Not for profit grants are essential to continue delivering your organization’s goals.
You have worked hard to establish your nonprofit. Your mission is vital to your community, and you and your staff are passionate about your work. Still, finding funds to execute your goals is a constant challenge.
Ultimately, a nonprofit’s financial success depends on its ability to effectively balance its revenue and expenses while fulfilling its mission and delivering value to its stakeholders. Achieving this balance requires a combination of sound financial practices, effective fundraising to obtain not for profit grants, and a clear focus on achieving the organization’s goals.
Having a well-defined plan for fundraising activities and establishing solid relationships with donors and supporters is critical. You must also have sound financial management practices, which include developing and adhering to a budget, regularly monitoring and analyzing financial statements, and maintaining accurate records and reporting.
Developing multiple streams of revenue can be very beneficial for a nonprofit. Diversifying income sources can reduce reliance on any single funding source, enabling you to withstand fluctuations in funding from a single source and providing greater financial stability. By reducing dependence on a single funding source, a nonprofit can also avoid the risk of mission drift or changing its mission to align with the priorities of a single not for profit grant funder.
Nonprofits may rely on individual donations, corporate sponsorships, earned income from selling products or services, and not for profit grants. You should carefully consider the risks and benefits of each income source, prioritize those that align with your mission and strategic goals, and develop a balanced and sustainable funding portfolio that supports your mission and allows your nonprofit to achieve its long-term goals.
Given the number of ways a nonprofit can pursue funding and the constraints of time and resources to do so, many nonprofits choose to develop a base of individual donors before pursuing a grant program. A solid base of individual donors can demonstrate community support for a nonprofit’s mission, helping to build credibility and trust with potential grant funders; and help a nonprofit establish its financial stability, making it more competitive in the not for profit grant application process. Individual donors can provide a reliable and sustainable funding source, ensuring stability over time. Individuals may be more likely to provide support for general operating or program expenses, offering greater flexibility than grant funding. This is often required to be used for specific purposes.
While developing an individual donor base is a priority for nonprofits, it is not a prerequisite for starting a grant program. You can pursue both strategies simultaneously- just be sure your nonprofit has the capacity and resources to manage multiple fundraising initiatives effectively.
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In this article, we will offer insights into how to achieve your financial goals by developing a successful not for profit grant program.
No specific percentage of a nonprofit’s income should come from grants, as it can vary widely depending on its mission, size, and funding needs. Some nonprofits rely heavily on grant funding to support their programs, while others rely more on individual donations, corporate sponsorships, or earned revenue streams.
When considering how much funding to seek from grants, nonprofits should carefully evaluate their funding needs and the availability of grant funding in their area of focus. They should also consider the administrative costs of managing grant-funded programs and their potential impact on their overall revenue mix.
Applying for grants on an episodic basis can drain a nonprofit’s resources while producing little result, so it is best to be prepared before you start. Formally incorporate as a nonprofit in your jurisdiction. You must have a clear mission statement showing funders your organization’s value to the community you serve. Show that you are organizationally effective and demonstrably able to execute your goals with measurable outcomes. You must have a budget and financial statements and an engaged and diverse Board of Directors. And you will need to know your allies- key stakeholders or partners within your community.
Nonprofits may pursue several types of grant funding to support their mission and programs. Here are three of the most common types of grants:
Private foundations award grants to support a wide range of causes and organizations. Foundations typically have specific areas of interest which determine their funding priorities.
Corporations award corporate grants to support nonprofit organizations that align with their corporate social responsibility goals or interests.
Government grants are awarded by local, state, or federal government agencies to support a full spectrum of programs and services.
Within these categories, the degree of complexity and difficulty, both in the pre-award and post-award stages, varies widely. Choosing a grant consistent with your organization’s capacity to meet all the application requirements and any post-award follow-up and reporting obligations is essential.
Before developing a not for profit grant program, you must define your nonprofit’s mission and goals. A clear understanding of your mission will help you identify the specific funding needs the grant program should address and the types of funders most likely to be interested in supporting your cause.
You should conduct thorough research to identify potential funders that are a good fit for your organization and programs. Research may include reviewing foundation databases, attending networking events, and conducting online research to learn more about potential funders’ priorities and interests. Many funders have websites that are rich sources for insights into all aspects of their grant program, including beneficiaries from prior years. Several foundation directories also publish this information and the median award amount. These can help you determine your organization’s fit with the funder and the amount of funding that may be available.
Developing a compelling proposal is critical to securing grant funding. Nonprofits should focus on creating a clear and compelling narrative that explains their mission, the specific program or initiative to be funded, the need addressed by the program, and the expected outcomes and impact of the grant.
The importance of effectively describing the need your programs address and the impact the not for profit grant will have cannot be overstated. Need and impact are crucial elements you must deal with in virtually every request for funding.
The best way to illustrate the need for a nonprofit’s programs is to provide data and evidence supporting the organization’s mission and its impact on its beneficiaries. Here are some suggestions on how to do this effectively:
Clearly define the problem: Begin by defining the issue or challenge your nonprofit is trying to address in a concise and compelling way. Use statistics, internal or external research, and real-world examples to support your narrative and illustrate the scope of the problem.
Explain the impact: Describe the impact your nonprofit’s programs have on the individuals, families, or communities you serve. The impact is the difference your nonprofit makes. Funders want measurable results from their investment in your nonprofit, so you must develop tools for evaluating the success of your programs. Along with quantitative measures, use case studies, stories, and testimonials to demonstrate how your organization’s work makes a qualitative difference in people’s lives.
Demonstrate expertise: Show that your nonprofit has the knowledge, skills, and experience to address the problem effectively. Highlight the qualifications of your staff, volunteers, and partners. Explain how your organization is uniquely positioned to make a difference.
Tie it all together: Finally, show how your programs align with the grantor’s goals and priorities. Explain how your organization’s work will contribute to achieving the grantor’s objectives and how you will measure and evaluate your impact.
By measuring the impact of its programs, a nonprofit can identify what is working and what needs improvement. This information can help the organization make informed decisions about allocating resources and improving program delivery. It allows nonprofits to learn from their successes and failures and improve their programs and services over time, leading to more effective and efficient operations and, ultimately, better outcomes for the people and communities the organization serves. Demonstrating that they are using their resources effectively and achieving the desired results enhances the organization’s credibility and builds trust with funders.
Impact is closely linked with outcome, and the terms are often used interchangeably. Impact implies a broader concept than outcome, which may be limited to the observable effects of your work. Although this can be confusing, the terms are usually defined in a not for profit grant application or can be inferred from the context.
Funders frequently probe the long-term impact of a nonprofit’s activities, which can be challenging for any nonprofit to tackle. Smaller, program-driven nonprofits often do not have the tools or capacity to track impact over time. These nonprofits may rely on external research, or where there is no relevant longitudinal study, may be able to extrapolate from their internal findings.
Now that you have laid the foundation for your not for profit grant initiative, you are ready to identify grant opportunities and apply.
Identify the opportunity: The first step is to identify a grant opportunity that aligns with your organization’s mission and programs. Conducting research on grant databases, attending webinars, and networking with other nonprofits to learn about funding opportunities are common ways to find opportunities.
Review the guidelines and requirements: Once you have identified a grant opportunity, carefully review the guidelines and requirements to determine your organization’s eligibility for the grant and ensure you understand the funder’s process. Review the grant application materials and attend any informational webinars or conference calls that may be offered or required. You may contact the funder should you have additional questions.
Develop a project plan or program description: With the grant guidelines in mind, develop a project plan that outlines the goals, activities, outcomes, and budget for the proposed program. Staff members, program directors, or other stakeholders may identify the resources needed and the expected impact of the proposed program.
Write the grant application using the project plan as a guide. Ensure your narrative is concise, compelling, and consistent with the program budget and other documents which may be required, such as a timeline or projection. Completing the application involves collaboration between different levels of the organization, with staff members responsible for developing the program/project plan and writing the application and executives responsible for reviewing and approving it to ensure that the proposal aligns with the organization’s strategic goals.
Review and edit the application carefully to ensure it is clear, concise, and error-free. Working with an editor or peer reviewer and having more than one level of review is best, especially when writing a long or complex grant.
Apply to the funder by the deadline. Submit the application online, by mail, or by email, depending on the funder’s requirements. It is best practice to apply well before the deadline, as funders rarely, if ever, extend a deadline to accommodate any last-minute delays that may arise.
Carefully evaluate the potential risks and benefits of each not for profit grant opportunity before deciding to apply. Consider factors such as the degree of alignment between your program or project and the funder’s field of interest and the amount of funding available. A higher value request where your programs align closely with the funder’s focus may merit a more significant commitment of time and resources. By conducting a thorough risk/benefit analysis, nonprofits can ensure they invest their resources in pursuing grant opportunities that support their goals and are more likely to succeed.
Along with a clear and compelling mission and measurable impact, funders want to see that a nonprofit has strong and capable leadership, including a well-functioning board of directors and executive team. They may look for evidence of solid management practices and a track record of successful program implementation.
Financial stability and transparency are also important. Funders want to ensure that their investments are being used effectively and responsibly. Nonprofits should be transparent about their financial practices and have systems in place for tracking and reporting on the use of funds.
Having a network of connections within your community improves the likelihood that your programs will be successful, fosters trust and may be viewed by a funder as an effective strategy for sustainability and growth. Funders may be more likely to support nonprofits that work collaboratively with other organizations and stakeholders to achieve shared goals. Many not for profit grant applications request information on partnerships and formal or informal collaborations.
Innovative approaches to address social issues and achieve the nonprofit’s mission can be attractive to funders. There are numerous funding opportunities specifically targeted to support innovation. However, every nonprofit should be willing to consider new strategies and demonstrate a willingness to learn and adapt based on data, feedback, and in response to the changing needs of their community.
Funders may be interested in supporting nonprofits that have the potential to scale their impact over time. Nonprofits should demonstrate a strong capacity for growth and have plans in place to expand their programs and services sustainably.
Funders consider the strength and qualifications of the nonprofit’s Board and staff to evaluate the organization’s competence to achieve its mission and goals and adherence to best practices.
There are some key qualities that funders may look for when evaluating a nonprofit’s Board:
Most not for profit grant applications require the submission of a list of Board members (Trustees or Directors) along with their titles and contact information. You may include limited biographical information, such as work affiliations and length of service on the Board, to highlight their qualifications. In the application narrative, your organizational history or executive summary should specify ways your Board engages with and supports your nonprofit.
When considering a nonprofit’s staff qualifications, a funder may look at experience, educational qualifications, leadership and management skills, cultural competence, and commitment:
By evaluating staff qualifications in these areas, funders can better understand the nonprofit’s capacity to effectively implement and manage the program and the likelihood of achieving the desired outcomes.
Not for profit grant funders typically do not evaluate nonprofit volunteers as a specific criterion for funding. However, funders are interested in the ability of the nonprofit to engage and manage volunteers as part of their overall organizational capacity.
In evaluating a nonprofit’s capacity to engage volunteers, grant funders may look for evidence of the following:
Funders may view volunteer engagement as a positive indicator of the nonprofit’s community engagement and see it as evidence of the organization’s ability to mobilize support and resources from a broad range of stakeholders. Additionally, volunteer involvement can improve the nonprofit’s capacity to deliver services and programs, increasing the impact and reach of its mission. By showcasing their ability to engage volunteers, nonprofits can enhance their credibility with grant funders and position themselves as strong candidates for funding opportunities.
The amount of your request is central to your proposal. Determining the amount requires consideration of both the project budget and the amount of funding available. There is no hard and fast rule concerning how much you can request. If this is a foundation or corporate grant, you may look to past grants or the median amount the funder has previously awarded as a guideline.
Consider also whether you are requesting the total amount of the project budget or partial funding. If you request the total amount, be prepared to state whether the project will proceed if you receive a partial award. Whether you ask for the full amount or partial funding, you will need to show how you will fund the balance of the project if the award is less than the total budget.
In some cases, the funder may contact you when they receive your application to discuss scaling the project to fit within an award amount.
Developing a grant plan or strategy involves a deliberate and systematic approach to identifying and pursuing grant funding opportunities that align with your mission, goals, and programmatic needs.
If you have already applied for a grant incorporating the elements discussed above, you have done much of what is needed to develop your plan.
Again, keep your organizational capacity and programmatic needs in mind as you develop your strategy. Perform your not for profit grant research systematically, thoroughly assessing each opportunity.
Most not for profit grant opportunities have a window during which the funder accepts applications and a deadline to apply. Some opportunities are open-ended- you can apply any time during the year- and these can provide flexibility in your planning.
Once you have identified the not for profit grants you will pursue, develop a grant calendar outlining the deadlines and application requirements for each opportunity. A calendar can help ensure that the organization can submit high-quality applications in a timely manner.
To optimize the time and resources invested in applying for grants and produce better results, create a process for proposal development. The process should outline the roles and responsibilities of staff and board members involved in writing the narrative, assembling required documentation, submitting the proposal, and following up on submissions. The procedure for obtaining review and approval from executive staff should be clearly defined. Including a template timeline for completing the steps in the application process will be helpful. The actual timeline will vary from grant to grant, depending on the complexity of the application.
After receiving the application, the grant funder may contact you with questions or to request further information or documents. It is important to respond quickly and definitively.
Carefully consider who will be responsible for responding to the funder’s requests. Senior staff often handle questions concerning scaling the grant or strategic matters. Keep in mind that every point of contact is an opportunity to cultivate the relationship between your nonprofit and the grant funder.
Obtaining not for profit grant funding is becoming increasingly competitive. A relatively high percentage of grant applications, especially first-time applicants, are declined. It is advisable to consider this when developing your grant budget.
If your application is approved, the funder may notify you by phone or email. If it is declined, you may receive a letter indicating why your application was not approved for funding. Often, the reason is that the funder received more requests than they could fund. In these circumstances, consider re-applying in the next grant cycle for which you are eligible under the funder’s guidelines.
When a funder gives a more specific reason for declining, consider that when deciding whether to re-apply. For example, the funder may support another nonprofit with a mission closely aligned with yours and feel that cause has already found its place in its giving portfolio. In that case, while it may not be productive to re-apply in the following cycle, you should keep the lines of communication open for future consideration.
Once an award is secured, you must have processes in place for monitoring and evaluating grant activity, including tracking grant expenditures and outcomes and reporting to funders on grant progress. Many funders require interim and final reports. The complexity of the reports is typically commensurate with that of the grant. As with the application process, it is best to define roles and responsibilities and track due dates well in advance. Not for profit grant reporting is an opportunity to show what you have achieved with the grant funds, highlight the benefit to your organization and the impact on the community, and establish a platform for your next application to the funder.
Cultivating funders is a crucial element in the success of your not for profit grant program. By handling pre-award communications professionally, being responsive to the funder’s questions and requests, providing timely and informative updates on program outcomes, and showing appreciation for their support, your nonprofit can develop long-term relationships with its funders.
When your application is successful, and you receive an award, add that funder to your grants calendar for the next grant cycle for which you are eligible. As you continue applying for not for profit grants, receiving awards, and building relationships with existing and new funders, you will achieve a consistent revenue stream from your grant portfolio to reach your financial goals.
With about 10 million nonprofits worldwide, there are an estimated 1.5 million in the U.S. alone. As described by reporting in Barron’s, nonprofits represent 10% of the workforce, have revenue of $2.7 trillion, and comprise 5.7% of the U.S. economy.
Despite their impact, the nonprofit sector is economically unstable. Thirty percent of social and human services nonprofits face liquidity issues, 30% lost money in the last three years, and about 50% had only one month of revenue as a reserve.
Nonprofits are a force for good. Their primary purpose is not to generate revenue. Nonetheless, every nonprofit must meet its financial needs to survive and grow. In the face of financial instability, the cost of taking the wrong approach to not for profit grants fundraising is high. Having sound guidance as you navigate the challenge of meeting your financial goals can make the difference between success and failure.
Contact Us Today for the confidence of an experienced, award-winning team of non profit industry specialists. Let’s discuss your not for profit grants and funding requirements.
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This article was written by Kristine Westbury for AuroraFinancials.com