Why is it that the new and emerging non-profits all too often see foundations and other grant-making entities as their first and best source of funding? Why do they think that’s where the easy money is to be found? Is it because foundations are required by law to contribute a specific percentage of their assets to non-profit organizations each and every year?

If you look at it that way, I suppose the logic is pretty simple. Non-profits need money, and foundations have to give money to non-profits. On top of that, foundations have a process that makes it relatively easy to ask for their money. You submit your proposal following their rules and await the answer. Whether the answer is yes or no, it’s a clean, straightforward process. No messy asking people for their own earned or saved money to support your cause.

Adapted from GivingUSA

A match made in Heaven! Right?

Not necessarily. Only about 13% of the funds given to non-profits annually comes from foundations, and about half of that 13% is from small foundations that are essentially giving mechanisms for individual donors. Think family foundations and those set up by individuals to further the causes in which they believe. So that makes about 7% of annual charitable giving coming from independent, grant-making foundations.

On the other hand, about 75% of charitable giving comes directly from living individuals. Add to that the 6% that is provided by family and personal foundations, plus the 8% from individual bequests, and the total amount of charitable giving that rests in the hands of individuals is 89%.

Think of foundations and individuals as two wells from which you are trying to pump water. One has 7% of the available water and the other 89%. Which pump handle would you grasp? And remember there are others trying just as hard as you to pump each well.

I’d be more inclined to look to individual donors than foundations for the lion’s share of my contributed-income needs. I mean, it’s pretty obvious that’s where the money is—in the hands of individual donors.

The relatively small amount of money coming from granting foundations is not because the foundations are not being asked to give. The simple fact is that most of the money is not there.

So does it make sense to look to foundations for most, or all, of the money we need? I think not. I think you have to go where the money is!