditures for administration • administration ratio (e.g., up to 25%) (administrative expenses ÷ total expenses) (+ = </= 25%) • Should have a reasonable amount of dollars devoted to salaries, benefits and taxes • not too little/not too much; reflect the local non-profit market • compensation ratio (salaries, benefits & taxes ÷ total expenses) (+ = </= 70%)

34. Red Flags in Financial Statements • Decrease in annual revenue • Rising expenses • Operating deficit • Cash flow problems on a regular basis • Lack of diversity in revenue – large and dependent on one funder • Late audits – no more than 6 months after the close of the fiscal year • Recent changes in management – no ED for a period of time • Decrease client demand for services • Gaps in financial reporting • Unusual delays in providing requested information

35. Red Flags in Financial Statements (cont.) • Unwillingness of management to allow an independent review of financial data • Inadequate information regarding financial performance • Key ratio deterioration • Unexplained variances from the budget • Resignation of key staff or directors • Low employee morale and high turnover • Donor complaints, vendor complaints, member complaints

36. Looking at the Whole Organization Site Visits

37. Components for Conducting a Good Site Visit • Say how much time you’ll have when you set up the visit • Come prepared with questions • Move around as you talk, see as much as possible beyond the director’s office • Check out seemingly unrelated physical aspects: • is the place clean, well lit, graffiti free? (this indicates, attention to detail, pride in work) • does there seem to be an underlying organization to the physical plant? • does the space function appropriately? (this indicates thoroughness in planning)

38. Components for Conducting a Good Site Visit (cont.) • Check out relationships between and among staff and clients: • does the boss pass the ball and encourage staff to speak? (this indicates appropriate delegation of duties as well as trust) • do the staff know each other and clients? (this indicates good morale and, probably, good working relations) • look for body language messages • Check out connections between what people wrote to you in the proposal and what they say: • are the staff who will carry out the work described in the proposal familiar with it? • does the written description match what you are seeing and hearing?

39. Components for Conducting a Good Site Visit (cont.) • Do you detect the presence of “plants,” i.e. people placed in your path specifically to say wonderful things? • Is your visit overly scripted or under planned? • Be prepared to give credit to the FEELING you get on the visit. Such feelings are often more reliable than the statistics or words in the written materials. • At the end of the visit, after leaving, immediately take notes. Come to a conclusion: did the visit inspire more confidence or did it diminish confidence and raise more questions?

40. Applicant Feedback & Sample Report Guidelines