Should Grants Be a Part of Your Fundraising Plan?   Recently updated !


by Mandy Pearce

Are you the founder of a new nonprofit, an employee in an existing nonprofit, or possibly a board member serving a nonprofit? If so, you have probably wondered about the fundraising plan for your organization.
What should you be doing?

What should you NOT be doing?

Are you holding enough fundraisers? Should you participate in #GivingTuesday? Should you do direct mail? The list goes on and on.

But the question we are here to discuss today is: Should you start writing grants, and if so, when, for how much, why and to whom?

It might surprise you, but there are many nonprofits that do not, and never will, apply for grant funding. So, the short answer to the question about if you should is, it is complete variable based on your organization and your needs.

Grants exist in the nonprofit world for a reason. There are some ideal times to write grants and I encourage you to learn about those times, and determine what is a good fit for you, your programs/projects, 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.

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 6 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. 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.
  5. If your organization has a budget or a previous year’s budget in the ‘red,’ you may not want to begin writing grants 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.
  6. 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. 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, not automatic.

All too often people think of grants merely because they qualify to apply as a nonprofit, or there is a new federal program that fits their for-profit needs, or they are under the impression that grants are ‘free money.’ These are all bad reasons to write grants as a revenue stream for ANY organization.

If you are creating programs or projects to fit a grant, you have found or heard about, that is not the right order of operations. Decide on your needs, list them, itemize the cost for each need, and include the timeframe for when you need the dollars in-hand. This will help you understand if you have time to raise the dollars through grants and find well-matched foundation prospects that are interested in funding your specific needs.

If you have considered the information above and feel you ARE ready to add grants to your fundraising efforts, I would ask, “Do you have a fundraising plan?”

Most of the time, that answer is no.  If you don’t have a fundraising plan, I encourage you to develop one. Next to an organizational strategic plan, it is one of the most vital tools in your fundraising toolkit.

For those rare birds who do have a written fundraising plan, I then ask, “What is your current needs list?”  A majority of those folks do not have any idea what that is.

If you don’t know what needs you have, and you don’t have a written plan on how you are going to accomplish your fundraising goals, why on Earth do you think you need to write grants? *Note: There is a big difference between a ‘needs list’ and a ‘wish list’.

Here at Funding For Good we understand the challenges facing many nonprofit organizations and realize how important establishing quality foundations can be in maintaining and growing income and services. The services you provide fill many needs in your community and you want to know they will be around for years to come.

Whether you are new to financial development, taking on program or project budgeting for the first time, or just stepping into the world of fundraising, there is a lot to take in!

Without first knowing the foundations of developing a budget you can use to help raise money, it will be difficult to successfully diversify your funding streams and increase the number of donors supporting your work, whether they are foundations or individuals. You need to establish budgets that will provide sustainable revenue for your programs/projects so you can get to the business of serving those in need.

What if you could serve more and crisis fundraise less?
Would you be less stressed?
Would you be able to grow your organization?

As a development director and coach, these are some things I always evaluate throughout the year and evaluate for the fundraising plan I will create and use in the upcoming fiscal year.
Here are some actions steps you can take now to prepare for success in the coming year.

  • Review your current budget and identify any missing line items.
  • Generate an accurate and realistic budget that will serve as a major fundraising tool with the help of other key decision-makers in your organization (board, executive staff, department heads, etc.).
  • Focus on three major components often left out of the budgeting process (volunteers, in-kind goods and in-kind services) to create accurate budgets that will tell your story to donors.
  • Firm up your next year’s budget before the end of your current fiscal year.
  • Create a message from your numbers to show your impact and secure more dollars.

I hope this information will help you evaluate if grants should be added to your fundraising plan,if you should eliminate them, or possibly increase/decrease your efforts with grants in the upcoming fiscal year.