Time To Plant New Seed (Funding)?

March 24, 2011 | By Guest Contributor | Post a Comment

(This guest post was written by Glenda O’Neal, a grantwriting consultant, founder of a new website for grantwriters, www.Grant-Writing-Proposals.com,  and a member of Thompson Publishing’s Editorial Advisory Board. ) For many years, the federal government’s approach to grant making was based upon a “seed money” concept. Using that approach, the federal government helped local organizations start programs by providing funding for a few years – initially making a significant grant, then gradually reducing the federal share of funding while increasing the local portion.

The federal government expected to phase out of the funding formula over time, anticipating that by doing so, it would give the recipient time to establish its project, build its internal capacity (if necessary) and increase its project funding from local sources. By the end of the federal grant period, the local organization was expected to fully fund the project through other sources.

The Older Americans Act is an example of how the seed money concept worked. OAA Title III grants typically provided funding for a three-year period. In the first year, the federal agency provided 80 percent of the total funds and the grantee was required to provide 20 percent. During the second year, the federal share decreased to 60 percent while the local share rose to 40 percent. In the third year, the federal share was lowered to 40 percent and the local share increased to 60 percent. By the fourth year, the local organization was expected to fund 100 percent of the project.

Over time, the seed money concept of funding has gone by the wayside a bit as federal agencies have taken different approaches to funding. It is not unheard of now for a government agency to fund 100 percent of a project, up to a maximum award amount. Cost sharing is no longer a requirement for all grant programs. There also seems to be a growing interest in federal agencies entering into cooperative agreements with recipient organizations instead of making conventional grants.

Have these approaches led to increased federal spending for grant programs? Would we be wise to turn back the clock and revisit the era of the seed money concept of funding? Would the seed money concept of funding enable local organizations to reduce their reliance on government funding?


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