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How Local Governments Can Land Private-Sector Grants

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Local governments are not necessarily precluded from pursuing private-sector grants. By creating a 501(c)(3) foundation, local governments, and even police departments, can become eligible for grants from private-sector grantors that indicate in their guidelines that they only award grants to nonprofits. During ICMA's September webinar "The Language of Grant Writing," one of the last questions during the Q&A secton came from a local government official that brought up this very issue:

“I’m with the city and we have never considered going after private-sector funding. How can we position ourselves to win foundation grant awards?”

The answer deserved transcription, so I've quoted it at length below. Dr. Beverly Browning, who hosted the webinar, responded as follows:

“There are units of municipal governments across the country that have actually formed 501(c)(3) nonprofit foundations within their unit of government. One of these is the City of Pasadena, California.... [There are] many others you can look up on the internet.... This is a way to make yourself eligible to those private-sector funders that indicate in their guidelines that they only award grants to 501(c)(3) tax-exempt organizations. So it’s very helpful, for instance, to set up a public health foundation or a police department foundation under the city, or a community improvement fund under the city. [This process] can either be done by the city attorney, or you can actually partner with a local community foundation—for instance, the Arizona Community Foundation.

So when you know that you’re going to be looking at how to qualify yourself better, 1. Start planning, 2. Put together an advisory board, 3. Involve your finance department and legal department, 4. Bring in a bank trust officer, 5. Speak with a community foundation representative or partner

Sit around the table and talk about the best way to put together a package proposing this move to incorporate a 501(c)(3) fund or foundation under the umbrella of your city, township, or county, because you want to have your ducks in a row before you take this to a governing board approval. Because this is new. Most election officials haven’t heard of it. They don’t understand it. They think that it’s going to make you more liable. Instead, it’s going to make you more eligible to receive private sector funding."

With the establishment of this nonprofit, local governments can receive awards from foundations as well as corporate grant makers. What are the types of projects that they are likely to fund? Dr. Browning listed the following examples: 

  • Cleanup of a polluted body of water
  • Signage for your community
  • Interpretive trails for the physically challenged
  • Energy-efficient lights in downtown main street
  • Park benches
  • Beautification projects
  • Handicap accessible bathrooms

"All of these kind of things have been and can be funded with private-sector funding," she added. "So you’re missing out if you haven’t gone after that. And you’re also draining your expense line items for every single department if you’re using dollars from your regular general fund or budget and you’re not looking to private-sector partners."

In the next few blog posts, I'll review some helpful takeaways and best practices from our latest ICMA webinar, which centered on managing grants when you have no grants team. Be sure to subscribe to our blog so you can get notice of the latest blog posts, and click the button below to get our popular article "Excelling Beyond the Spreadsheet":

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