So, you want to start applying for grants? Great! Grants are a great additional revenue source for nonprofits. Grantors can often be long-term relationships that have lasting impacts on organizations and the communities they serve. Plus, grants can be incredibly helpful in maintaining programs and services, as well as expanding on them. However, grant funding is an exercise in patience.
There is a myth that as soon as you receive 501c3 status, your organization will immediately qualify for grant funding and that grants will be the perfect way to get your organization off the ground. Unfortunately, there is a lot that goes into being ready for funders to even consider your organization’s application. Typically, grantors are looking for established organizations. They usually look for those with at least three years of diversified fundraising where the grant will make up no more than 15% of revenue.
Eligible organizations ready to put in the necessary work to apply will find that grants can elevate their programming and provide otherwise unavailable opportunities. But grants are an enduring game in terms of fundraising, and not every nonprofit is ready to apply.
Are you ready? Below are some of the minimum qualifications needed for most grants.
Before you can even start to think about grant funding, you want to make sure you have all your ducks in a row. Is the organization’s legal status as a 501c3 tax-exempt nonprofit active? Is the nonprofit complying with all state regulations? In 41 out of 50 states, nonprofits are required to register as a charity to actively solicit donations.
Right off the bat, the first thing grantors want to see is your compliance paperwork. This includes the organization’s Internal Revenue Service (IRS) determination letter, list of current board members, and the proposed project’s budget. Applications often require that these be submitted directly to the grantor for review. Consequently, these are some of the first required documents on the list.
If your board members are not donating to your organization, why should a potential grant funder? Your board members are your VIP volunteers, and they should be your biggest advocates in the community. Even if they are only contributing a nominal amount, showing that they believe in your mission enough to part with their hard-earned money is incredibly important. When you start a nonprofit, your board members are typically your first (and sometimes only) donors and volunteers. They should want you to succeed. Grant funders want to see that they have faith in the mission you are working toward.
Grant funders also want to know that you are not relying solely on their funding to make ends meet and deliver on your services. If you have public support from your community, and your community believes in your organization’s mission, that’s great! You will be much better off when applying.
Grantors want to see you are financially solvent and that if they fund the proposal, they will be increasing the services your organization provides. An established operating budget showing a positive cash flow is crucial. Funders do not want to be the only reason your mission is surviving, and a solely-grant-funded operating budget is not sustainable. Remember, most grantors want to see grants (including their potential gift) make up less than 15% of the organization’s total revenue.
You will need to be able to show that your programs are working and that you are effective in whatever services you offer. Grant funders want to know you are getting results. If they fund you, they want to be making a worthwhile investment. Grant funders will not typically fund newly established programs. They intend to see the numbers on paper referencing your program results over time (usually at least three years).
Your team can make all the difference when getting ready to apply for grants. It’s important to have good people in place who understand your mission, see your vision, and have the skills necessary to get the job done.
Do you have team members collecting data from your programs? Is your team running the programs effectively? Does anyone on the team have the writing capabilities necessary to answer the grant funder’s questions in a compelling and informative way? These are all important questions when starting the grant funding process.
It should be noted there is no shame in outsourcing and contracting help from grant-writing professionals. Grants are often complicated and overwhelming. Sometimes, paying for peace of mind is well worth the cost. Not every organization—especially smaller ones—can afford to bring on a dedicated grant writer (even part-time). That’s why contracting with a professional may be a better approach. Consider what path is the best for your organization’s time and budget.
To sum up, there are many things to think about when starting down the grant funding road. The questions above are just a small sliver of what grants typically require. But, if you have most of these items in place, you are in a good spot to start applying for funding. Good luck!