State or federal governments occasionally provide funds to a nonprofit organization in your community, which the nonprofit then regrants to smaller nonprofit organizations. The intermediary is usually a larger, wellestablished nonprofit such as Family Independence Agency, United Way, your community foundation, or your workforce development board.
In recent years, the federal government has used intermediaries to help get grant money to small, faith-based community organizations. These organizations had difficulty competing for federal grants because they often did not have a financial officer or a means to comply with extensive federal reporting requirements.
When this happens, the local agency usually receives some of the grant as compensation for reviewing the mini-grant proposals, distributing the grant dollars, and ensuring that all reports and evaluations are submitted on time to the granting agent.
Intermediary funding is always granted for a specific purpose, and made to a local agency, because that agency knows more about needs in the community. A local agency is also more familiar with the reputation of various service providers than any federal or state government could be.
Community Development Block Grants (CDBGs), for example, are meant to be spent locally, and are used to develop projects that respond to specific community needs. Block-grant money is passed from the federal to state government. The state awards some grants to rural or smaller communities, and passes the rest of the money to larger city governments and lets them administer their own programs.
Another example of intermediary funding was the large tobacco settlement. The money was earmarked for prevention and stop-smoking programs. Some states actually administered the tobacco-settlement funds. Other states, however, passed it to local agencies, such as community foundations. The foundations, in turn, passed it on to local nonprofits that had programs in place that addressed the targeted tobacco-use issues.
In Maggie's state, the tobacco settlement money first went to the local community foundation. The foundation then invited approximately twenty organizations to apply for grants, knowing they either already had programs in place or were capable of putting one together in short order. Technically, if an organization didn't receive an invitation to apply, it couldn't, but Maggie made a strong case for getting one of her clients added to the list.
“I had a client that had a strong program for educating teens about advertising and helping them use that knowledge to produce commercials that rebutted claims in the ads. Their program, however, was not well known.” While her client had not specifically addressed smoking as an issue, she knew that eventually they would.
“I heard about the fund because another of my clients had been invited to apply. So I called the community foundation and told them about my other client's program. They were very nice about it. In fact, they welcomed the idea of teaching teens how to evaluate ads. They invited my agency to submit a proposal. It turned out that both of my clients got their grants, and the one that I had brought to the foundation's attention was awarded twice what they asked for.”