I've wondered about this issue also.  We send out a newsletter
monthly--a paragraph or two about written by the grants office, a
cartoon, lists of opportunities divided into broad categories (arts and
humanities, agriculture, education, environment, etc.), and lists of
proposals submitted and grants received.  It does take some resources
(time, subscriptions) to crank it out.

Every now and then I've asked faculty and staff if they read it--yes, they
usually say.  If I poke a little further, they will frequently confess to
looking at the cartoon first, then scanning the list of folks who received
grants, perhaps looking at the list of folks who submitted grants, and
maybe looking at the sections devoted to their own disciplines.  Should
we keep sending it out?  Yes, definitely.

This year we distributed a questionnaire to measure the impact and
effectiveness of the grants office.  We asked a few questions about our
newsletter: (N=124 respondents)

Do you receive it?  124 yes, 0 no
Do you read it?  116 yes, 4 n o
Has it helped you identify any grant opportunities which you have
pursued (successfully or unsuccessfully)?  59 yes, 63 no
Should we continue preparing and distributing this newsletter?  110 yes,
6 no
(stuff snipped)
The Grants Office's methods of publicizing opportunities is (likert scale,
1-5): 4.33, with 5 excellent, 1 terrible

We will continue to distribute the newsletter, needless to say.  I think we
would have anyway; it's a good way to maintain a visible profile in the
university community.

We also asked in our survey if there were other ways we should be
publicizing grants opportunities.  A surprising number of folks said
electronically--email, gopher, www.  (That's surprising to me because
our campus is just now getting wired.)  I'm working on that this summer.

I'll be curious to see how others answer this inquiry.

Regards, Bill Campbell
Director, Grants & Research
University of Wisconsin-River Falls (a regional comprehensive of 5000
students)