Getting grants: Mission-critical funding for the mission-driven

First things first: Grants are not gifts.

While a philanthropy or investor doesn’t have the same expectations for repayment as a traditional bank issuing loans, it does expect a return on investment: a bank is concerned about how the money is repaid, a grantor is concerned about how the money is spent, and how much impact it creates.

Grant funding is designed for charitable purposes. And while many entrepreneurs under the strain of building a business might appreciate the thought of receiving a grant – and the idea of not having to pay back a grant rather than paying back a loan, plus interest, sounds like a relief – there are certain qualifications required for grant funding.

This type of capital is typically reserved for nonprofits and requires 501(c)(3) status or similar classification. The funds are focused on impact.

A few exceptions for founders of for-profit organizations include Kansas City G.I.F.T. (Generating Income for Tomorrow)­­­, whose current mission and model provides grants to Black-owned businesses in Kansas City; Porter House KC’s Alchemy Sandbox program in partnership with UMB Bank, which provides 20 businesses with up to $5,000 in grants to directly support their back office, equipment costs, rental assistance, or general system needs; and events such as AltCap’s pitch competition. If your business is focused on supporting the success of other entrepreneurs, the Small Business Administration offers support.

Although grant funding is typically reserved for organizations in the nonprofit space, support from the capital ecosystem in Kansas City looks much the same. Kansas City’s Capital Access Task Force is positioned to help mission-driven organizations identify potential funders that best-align with their work, to provide support and preparation for the grant application process, and to clear paths for greater access.

Alignment and support

First, and foremost, grantseekers must be able to clearly tell their story and illustrate impact. Very specifically, what problem can grant funding solve? From there, potential funders can be identified. Grantseekers should do their research. Who is most aligned with the problem this grant request aims to solve? Who in the KC ecosystem would be most interested in funding this effort?

So, do the homework. But – do homework outside of KC too. Start locally but expand regionally and then nationally. There might be a variety of reasons why the right funder might be in Manhattan, Kansas, for example. Also, if you’re doing something new – that might look like a risk locally because it’s never been done – finding someone who has done something similar can help. People are open to sharing their experiences. Ask all the questions: How did they do it? What approach was taken to develop? What did they learn? What challenges did they experience if any? How did they pivot? Then, an innovative pitch doesn’t seem so risky when there’s research to back it.

Loan and grant application processes are similar. A loan officer’s officer memo with banks is very similar to a grant recommendation. The difference is when applying for a grant, it is very mission- and impact-driven. Support organizations within the task force can help walk grant seekers through questions that will need to be answered for a strong grant request. This is especially important for those organizations that might not have their own grant writer. Grant writing is a specific skill. Again, it goes back to how well an organization can share its story and illustrate its impact.

Finally, stay true to the mission. Do not adjust or modify the core mission to get grant dollars.

The responsibility of funders

One of the best things about grant funding in Kansas City is that the funders are accessible. That said, funders – including the Kauffman Foundation as a private philanthropic nonprofit – have a responsibility to make sure we’re not only accessible, but equitable. We have to be intentional about where we’re putting our dollars.

It goes back to alignment. Are we telling our story well? I challenge all funders to evaluate their grantmaking. Does impact include the community’s voice? Is it equitable?

Further still, are we, as funders, taking risks? Where are the gaps? Grant funding is a key component to the capital landscape because it can address the gaps – and there are so many gaps as it relates to money. We have a capital gap, but it’s also a generational wealth gap. We’re talking light years of businesses being, and staying, behind.

According to 2016 data, it will take 228 years to close the racial wealth gap for Black families. If we as foundations and investors decide we don’t want to address that gap, just think how much higher that figure would be?

We’re able to close that gap. We can’t undo what caused Black and Brown families to be behind in income and class status, but we can help close that gap by leveraging our grant funds to support equitable access to capital through entrepreneurship.

For example, Kauffman’s investment in grantees like Holy Rosary Credit Union (HRCU) catalyzes their work to provide in-house, accessible loans to local entrepreneurs. HRCU’s mission to provide economic opportunity furthers our mission to prepare people for success in their jobs and careers, so that everyone has the opportunity to achieve economic stability, mobility, and prosperity.

Our grantmaking in the capital access space mitigates risk – or, I should say, perceived risk. With support from our capital access investments, three banks in Kansas City help us reach our goal through capital initiatives to encourage systemic change and have either made changes to how they underwrite loans or have developed products tailored to meet a need. Further, Kansas City Credit Enhancement Fund is changing policy. That’s where change really starts to happen, closing the gap a lot sooner.

Intentional, collaborative grant funding is changing systems. And, with changing systems, we change things for the long term.