Sources of Project Funding

FUNDING PROJECTS

Finding the resources for project funding is THE KEY ISSUE for getting your building project implemented. You may not need a lot of money to start up your project planning, but it is the nature of building that you will need large injections of funds to get beyond the planning and design stages. There aren't endless solutions to the funding issue. The main solutions that are used over and over are listed here for your consideration.

Money in the bank.
This methodology either takes foresight and patience or the project must be small in comparison to the organization's annual revenues. A large benefit is that interim financing is all but eliminated, and that can be a major cost.

Borrow money from a bank.
Borrowing money from a bank would usually take the form of a mortgage. Complications may arise if ownership of the land and any existing buildings is not simple, or if the proposed building will be non-commercial, e.g. a museum or a church.

Industrial Revenue Bonds.
Not every project will qualify for Industrial Revenue Bonds, but despite the name the project does not have to be industrial. Experts will be needed to handle the "red tape". Even so, the overall cost can be less than bank financing.

Developer or investor funding.
This method provides the funding through a developer or an investor who then leases the completed project to you. This is like leasing a car. This "build to suit" approach can be more affordable because there is no limits on how you structure the deal, but it usually costs more in the long run - just like leasing a car. This process is simplified if the other party already owns the land.

CDBG funds.
Community Development Block Grants are available for very specific community needs and are open to government agencies and some non-profit organizations. Competition for the funds is stiff. The big
  benefit is that up to 75% of the costs could be paid by the grant. The downside is that you will spend about 10% of the cost of the project with no assurance that you will ever receive funding.

Foundation grant.
This approach is usually only available to non-profit organizations. The first key to making this work for you is to find a foundation whose mission is in alignment with your own. The second key is making a compelling case. Most foundations are very rigid in their requirements for submitting an application, so don't give them a reason to turn you down by not following the "rules".

Fund raising.
You need to be a non-profit organization for this to be viable. A 501c3 tax status is almost mandatory. An appealing mission and a compelling need are big helps. A fund-raising consultant can teach you the ropes and guide your efforts. It is a major advantage if you already have a good base of supporters.

Parent organization.
This is rare; but, if you are part of a larger organization, your project may be able to get funding from your parent organization.

Government money.
If you have the right political connections, you could be the beneficiary of an "earmark" or "line item grant" in a spending bill at state or federal level. This is otherwise known as "pork barrel legislation".

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