Is your organization…
- Facing a financial crisis and thinking about Grant Writing?
- Launching a new program?
- Hiring a new Development Director or staff member?
- Building a new facility?
Often, these situations require the board of directors to respond to the following question:“How are we going to raise all this money so quickly?” Usually the answer involved Grant Writing.
In our experience, board members make one of the following two suggestions:
“We plan to write more grants!” or “We need another fundraising event!”
Today, we intend to put the grant writing process into perspective!
Grant writing can help secure seed money, expand a program, support a capital campaign, or complete a one-time project. However, grants are by far the least effective way to raise big dollars on a short timeline.
Grant writing is more than simply putting words on paper. The next time your board proposes grants as a solution for short-term fundraising needs, consider the following facts every board member should know.
1. Consider it a RED FLAG if your organization is more than 30% dependent on funds from grant writing for general operating expenses!
Grant writing is great. However, if your organization can’t keep the lights on or critical programs running without grant dollars, you are playing “Russian Roulette” with your mission. What happens if one more of the grants you depend on is not awarded? Are you prepared to fire staff, reduce program hours, or worse, close a program down? Donors request copies of your finances, proof of community partnership, and an outline of your sustainability plan for this very reason! They do not want to create dependency or contribute to a sinking ship.
2. Even grant writing that produces the highest quality proposals might not be selected for funding.
It’s easy to blame the grant writer if proposals are not getting funded. However, while grant writing is extremely important, even the best grant writer cannot guarantee the proposal will be awarded funds. Many foundation donors make their decisions based on priority areas. Your proposal might be perfect, but someone else’s might “resonate” more with that donor. Ultimately, you can control the quality of the narrative, but you can’t control your organization’s specific tier or geographic region.
3. Most grants are part of a competitive grant cycle. Just because your organization is “encouraged to apply” does NOT mean grant writing will result in funding.
Program officers encourage all “eligible” participants to apply. Donors love to entertain diverse proposals. Encouragement is amazing but it’s not an award notification. There is a lot of relationship building that needs to happen between and organization and a prospective donor (be it a foundation, business, church, or individual). Donor-relations that build donor-retention apply to the foundation world too.
4. Grant Writing does NOT mean FREE Money!
A grant is an investment. Donors want to fund your organization’s IMPACT, not your existence. Your organization must submit realistic proposals, establish efficient tracking systems, and report your impact to the donor. It is easy to focus on the size of the check and forget that your grant proposal is essentially a contract. You cannot use grant dollars for anything you want. Remember, you must restrict the use of those funds to the line items you submitted in your proposal. If you do need to make programmatic or budget changes, you must reach out to the donor to request authorization. In many cases, donors even expect grantees to sign a contract. If funds are not utilized in the approved manner or performance goals are not met, the organization may be required to reimburse those dollars.
5. Quality proposals depend on quality program designs.
Your team must develop a strong program design before ever submitting a proposal. The grant writer must have access to key information. Examples include the program/project need, financial documents, prior impact data, partnership agreements, goals/objectives, and evaluation processes. Even the most gifted grant writer cannot be expected to “whip up a winning proposal out of thin air” any more than a professional jockey could be expected to win the Kentucky Derby riding a pony.
6. Grants alone do not create sustainability but certainly can contribute to support capacity building and sustainability initiatives.
Donors are investing dollars in your proposed project or program. Therefore, your board and staff should actively seek ways to invest those dollars, not just “use” them. Consider ways to maximize the long-term impact. Capacity building initiatives include things like the creation of new program. Another example is the development of a comprehensive marketing plan and outreach materials. Along those same lines, update your website to increase visibility, engagement, and online contributions. Don’t forget Board Development training. Remember, capacity building is any initiative that will benefit your organization beyond the grant cycle.
7. Grants can take 6-9 months to secure.
Grant cycles vary. Some happen on a “rolling basis” while others involve a 6-9 month process. There are several steps in the typical grant process. Steps include things like grant research, relationship building, crafting a proposal, waiting for award notifications, and finally receiving a check! For this reason, most grant writers recommend that organizations identify their projects and begin prospecting for grants 12-18 months before they need the dollars in hand. State and Federal Grant cycles can take over 12 months.
8. Donors base their award selections on their stated priorities and personal passions.
In a nutshell, this means your “perfectly written proposal” might not resonate with the donor enough to be granted.
9. Grants are never guaranteed from year to year.
If your organization has been awarded the same grant annually for a decade, that’s wonderful. However, that doesn’t guarantee future grants. Unless a grantor has specifically committed to long-term support, you must budget as if those dollars might not be awarded. Many multi-year grants are dependent on the achievement of annual goals and can be canceled if stated goals or benchmarks are not met.
10. Grants that support project materials, but not the staff salaries and overhead to support it, can create a burden on your organization.
Before you pursue a grant to hire a new staff member for one year, carefully consider how you intend to sustain that position after the grant cycle. It is not realistic to expect that within their first 9-12 months a new employee can learn the organization. It takes time to connect with clients and the community and successfully raise their salary for the next year! What is your current team’s capacity? Can they manage the increased workload that comes with the program and grant reporting requirements?
11. Be prepared to modify project design and fundraising strategies should you only receive partial funding.
Grantors often ask, “Will you be able to successfully implement this program/project if your organization is only awarded a portion of the funds requested?” Be prepared to respond to this question by considering questions such as: Can you break down the service cost per client? Can you reduce program hours without jeopardizing the program impact? How will you leverage the additional support on time?
12. Most grant proposals require that you include a sustainability plan to ensure that the program/project can continue after grant funds expire.
Donors seek to make an investment in your mission. They expect the board and staff to be diligent in creating a diverse and sustainable funding base. General operating and program grants are wonderful resources. That said, you need to understand that those dollars are a steppingstone as the organization continues to leverage community support to grow and maintain your mission.
13. Many grant proposals require that the organization share the percentage of board members who contribute financially to the organization annually.
Yes, you read that correctly. Donors want to know that board members have some skin in the game! Why should a foundation or any donor open their wallets to support a cause if every single governing board member is not willing to do the same? Grant applications typically request the percentage of board members who contribute financially to the organization. However, it is not uncommon for grant applications to require the total dollar amount board members contributed in the past year. Sometimes they ask for the percentage of the total budget comprised of board member contributions.
14. State and federal grants often award funds on a reimbursement basis.
This payment schedule can present lots of challenges for nonprofits with limited cash flow! Ideally, your organization should expect to pay out 3-4 months of program expenses before receiving reimbursement funds. (Because we all know that the government’s top priority is making sure you get your checks on time! Right?)
Many organizations prepare for state or other reimbursement grants by creating a reserve fund. Others partner with their local bank to establish a line of credit to specifically cover grant program expenses. This ensures that there is no lapse in programming between reimbursement checks.
As you work to build capacity within your organization, educate your Board on Grant Funding. Board support is needed at all levels, and understanding the ins and out of grants is a great place to start. Maybe you want to print a fact sheet to share with the board. Take time to review it for 5 minutes at a board meeting. Be sure to address questions so everyone is on the same page. Adding a grant update might be a great addition to an upcoming board meeting.