Mental Accounting and the Myth of Finite Money
The term “mental accounting” may sound unfamiliar, but you’ve probably engaged in it (at least on a personal level) a number of times. We tend to think about budgets in this way, allotting a certain amount for bills, home, entertainment, education, etc. It’s how we categorize and evaluate economic outcomes. There are mental categories for “extras” too--things like charitable giving, that maybe don’t enter into the typical budget.
Research indicates that people often swap one mental category for another when it is time for give, which can frequently lead to the idea that there is only a certain amount of money available, especially between nonprofits. While this is sort of true, it isn’t that simple.
More nonprofits than money to support them
There’s actually plenty of money to go around (which goes even further in the hands of a good nonprofit accountant), but donors are often hesitant to spend it. Foundations face legal obligations to spend money, but only 5%, which means there’s a lot sitting around. There’s money waiting to be spent amongst a variety of nonprofit organizations--so how do we coax it out?
Foundations and donations
Individual donors are helpful to the nonprofit cause, but foundation dollars are a great way to continue offering great nonprofit services to your community. Grants from foundations offer larger, sustainable amounts of funding, but they may be the necessary piece of the puzzle for your organization.
Of course, you’ll need to spend more time cultivating great grant applications if you hope to get this share of the pie.
While individual donors can donate at nearly any time, there are usually deadlines with foundations, which means you’ve got to have it together. Do your research to find deadline applications and stay on top of them.
To improve your chances, do your legwork. Put in a call to the foundation and find out how they award money. Take the opportunity to introduce yourself and your organization, learn about their process, and ask any questions you may have. If it feels right, you may consider offering an invitation for representatives from the foundation to visit.
Fill out the application
Take time to carefully write and edit your award application--pay special attention to all instructions, as even remote deviations may disqualify you from receiving funding. Be straightforward and honest, but don’t be too humble about your achievements.
Even after you submit your application in an attempt to get some of available foundation dollars, your job isn’t done. Whether or not you receive a grant, someone is taking the time to learn about your organization, which deserves a hand written thank you. Send a letter--and a separate email or note if there was a specific person who helped you. It won’t necessarily increase your chances, but it is a great way to build community and network in the nonprofit world.
The bottom line
No matter which mental category individuals and foundations are putting their donation dollars into, there are a surprising amount of them. If you put in the work, you’ve got a great shot at those dollars.