The 2013 Giving USA annual study reports that, on average, 21 percent of a nonprofit’s income comes from a combination of private foundations and corporations. This is good news for nonprofits because foundation giving is up 4.4 percent over the prior year and corporations are giving 12.2 percent more than the previous year. To access these philanthropic funds, most foundations and corporate giving departments require nonprofits to submit information explaining why they want these dollars. Sometimes, the funder will request a detailed grant application, but more and more, foundations and corporations are first requesting a Letter of Inquiry or Letter of Intent, called an LOI, from nonprofits instead of a full comprehensive proposal.
Using an LOI as a way for a funder and a nonprofit to get acquainted is mutually beneficial to both parties. For the funder, an LOI is an expedient way to know if a nonprofit’s mission and goals match its funding priorities without having to have staff review pages and pages of a full proposal. For a nonprofit with limited resources, an LOI requires far less time to compose than a full proposal and is a good way to present a project idea for funding without having to invest the countless hours of writing typically required for a full proposal.
But a good LOI is a lot more than an abridged version of a full proposal; it must be compelling, engaging, and sufficiently interesting enough for a funder to say, “This project idea is intriguing and matches our mission. I want to learn more about it so that we can possibly fund it.” An effective LOI, though usually no more than three pages, is often more difficult to write than a full proposal because it must be succinct, yet convey the organization’s need or community problem to be solved; the proposed solution; the nonprofit’s capacity to address the need or solve the problem; and enough budget information so the funder can envision how its gift will be used.
Impact100 Sonoma, a local women’s giving circle that has raised over $900,000 for Sonoma Valley nonprofits over the past 5 years, relies on LOIs to screen its grant applications. Many members of Impact100 Sonoma are currently reviewing LOIs submitted by local nonprofits and on February 21 will invite nonprofits with impactful LOIs to submit full proposals, due March 24.
Grace Meeks, Impact100 Sonoma board member, oversees the process by which the organization selects its $100,000 annual grant recipient. Recently, she commented, “A good LOI not only needs to be brief in its descriptions, but also very clear in the point it’s trying to make. The reader wants to be able to understand the problem, the proposed solution and how their organization can implement the solution. It needs to be understood how the money being requested will be used. When a Letter of Inquiry form is provided by the giving organization, it’s important to answer the questions being asked. Additional information can be added, if pertinent, but an LOI that is wordy for the sake of being wordy is hard to evaluate. The intended message can get lost in all the words. Basically, an LOI should be succinct, clear and compelling.”
To write a successful LOI, the first step is to check if the funder has published guidelines. If so, follow them to the letter and ask for clarification if anything is unclear. If there are no guidelines, use these tips for writing an effective LOI:
Develop an exciting, compelling project title to capture the funder’s interest.
Create a hard-hitting project summary that describes how much funding you are requesting, what your organization plans to do with the funding, and what will be the results.
Concisely describe your organization’s history, services, and capacity to address this community need for which you are seeking funding.
Provide a statement of need to convince the reader the community need is important and that your organization is uniquely suited to address this need. The statement of need often includes a description of the target population, geographic area, and research to support this need.
Describe the methodology you will use to implement this project in a clear, logical way that will address the community need. This section should include information about project staff, major activities, and specific intended outcomes.
Briefly present your budget to implement the project, identifying additional funding sources that are committed or anticipated.
Include a summary that restates the project’s intent, convinces the reader that your organization is poised for action, lets the funder know you are open to further discussion regarding your project and organization, and thanks the funder for this prospective partnership opportunity.
A strong LOI is a great way to introduce a prospective funder to the work that a nonprofit is doing in the community. While only a foot-in-the-door, it can be an important beginning of a long-term relationship that benefits the nonprofit, the funder, and the community.
Dr. B.J. Bischoff owns Bischoff Performance Improvement Consulting, a Sonoma firm that builds the capacity of nonprofit organizations and public sector agencies to better serve their stakeholders. She is President of Impact100 Sonoma, leads the Sonoma Valley Presidents Council and serves on the Sonoma Upstream Investments Portfolio Review Committee as an appointee of the Sonoma County Board of Supervisors. Contact her at bjbischoff@bjbischoff.com.
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