Gifts, grants, contracts, endowments and fee generation: What's the difference?

Diversifying University of Missouri Extension's income streams is crucial to funding a vibrant extension effort that is relevant, reliable and responsive. Gifts, grants, contracts, endowments and fee generation are all possible sources of new income streams. The additional funding received from each of these sources can enable MU Extension to accomplish programming and projects that would not be possible otherwise.

Gifts vs Grants Logic Model (PDF)

Gifts

Gifts are donations of money, tangible items, volunteer time or other valuable resources that can be used immediately to support the mission of University of Missouri Extension in the short run (one or two years).

Advantages

• Gifts help MU Extension sustain and grow in the short run.
• They can support programs until more long-term strategies can be put in place.
• Success is based on MU Extension's reliable, relevant and responsive performance.
• Gifts can stimulate more substantial funding. Money attracts money. Success attracts success.

Disadvantages

• Once the resources are used, they're gone, and new or continuing gifts may need to be generated to sustain programming.
• Gift generation efforts often take time and money away from programming.

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  Why people give

   • They were asked.
   • They believe in the cause or mission of the organization.
   • They got involved in the organization as a volunteer.
   • They learned about the organization because of what it did for a relative, friend or neighbor.
   • They want to support an organization that a relative, friend or neighbor supports.
   • They feel the person asking is interested in responding to their interests or needs.
   • They believe the organization is well managed.
   • They feel satisfied or find self-fulfillment through giving.
   • They see the results of the organization’s work.
   • They appreciate the way in which they were thanked – they feel cared for.
   • They can afford the gift.
   • They thought the person asking was responsive to questions and concerns.
   • They receive a tax deduction.

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  Why people don't give

   • They weren’t asked.
   • They don’t have any relationship to the organization.
   • They don’t identify with the cause.
   • Follow-up did not occur as promised.
   • They could not see the impact of the nonprofit organization.
   • The person asking used pressure tactics.
   • The person asking was boring and unenthusiastic.
   • They have other priorities.
   • They thought the organization misused funds or did not devote enough to programs.
   • They could not afford to give at the time they were asked.
   • They felt the person asking was not personally invested in or acquainted with the cause.
   • The person asking did not appear informed about the organization.

  Adapted by Director of Donor Education Cynthia Crawford in cooperation with Director of Development Cat Comley from training by John E. McClusky, Nonprofit Management and Leadership Program Director, University of Missouri–St. Louis, 2013.

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  Ten thoughts about giving

  These days, people are being approached more often and more persuasively to give money to various causes. You can make those solicitations easier to handle if you include plans for giving in your financial plan. Here are 10 points to think about when planning your giving.

  1. Be deliberate, not impulsive. Think about how you choose to balance your goals for money: spend some, save some, share some.
      
  2. Your money, your choices — for where and how much to give. Many people make impulsive giving decisions, basing them only on who knocks on the door, phones or mails an appeal. Think about your giving priorities and amounts in advance and include them in your financial plans.
      
  3. Giving is not always about money. Gifts of your time and talents, work and wisdom are also important contributions.
      
  4. Get input on giving decisions from respected associates, friends, family, potential heirs and professionals such as your investment advisor or attorney. Be well informed about giving options, and you decide. Announce — don’t negotiate — your decisions.
      
  5. Planning to give is great, but it’s not really giving until the paperwork is done.
      
  6. How much you give is a personal decision. Make the amount meaningful to you.
      
  7. You can say no. Kindly turn down requests for charities that are not on your high-priority list. If the requests are persistent and unrelenting, be firmer, make your “no” clearer and harder to ignore.
      
  8. Review your entire financial plan, including your giving plans, once a year. Choose a day, such as New Year’s, to annually review your plan.
      
  9. It’s okay to follow up with charities. Ask what your past gift specifically accomplished.
      
  10. The timing of gifts is flexible. Give your gifts on your timetable.

  Developed collaboratively by Cynthia Crawford, director of donor education, and Andrew Zumwalt, financial planning state specialist, both of MU Extension; and James Preston, senior director of development, MU Advancement, 2014.

Grants and contracts

Grant and contracts can dramatically expand the resource base from which we deliver MU Extension's mission. Generally, MU Extension develops a proposal indicating that if the funder will provide resources, generally money, we will provide specific educational efforts or activities that benefit the funder and also support MU Extension's mission. The money is provided for a specific, defined purpose. Grants and contracts are generally made available by federal or state agencies, corporations, foundations or organizations rather than an individual or family.

Advantages

• Grants and contracts can be a win-win for the funder, county councils and MU Extension.
• Funding can be significant and may be available for multiple years.

Disadvantages

• Grants and contracts are not easy to find and negotiate.
• Most grants are competitive, so funding is not guaranteed.
• Grant work and contract work must be accomplished as agreed and within deadlines.
• Failure to honor grant and contract agreements jeopardizes future grant and contract possibilities.
• Lots of reporting and paperwork is often required. The detailed accounting required can be very time-consuming.
• Use of the money is not flexible. Extension accepts the money in exchange for specific work.
• Some grants do not provide funding for administrative support, which can increase MU Extension's costs for accomplishing grant activities.

Endowments

Endowments are a long-term funding strategy whose proceeds are designated to be used for a specific purpose. The money put into this fund — the corpus — will be part of the fund forever to earn interest and grow. Only the earnings portion of the endowment will be spendable. The earnings are generally distributed monthly within a year of starting an endowment, or the endowment decision-makers can choose to put the earnings into the endowment. The larger the corpus, the more earnings it can generate — earnings that will be available in the future to support more significant programming.

Advantages

• Plans are made deliberately and carefully for long-term impact of funds.
• University of Missouri endowment funds are professionally managed and conservatively invested.
• The funds are expected to be in place forever to help make important programming available for generations.

Disadvantages

• The value of the corpus and its earnings, while managed conservatively, are at the risk of the stock market and vary with its fluctuations.
• Often, costs are associated with management of the corpus.
• The corpus is not available for unexpected, short-term financial emergencies.
• A significant amount of money is needed in the corpus for earnings to be substantial enough to make a significant difference.

Spendable and Endowment Accounts

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  Spendable Account Managed by MU

  Goals

  Accumulate money to be used within two years.

  Source of funds:

   • gifts from donors
   • distribution from permanent endowment funds
  

  Key points

  Balance no more than 15 percent of endowment. This is not a good place to leave money long term because deposits lose purchasing power.

  The university does all accounting work and sends thank you letters and all tax paperwork needed by donors.

  Yield

  This is a savings account with interest similar to passbook rates.

  With an interest rate lower than the rate of inflation, the longer the money is on deposit the more purchasing power is lost.

  More importantly, the money needs to be used to improve people’s lives.

  Costs

  5 percent one-time gift administration fee.

  No annual fees.

  No fees for distribution funds transferred into the account.

  Council's role

  Active management includes:

   • Development plan in place as part of county business plan.
   • Council can establish an account by motion in minutes and with an initial deposit.
   • Council directs withdrawals or transfers through motions in minutes. Minutes submitted to director of donor education for processing.
   • Councils are important, also, in generating new gifts and stewarding donors.

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  Endowment account managed by MU

  Goals

  Deposits remain in place forever. The account becomes permanent once the balance reaches $2,500 and paperwork is completed.

  Once an account becomes permanent, a distribution goes into the spendable account, and this cash flow continues forever. The goal is for the corpus to grow in purchasing power, or to at least maintain it

  Key points

  Funds are invested conservatively by the university. Funds are not withdrawn from the account once the account becomes permanent.

  The university does all accounting work and sends thank you letters and all tax paperwork needed by donors.

  Yield

  The value of the endowment is based on performance of the investment market and therefore can fluctuate. In 2012, university endowments grew 13.7 percent.

  4.5 percent distribution to the spendable fund, with one-twelfth distributed each month (not interest).

  Costs

  3 percent one-time gift administration fee.

  1 percent annual management fee

  No gift administration fees if councils choose to transfer spendable funds into endowment accounts.

  Council's role

  Active monitoring of accounts in place.

  Active management to:

   • Establish an endowment by motion in council minutes and an initial deposit
   • Increase the corpus of endowment funds and steward donors.

Fee generation

Fee generation is the practice of asking the people that benefit the most from MU Extension programming to pay something to participate in programming. As public funding efforts for MU Extension are no longer adequate to sustain the level of programming that is acutely needed by Missouri residents, charging program fees is becoming increasingly necessary.

Not all programs charge fees. Gifts, grants, contracts and endowment funds can support programming and reduce the need to charge fees. Also, some MU Extension programs have such high public value that they are funded 100 percent by appropriated tax dollars, eliminating the need to charge for participation.

In fee generation efforts, the county MU Extension councils should budget to cover local costs and remit a portion to help cover MU Extension faculty costs. Just as MU Extension has always been a partnership of federal, state and county funds, fee generation continues to recognize partnerships.

Finding funding

MU grants and resources

Pivot Funding Opportunities Database (free to all MU researchers)
Pivot, formerly the Community of Science (COS), provides a comprehensive database of funding opportunities and an expertise database to help you identify potential collaborators within MU and at institutions around the world. The website also allows users to set up automated funding alerts. Pivot is a subscription service provided by the Office of Research for all MU researchers.

Internal Funding (MU only and system-wide opportunities)
The MU Office of Research offers several internal funding options for faculty.

MU Limited Submissions
In some cases, sponsors limit the number of applications an organization may submit and require the organization to determine which application(s) will be submitted. The list is hosted on InfoReady (link above) and you must follow the application procedures. Update notifications are delivered through the OSPA listserv.

Federal government

Grants.gov  (all federal agencies)
Central portal to register, search for federal grant opportunities and begin the application process. Sign up for email notifications to be notified regarding new grant opportunities.

Federal Register
Source for all federal grant-related announcements and notices of solicitation of applications.

Catalog of Federal Domestic Assistance
A government-wide compendium of federal programs, projects, services and activities, including financial and nonfinancial assistance programs administered by departments and establishments of the federal government.

Federal Grants Wire
A free and easy-to-use resource with information on current and archived federal government grants and loans.

State government

MO.gov
Official Missouri website that provides links to all state agencies and services to access information for grant and bid opportunities.

MO Department of Economic Development — AmeriCorps Missouri
The Missouri Community Service Commission oversees the AmeriCorps program that awards grants to local organizations. AmeriCorps members help communities tackle pressing problems while mobilizing millions of volunteers for the organizations they serve. AmeriCorps fact sheet (PDF)

MO Department of Economic Development — Neighborhood Assistance Program (NAP)
The NAP provides assistance to community-based organizations that enables them to implement community or neighborhood projects in areas of community service, education, crime prevention, job training and physical revitalization.

MO Department of Economic Development — Youth Opportunities Program (YOP)
The YOP works to broaden and strengthen opportunities for positive development and participation in community life for youth, and to discourage them from engaging in criminal and violent behavior.

Civic groups and faith-based organizations

Local civic groups and clubs (e.g., Lions, Optimist, Rotary, VFW, American Legion, etc.) provide community grants that nonprofits can apply for in areas of member interest and/or community need. Get in touch with clubs in your community to find out about grant programs.

Many faith-based organizations and churches offer assistance programs and/or have foundations which offer grants to nonprofit organizations.  Contact the churches in your area to inquire about programs available.

Local government

Contact your local city and county government offices to learn about grants and bid opportunities that are available. Funding might be available for arts and cultural programs, health and human services, basic needs and housing services, and community and economic development.

Other resources

Candid
Candid maintains a comprehensive database on U.S. and global funders. A valuable free resource offered is the Philanthropy News Digest.

Candid in your community
Find Candid community resources in your local community.

Center for Nonprofit Excellence (CNE)
Each week, CNE finds three grants that are publicly available on the web and publishes them to their list of “Featured Grants.” 

Grants Alert
Resource that researches, identifies and shares information on grants for K-12 teachers and schools. Provides up-to-date alerts on corporate, foundation, state and federal education funding opportunities.