by Mandy Pearce

You want your budget to look bad?

Here’s a question that took me by surprise during our most recent Live Stream event on grant writing.

Question: What will foundations think if I have good financials and I’m not in the red? We have had great years for the past few years and our end of year financials have been in the black. But that doesn’t mean it will continue with
that trend. 228b8eec-e5a3-4fe9-8612-9585c986083c

I was actually taken aback when I read this. This person actually thought they needed to show desperation and a really bad situation to a foundation in order to secure grant funding. Additionally they wanted to focus on the fact that they could be in a bad situation again in the future, instead of the fact that they are indeed doing really well now.

I’m going to have to go ahead and let you in on a secret, that is just not the case as you should always aim to show positive budgets and how well you are doing.

Today more than ever, donors look at granting as investing. Donor/Foundation/Prospects wants to know that there will be a return on their investment (ROI) when they grant you dollars to generate impact. Quite often, they also want to know what that impact will be and if you accomplished those goals. Organizations with scary financials are not really the best ‘investment’ opportunity.

Think of foundations like bankers. If you are barely paying your bills, have tons of credit, maybe you have missed payments on bills and are just scraping by, would you go to the bank and ask for a loan and think you would be a prime candidate to receive one?

Probably not.

Banks, much like donors, want to know that you and your organization are a good investment. That you will be able to accomplish your goals with the dollars they give and that you won’t be closing your doors without the money or that you are barely scraping by.

The desire to know how you are doing financially is one of many reasons a lot of grant proposals require submission of previous, current and projected financials for an organization. They also often require a copy of your most recent audit and/or 990s.

The better your financials, the more appealing you are to donors.

I get the same question in regards to endowments. “If we have an endowment, won’t donors be less likely to fund us because we have money saved up?”  Nope, not the case.

As always, I encourage you to learn all you can about any foundation and then start building a relationship with them prior to submitting a proposal.  Many of your concerns about your financial health could be put to rest with such a conversation.

I hope this helped debunk a myth that is apparently alive and well among nonprofits. Keep growing, producing great looking budgets, building your capacity, and creating impact in your respective fields.

I’m heading out on my honeymoon as you read this today. I’ll be in touch from the road. Be looking for some Facebook Live videos and possibly a new vlog or two from interesting places.

Keep Growing For Good! – Mandy

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