When the Grant Well Runs Dry: Lessons from Nonprofit History
As I'm editing this piece, it's 8am on Friday April 25th, 2025 in Colorado. It's terribly gloomy outside and it's been another long week. In the nonprofit sector in the USA, many nonprofits - big and small - have come to get excited about and anticipate grants to support their projects. Along with individual fundraising, event fundraising and sponsorships, in-kind donations, government contracts, and fees for services, grants have become an important pillar of nonprofit funding - especially where there are supply gaps in the traditional market economy.
In the US, with large changes to the government and public funding sphere, I've been wondering, what would it look like if grants largely went away and stayed that way? What did organizations do before grant writing - as we know it and rely on it today?
So I did a little research, and want to take us back on a little journey to understand how funding happened in a pre-grant writing world - and what these historical approaches can teach us about the future of nonprofit funding.
The Patron Model
Before institutionalized philanthropy, direct patronage was the primary funding mechanism for everything from scientific research to artistic endeavors. Wealthy individuals - whether nobility, industrialists, or merchants - would directly support causes and initiatives that aligned with their personal interests or brought them prestige.
For example, the Medici's of Florence funded Renaissance artists not through grant applications but through personal connections and demonstrated talent. Similarly, in America's Gilded Age, industrialists like Carnegie and Rockefeller personally decided which initiatives deserved their wealth, often based on who they knew and trusted.
The upside? Funding could be substantial and sustained.
The downside? Access was extremely limited to those with the right connections...
Religious Institutions
For centuries, churches and religious organizations served as major sources of funding for social services, education, and community development. Local parishes supported orphanages, hospitals, and schools through direct funding rather than application-based processes.
These faith-based funding models relied heavily on moral appeals and alignment with religious values rather than metrics-driven proposals. Organizations seeking support needed to demonstrate alignment with the religious institution's mission and values - not unlike today's need to align with funder priorities, but with a much more personal touch.
Community-Based Funding Approaches
In the past, before formalized philanthropy, mutual aid societies and community-based fundraising also played a critical role. Communities would pool resources to support local initiatives through:
Subscriptions where community members pledged regular contributions
Benefit events like dinners, performances, and auctions
Collective investment in community institutions
These approaches relied on strong community ties and shared values - a far cry from today's data-heavy approach, but perhaps with a stronger connection to constituent needs.
The Birth of Modern Philanthropy
The transition toward modern grant-making began in the late 19th century when industrial fortunes created unprecedented wealth. The establishment of the first major foundations such as the Rockefeller Foundation (1913) and the Carnegie Corporation (1911), marked a shift toward a more systematic approach to giving.
Even then, the early foundation model still heavily favored personal connections. Having access to foundation leaders often mattered more than the quality of a written proposal. Early foundation funding operated more like patronage with additional paperwork than the structured competitive processes we know today.
Political Lobbying and Appropriations
Government funding didn't always come through competitive grants. Direct legislative appropriations - essentially, getting your organization written into budgets through political connections - was how many organizations in the past secured public funds.
This approach required political savvy and connections rather than grant-writing expertise. Organization leaders needed to convince elected officials of their value directly, often through sustained relationship building and strategic communication of community benefits.
What We Can Learn From History
This brief historical perspective offers some insights for modern nonprofit leaders:
Relationships have always mattered – While grant writing appears more meritocratic, relationships still influence success rates (trust me). The organizations that thrive over the long term understand that grant writing supplements - but doesn't replace - relationship building.
Diverse funding approaches provide stability – Organizations that last rarely rely on a single funding stream. Just look at public 990 data of your favorite, large nonprofit and you’ll see a wide variety of revenue sources and assets.
Local community connection creates resilience – Organizations that maintained strong long, community ties historically had greater longevity. This principle remains true regardless of how funding mechanisms evolve.
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