As a 35+ year veteran of nonprofits, including the last 17 years as a full time grant consultant, I have celebrated many successes and cried over some spectacular failures. That’s the way fundraising life works.
After a few years of working with various nonprofits, I started to notice patterns. While some clients found success easily, others progressed slowly, and some absolutely floundered. Why?
There are some specific reasons and I break them into two main categories: Grant Readiness and Grant Strategy. When these two elements are in place, grant seeking is usually successful.
Here’s what it means to be “Grant Ready.”
Many nonprofits simply don’t have the capacity or ability to attract grants.
This includes not having well-defined programs, poor organizational structures, no history of success (or even worse - a bad reputation!), or other weaknesses.
I created the Grant Readiness Assessment (a free tool available here) to guide nonprofits that want to begin or expand their grant-seeking. It includes 20 questions that, together, measure the organization’s readiness to seek grant funding.
How long have you had your 501(c)(3) designation?
This one is easy. The longer you’ve been around, the more likely it is for funders to give you a grant. Why? Because new nonprofits are risky investments. If you haven’t already proven you are sustainable, it is harder to get grants.
What are your current sources of funding?
If you only have a few sources of funding, you may not be sustainable. Grants are typically only about 10-20% of a nonprofit’s overall revenue. Strong organizations have a variety of revenue streams, such as:
Fees for services
Fundraising events
Contracts
Private donations from individuals
Corporate donations/sponsorships
United Way
Grants
How many consecutive years have you filed an IRS Form 990?
If you aren’t consistently filing your paperwork with the IRS, it looks as though you are disorganized and might not be able to manage a grant. If you fail to file for five years, the IRS will revoke your nonprofit status.
Do you have independent audits completed?
Smaller nonprofits might not have audits done by outside agencies. In fact, not every state requires them of nonprofits. Regardless, having an audit is like a stamp of approval, showing you use sound financial principles and you keep your paperwork organized.
How many volunteers do you have each year?
Volunteers are unpaid staff, but not every nonprofit can or should use them. However, if you have a lot of volunteers, that can indicate public support of your mission -- grantors love to see that!
How many full-time equivalent paid staff do you have?
If you only have a few employees, grantors may worry that you don’t have the capacity to manage a grant. The fewer staff you have, the smaller your grants will be.
Has your board completed the Standards for Excellence of other comprehensive board training?
A strong board of directors is key to a strong and successful nonprofit. Standards for Excellence is a nationally recognized training program to ensure organizations are using best practices. Completing the training shows that your board is engaged and understands their role.
Do you collaborate, share referrals, or otherwise work with other nonprofit organizations in your community?
Grantors don’t want to invest in services that duplicate what other organizations are doing. Working with partners in the community is a strength -- but you need to document what you do!
How many people serve on your board of directors?
The number of board members should be appropriate to your organization size and impact.
Does your board represent the community you serve?
This is an area of weakness for many nonprofits. Your board of directors should reflect the community you serve in terms of demographics. Board members with “lived experience” in your service area (for example, an emergency shelter having a board member who has experienced homelessness) is a feather in your cap. Conversely, having a board composed of all one gender, one race, and/or one age group may be detrimental. Diversity is best!
Do staff members serve as voting members of the board?
The board should be an independent group of leaders. Having staff members serve as voting board members is a red flag for funders.
Do any family members of key staff serve on the board?
Same as above. Family members of staff and/or family members of other board members is a red flag in terms of independence.
Does 100% of your board donate financially to the organization each year?
If your board of directors doesn’t support you, why should anyone else? This is a major red flag issue.
Do you have formal board policies that are reviewed annually?
This is something you have to report on your IRS 990 each year, so you have to make it public knowledge whether you have these policies or not.
Does your board have term limits that are enforced?
Board turnover is key to sustainability. Having the same board members for years and years is a red flag to funders and jeopardizes your organization’s sustainability.
What is your annual budget?
Your current budget reflects the amount of funding you can reasonably expect to receive in grants. Very seldom will a funder give you a grant that is valued at more than 10% of your total budget.
Do you document the demographics of the population you serve?
It’s not enough to say you just “know” the demographics of those you serve. Documenting these demographics is something you will need to do in order to secure funding.
Do you document the outputs of your programming?
Outputs are your activities. The number of people trained, hours of training, people house, people fed, pets rescued, etc.
Do you document the outcomes of your programming?
The outcomes are the changes that are seen because of your outputs. Changes in knowledge or behavior. Longer, healthier lives. Increased income for families, etc.
If you are a faith-based organization, do you require those you serve to participate in church-related activities or require a statement of faith as a condition of receiving services?
If you require participation, this will limit the funding you can receive.
HOW DID YOU DO?
Is your organization ready for grants? You can take our free, no-strings-attached assessment by clicking here.
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