How to Turn $75,000 Into $25 Million for Nonprofits
A new fund helps groups secure grants from the Inflation Reduction Act.
Over the last year one small development agency in northern Minnesota has used a single $75,000 grant to secure $25 million in climate-related funding from the federal government for local energy efficiency and agricultural projects. It’s an early part of an effort by a consortium of grant makers to help nonprofits and communities obtain money from the Inflation Reduction Act and other federal programs designed to fight climate change.
The new fund, called Invest in Our Future, plans to raise $260 million to help nonprofits and municipalities develop projects and apply for federal grants. Seven grant makers including the MacArthur Foundation, the David and Lucille Packard Foundation, the Rockefeller Foundation, and the William and Flora Hewlett Foundation have contributed to the fund so far.
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Over the past year, a small regional government planning and development agency in northern Minnesota has used a single $75,000 grant to secure $25 million in climate-related funding from the federal government for energy efficiency and agricultural projects in the rural communities it serves. It’s an early success story for a consortium of grant makers that seeks to help nonprofits and communities obtain money from the Inflation Reduction Act and other federal programs designed to fight climate change.
The new Invest in Our Future fund has raised $180 million to help nonprofits and municipalities develop projects and apply for federal grants. The fund is focusing grants in federally designated disadvantaged communities and 10 states where it sees the greatest potential for emissions reductions and clean-energy development, including Georgia, Michigan, and Texas. Seven grant makers have contributed so far, including the MacArthur, David and Lucille Packard, Rockefeller, and William and Flora Hewlett foundations. (The Hewlett and MacArthur foundations are financial supporters of the Chronicle of Philanthropy.)
The foundations intend to use small grants to help nonprofits and communities secure large sums of federal aid, creating many more success stories like the agency in Minnesota; it used the money to help tiny rural towns identify needs, develop plans, write grants, and more. The federal government is making tens of billions of dollars available for clean-energy projects through a dizzying array of agencies, all of which have differing criteria, processes, and preferences. Groups can also receive direct payments in lieu of tax credits to cover a portion of the costs of some clean-energy and energy-efficiency projects.
Small nonprofits and communities often lack the resources to develop projects and apply for the grants. Participating grant makers worry that without assistance, the communities that need these improvements the most — and that are often passed over by such programs — will once again miss out.
“Philanthropy has a role to play in helping bridge and support groups to make the best use of this opportunity, to help them get access to dollars and get them to the ground and to the places where they’ll be able to move the needle,” says Prithi Trivedi, special initiatives director at the Packard foundation, which has long supported environmental initiatives. “Part of the reason that we joined this effort on this goal is the sense of urgency around this moment.”
A Catalytic Grant
Two centerpiece achievements of the Biden administration present an unprecedented funding opportunity for climate projects. The Federal Inflation Reduction Act, passed just over a year ago, authorized $27 billion for projects that reduce greenhouse-gas emissions — $15 billion of which must be spent in low-income and disadvantaged communities. Additional $40 billion in loan guarantees is available. And that’s just a portion of the $369 billion in the legislation, much of which will be paid out in tax credits. The $1.2 trillion Infrastructure Investment and Jobs Act also includes grants for renewable energy and other related projects. The potential for this money to change how communities consume and produce energy is immense. The Department of Energy estimates that the two pieces of legislation will curb greenhouse-gas emissions in the United States by 41 percent.
The bills have the potential to put money for climate projects in every community across the country, says Henry Platt, a partner at Bridgespan and co-author of the report “Winning on Climate Change: How Philanthropy Can Spur Major Progress over the Next Decade.”
“There has never been a better time for philanthropists to just pick up their heads and look around at what’s happening in their communities and see how they can get involved,” he says. “It takes a little bit of work, but there are so many opportunities. Small amounts of money can make a big difference, especially at the community level.”
Small amounts of money can make a big difference, especially at the community level.
This spring, Invest in Our Future made a $1 million grant to the Heartland Fund, which makes grants to groups in rural communities that work on civic engagement and clean energy and seek federal funding for those projects. Heartland used the grant to start a program called Resource Rural.
That program is creating a national hub where organizations and communities can find information about federal grants and share stories so groups can learn from each other’s experiences. The grant also helps support its work with the Brooking Institution to create a database of federal climate grant opportunities that make sense for rural areas. It also created the Rural Climate Partnership, which focuses on planning clean-energy projects, regenerative agriculture, rural electric co-ops, and other issues.
In some instances, the group accepts and manages large grants on behalf of small rural organizations. It can also connect groups with grant writers and even pay for the service.
That initial grant from Invest in Our Future allowed the group to begin developing these services. Since then, it has raised an additional $3.5 million. The initiative estimates it will need $15 million over five years for the program and for the grants it plans to make.
“We just wouldn’t have had the ability to build the capacity that we needed to launch this project without the Invest in Our Future grant,” says Sarah Jaynes, executive director of the Rural Democracy Initiative. “It was meant to be catalytic, and it really was. It was a game changer.”
So how exactly did that small government agency in northern Minnesota parlay a $75,000 grant into $25 million in federal dollars?
The Region Five Development Commission, in Staples, Minn., works with rural towns to connect them with federal grant opportunities. Last September, the commission received $75,000 from the Rural Climate Partnership, a program of Heartland. That tiny grant covered time for several staff members to research grant opportunities, align existing projects with those possible grants, write and submit grant proposals, and prepare follow-up reporting.
The development commission worked with the small town of Cass Lake on the Leech Lake Band of Ojibwe Reservation to create an energy and environment plan that included ideas like hosting a farmer’s market, creating a community composting site, and installing LED streetlights.
When a grant opportunity came up with the U.S. Department of Energy, B.J. Allen, the agency’s deputy director, was ready. She helped the school district, which includes neighboring towns not on the reservation, work with its utility providers to do an energy audit of its three school buildings. She helped the district put together a plan and apply for the grant. The process wasn’t easy. They had to gather letters of support, compile maintenance plans, write the grant application, and apply for additional grants to cover the matching requirement. That was far too much work for anyone in the town of 675 residents to do on their own.
“The school district, they don’t have the capacity for that kind of stuff,” Allen says. “They never would have applied if we hadn’t been there to help them.”
They never would have applied if we hadn’t been there to help them.
The grant was approved, and school district, which serves a student population that is 93 percent Native American, is getting $8.8 million to replace its boilers and HVAC systems, upgrade to energy-efficient LED lights, replace motors in refrigerators with more energy-efficient ones, and more across three school buildings. An added benefit: The project will generate jobs.
The development commission also secured $15 million from the U.S. Department of Agriculture to help create a regional food business center for small farmers in Minnesota and North and South Dakota and to help farmers conserve water and promote soil health. Altogether Allen has brought in roughly $25 million in federal grants so far, thanks to the $75,000 grant from the Rural Development Initiative
“Without this support, our region would have missed out on $25 million,” says Allen.
The speed with which federal dollars are moving means time is of the essence for Native American tribes, says Chéri Smith, CEO of the Alliance for Tribal Clean Energy. “Our job is to build the capacity of tribes to eventually do this work themselves,” she says. “But in the interim, we have this confluence of opportunity and an urgency to act while the funding is here and this window is open.”
Her organization will receive $1.5 million from Invest in Our Future, a significant sum for the small group. Smith works with tribes on sometimes complex energy projects.
Tribes need help to determine the feasibility of a project, particularly for things like large solar installations, line up financing, and find ethical service providers who will work with the tribes on their terms, Smith says.
The Alliance for Tribal Clean Energy is helping tribes win funding for projects ranging from tiny one-megawatt community and residential solar to huge 500-megawatt projects on reservations. The Bureau of Indian Affairs has $145 million to award over 10 years through the Tribal Electrification Program. That is in addition to U.S. Department of Energy programs and up to $20 billion in loan guarantees specifically for tribes.
The projects are more than just green energy for tribes. Smith says 14 percent of people on reservations lack electricity altogether. Utilities often charge people on reservations two to three times as much for electricity as other customers, she says.
Some people who couldn’t pay their bills have died of exposure in their own homes, she says. The ability for tribes to produce their own reliable power can be a matter of life and death, she says.
The demand is overwhelming.
“The requests for support are more than we can handle, even with this beautiful influx of funding from Invest in Our Future,” Smith says. “We need more to be able to respond to the requests for support from tribes. We’re only limited by our own capacity.”
There is nothing wrong with helping nonprofits win federal dollars, says Michael McAfee, CEO of PolicyLink, a research organization focused on advancing economic and social equity. But if that is all philanthropy does, it is missing a big opportunity. He says what is really needed is a push to change the way government allocates funds so underserved communities have a voice and get their needs met. He calls this a governing moment.
More assistance is needed to make sure federal dollars get to the places that need them most, McAfee says. He points out that 60 percent of the money in the infrastructure act goes directly to states and cities, entities that he argues don’t have a history of distributing money equitably.
McAfee says philanthropy and nonprofits need to focus more on working with government agencies and the private sector to ensure they spend those dollars equitably on communities that are often overlooked — and that people in those communities lead the discussion about how to spend the money.
“If we think that the nonprofits are going to save the day and make sure these dollars are spent equitably, we have grossly missed the mark,” he says. “This is the moment for all of us — philanthropy, nonprofit leaders, everyday people, and community — to demand that their city, county, and state government do the work that is necessary to revive neglected communities.”
Large environmental groups have worked with states and big cities for years, and many state and local governments have led on climate-change efforts while the federal government did little, says Brian Burwell, a partner at Bridgespan and another co-author of its climate report. That said, he agrees that philanthropy needs to do more to enable smaller community-based groups to advocate for their needs with government.
Communities must be at the table when governments develop projects, says Deborah Philbrick, a program officer at the MacArthur Foundation, which is contributing $20 million to the fund. “In the most perfect implementation of this legislation, we’ll be able to look back in 10 years and see this spending as an inflection point that reshaped the economy to be healthier, more equitable, and less extractive for all Americans,” she says.
McAfee agrees that philanthropy needs to help nonprofits build their internal operations and capabilities so they can qualify for the funds that are available. But, he argues, that’s just the beginning of the work. Groups led by people of color have been overlooked for so long, he says, that there’s an incredible amount of work needed to get groups in a position to apply for and receive funds. McAfee worries that once the dollars are spent, philanthropic institutions will simply move on to the next big issue. leaving these groups to languish again.
That is part of what MacArthur Foundation has been trying avoid, Philbrick says.
“It’s not just about getting folks dollars,” she says. “We want to make sure that organizations are strong and healthy, and that includes making sure that they are able to responsibly engage with all the cycles of getting a federal grant.”