7 Things To Consider Before Adding Grants to Your Budget

by | Dec 6, 2017 | Budgeting, Development/Fundraising, Grant Writing

Have you ever heard of a nonprofit that didn’t apply for grant funding? Adding grants to your budget may be something you choose not to do.

Would you like to be one of those organizations?

It might surprise you, but they exist. Some folks generate sustainability without relying on grant funding. It takes works, but it is possible to operate without adding grants to your budget.

Do I recommend everyone eliminate grants from their radar? No, of course not.

Grants exist in the nonprofit world for a reason. There are some ideal times for adding grants to your budget. I encourage you to learn about those times and determine what is a good fit for you and your programs/projects. You should also consider your time availability to apply for and manage grants and your desire to implement additional diversified funding streams to your budget.

I have worked with nonprofits that have been around for 50 years and are just now venturing into the grant world. They usually take the journey because of the economy, but not because they want to rely on grants. Adding grants to your budget should be in addition to your other funding streams, not the main source of income.

So, don’t assume just because you are a nonprofit organization, you are ‘suppose’ to apply for and rely on grants. That is not the case. Many experts in the field agree that a healthy nonprofit should never depend on grant funding for more than 30% of its’ total operating budget. 

Consider these 7 thoughts when determining your organization’s readiness to apply for a grant:

1. If you are in a place where you have met your capacity (staff, space, program, etc.), it might be time to look at capacity building grants so you can grow, build, or expand.

2. If you have an upcoming capital campaign, you may consider making grants a portion of that campaign to ensure its’ success and speedy completion.

3. If you are in a field where long-term funding sources have been cut or eliminated, then you may need to look to grant funding until you can rework your game plan for sustainability.

4. If you have programs or projects that are excelling and you feel grants may highlight some of these opportunities and allow you to serve more in your field, perhaps it is time to research what is available in terms of grant dollars.

5. Additionally, you should never ‘create’ a program or project to fit a grant you have found. Decide on your needs, list them, associate a dollar amount with each need, understand them, and then research grants that match those needs.

6. If your organization has a budget or a previous year’s budget in the ‘red,’ you may not want to consider adding grants to your budget until you have a few years in the ‘black.’ Donors will see you as a risk and often times will not look favorably upon your request.

7. If your organization is in its’ infancy, you may find seed money to support your work. Often donors require organizations to demonstrate their history of success prior to considering funding. In many cases, donors may require 3-5 years of successful programming. So, despite a perfect fit on paper, you may not qualify due to the amount of time you have been providing services.

There are many nuances to consider before beginning to utilize grant writing as part of your annual fundraising plan. But, there is also a lot to consider each year before you decide to continue grant writing in your fundraising plan, or removing it, decreasing the dollars you hope to raise through grants, or reducing the dollars you need.  Your reliance on grants should be strategic, and if need be, consult with peers or other development professionals to help analyze your individual, organizational needs before making these.

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