Stefano Mortellaro / tiny present

October 21, 2018; Crain’s Detroit Business

Many nonprofits seek foundation grants either as a central part or a necessary supplementary part of their business model, as we discussed in NPQ’s most recent seminar on nonprofit business models. While many mid- to large-sized foundation grants get much of the attention, smaller grants serve a strategic role, especially in nonprofits that are new or recently established, or which have small operating budgets. How these grants are administered means a lot to the nonprofits who apply for them, however.

Microgrants, or mini-grants, are used by a wide variety of nonprofits to address a wide range of needs, but they often come with the ironic reality of tight restrictions and reporting, which complicate nonprofit budgets while also eating up administrative and programmatic time. But there is always a way to make getting even a small amount of money either more onerous or more ROI-effective, and a creative philanthropist can generally find that way. We advocate for the latter, of course.

Not everyone might think that the following example is on the onerous side, because there are evidently no restrictions on the grants, but it entails creating microgrant funds by crowdsourcing money through admission fees to an event and distributing the funds based on attendee vote. That is the strategy for the dinners organized by Detroit Soup, which began in 2010 and has raised over $130,000 for local organizations. The model has been so successful that it has been replicated in 175 cities around the globe. Attendees at Detroit Soup events pay $5 for soup, salad, and the opportunity to vote for one of four projects—which have included art, urban agriculture, social justice, social entrepreneurship, education, and technology nonprofit efforts. Participants have four minutes to summarize their program, and then the audience asks questions. After the presentations and questions, everybody enjoys dinner and votes on their favorite project. The winning project receives all the funds. This model may have the possible upside of helping spread the word about your program among potential donors, but it also has some serious potential downsides for the nonprofit participant and reminds us a bit of the notion of having to sing for your supper.

But others have adopted microgrants as a strategy to catalyze community leadership in developing new ideas to address acute issues. Often these types of nascent community efforts seek to impact groups and issues that are underrepresented. By accessing microgrants, these initiatives gain critical capacity to explore issues, develop interventions, assess the scope of the need, and implement projects that benefit underserved communities and neighborhoods.

One example is the Greater Tacoma Community Foundation, which has a microgrant program called Spark Grants, a program born out of a community gathering in 2011 featuring Archbishop Desmond Tutu. Spark grants are made to individuals and are “designed to bring people-powered ideas and dreams to life in Pierce County, sparking positive social and neighborhood change through the efforts of grass-roots leadership.” While the program supports individuals, it also provides much-needed support to start-up nonprofits.

Often, microgrants made to individuals result in new partnerships with nonprofits. One Spark grant, for example, supported a resident’s passion to expose girls of color to environmental education, which resulted in the creation of an Environmental Justice Camp convened and hosted by a local environmental nonprofit. Although the nonprofit didn’t receive the microgrant itself, it reached a new constituency that can help it meet its mission of conservation. NPQ and BoardSource have previously discussed the benefits of various types of nonprofit alliances.

Increasing the capacity of emerging nonprofits and supporting individual community-building efforts are only a couple of ways that microgrants are being used. In New York City, the New York Department of Sanitation’s Foundation for New York’s Strongest announced a new microgrant program focused on sustaining the momentum from a Food Waste Fair hosted last year. The microgrants provide grant dollars, technical assistance, and goods and services to businesses that address food waste. This is especially relevant because in New York City, over 650,000 tons of food waste are thrown away by businesses annually. Addressing the issue of food waste is an increasingly popular nonprofit project, and one that NPQ has reported on this year. Microgrants in this instance call attention to a pressing issue and assist organizations in developing new approaches to solve problems.

Like any level of funding, microgrants can be just as helpful when they benefit internal development as they are when spent on programming. The Wallace Center, a program of Winrock International, launched the Food Systems Leadership Network (FSLN) earlier this year, a national network whose mission is convening, supporting, and connecting food systems-oriented nonprofits throughout the United States. One of FSLN’s strategies is using microgrants to build nonprofit capacities by supporting professional development opportunities for staff, as well as building organizational capacity in the national network.

While not exhaustive, this article highlights various ways that microgrants support nonprofit and community initiatives. There are several other examples, including public programs to support citizen-led efforts to improve community wellbeing, as well as microgrants that build social capital to increase residents’ ability to address larger challenges.

What the article does not do is address the dangers of getting stuck in a low-grant zone, which is a tough road. Such grantmaking should generally be done, for the most part, strategically and without tight restrictions, like individual donations, to allow recipients to chart their own courses to the greatest extent possible.—Derrick Rhayn