Most charitable nonprofits (501c3) include grants in their baskets of income. Grants usually come from foundations (private or corporate) or a government agency (federal, state, county, or city).
The IRS defines a grant as "Payments to exempt organizations to further the organizations' exempt purposes." Grants do not usually include salaries or other employee compensation or payment for services rendered.
Charities write grant proposals or applications according to the guidelines issued by the granting entity. Grant writing is not for the faint of heart. It takes a genius for research and organization, the organizational skills of a report writer, and the ability to write clearly about complicated issues.
There are several stages of grant proposal writing, ranging from gathering organizational documents to final editing. Here is an overview of some of those steps and suggestions for becoming a better grant seeker.
How to Develop a Grant Proposal Writing Process
Writing a grant proposal should not be a single experiment. Charities rarely write just one a grant proposal. They write many grant proposals.
Grant proposal writing should be an ongoing process and an integral part of your overall fundraising program. Why? Because there is a lot of competition and not enough grant money to go around.
A rather small percentage of grant proposals get funded. Among foundations, the percentage of grant applications that get funded compared to the number of proposals received ranges from 11% to 50%, according to one study.
That study also found that the reasons grant applications don't receive funding are that the foundation doesn't have enough money to fund all applications. Many applications fall outside the foundation's interests. And sad, but common, the application did not follow the foundation's guidelines.
Thus, charities need to plan to write many proposals over time and to set up a logical grant proposal writing process to sustain that effort.
Being Well Organized
Grant writing begins long before you have the grant to write. Grant writing starts with organizing information. Even before you start looking for funders, an in-depth understanding of your organization's mission and activities plus a trove of easy-to-tap organizational details are essential. Once well organized with all the facts and data you'll need to make your case for funding, writing the proposal will be more efficient.
Start a Grants Calendar
Creating a comprehensive grants schedule or calendar takes time and some super organizing. However, that work upfront will save you countless hours and resources over the years.
This calendar will be reasonably simple initially, but as your grants program grows, so does the value of a comprehensive schedule. You'll use it to keep track of your grants research, grants submitted, grants received, deadlines, reporting dates, and progress.
Although an Excel spreadsheet might work well, initially, you may want to invest in accounting software or donor software that makes it easier to keep track of grants throughout their life cycles.
How to Find and Cultivate Funders
Steps to Finding Funders
Looking for appropriate organizations that might fund your grant can be overwhelming. Cut it down to size with a system. Follow these tips for a start.
- Make a list of search criteria. Consider keywords, subject matter, geographic area, target audience, gender, race, and ethnicity.
- Use the subject index of the directory you use. Use your search terms. And search by interest, type of funding needed, and location.
- Learn as much as possible about possible funders. What are their areas of interest? Do they fund locally or nationally? Who are the staff and board members? Matching your interests to those of the foundation or government agency is very important. A good match saves time and energy.
- Visit the website of potential funders. Read their annual reports, peruse lists of previous grants, examine staff biographies, and anything else they are sharing with the public. Read their grant guidelines. Don't hesitate to call and chat with a program officer.
- Target your proposal to a particular funder. After your research, you should be able to speak to that funder in terms that best fits with their needs, mission, and culture. Never send the same proposal to several funders. Also, do not cut and paste from previous grant proposals. Each proposal must be as unique as the funders to which you apply.
- Create a prospect spreadsheet. List every prospect identified; how your organization aligns with each prospect's funding interests; your proposed request amount; deadline; other pertinent information.
- To save time, use all the online resources you can find. Many resources are free or low cost and include Candid, The Foundation Directory Online, Grants.Gov, Guidestar, and The Grantsmanship Center.
Is There Value in Grants for Small Nonprofits?
So you're small. Does that mean you can't get grants? How can small nonprofits compete for grants, and where should they look for grantors?
The answers are "yes small charities do receive grants" and "locally." Although large, national foundations get all the press, most private foundations are small with less than $10 million in assets. These foundations are usually family-based and fund local causes. Small nonprofits that serve a local clientele should find these local foundations and learn about their missions. Time spent in this way will likely pay off handsomely,
Navigating the Grant Writing Maze
Types of Grant Proposals to Write
There are at least three types of grant proposals. The multi-page grant proposal chock full of details and data is likely what we think of when considering starting a grants program. But two of these often-used proposals are surprisingly short.
- Letter of Inquiry (LOI). The LOI, usually sent to a foundation, summarizes the request for funds, briefly outlines the project proposed, and explains how the project fits with the foundation's interests. The LOI runs to two or three pages and simply tests the foundation's interest in the project. Many foundations now prefer that an LOI be submitted first. If there is a fit, the nonprofit may be invited to submit a full proposal.
- Full Proposal. A full proposal follows a standard format that includes a cover letter, a summary of the project, and the amount of money requested. The length of the full proposal can be as short as five pages or run to 25 or more. The foundation will provide specific guidelines for a full proposal. Follow them totally.
- Letter Proposal. This proposal, a letter of 2-4 pages usually, most often goes to a corporation or business. The letter summarizes the request and asks for a specific amount of money or a gift-in-kind. You might use this format when requesting the company to sponsor an event or participate in a cause marketing campaign. These types of requests most often go to the marketing or advertising department, rather than to the corporation's foundation or charitable foundation.
Grant Proposal Basics
Most full grant applications, from summary to budget to cover letter, require the same necessary information. Many grant-making organizations have their own proposal/application forms, although a few may only give you some basic guidelines. Here are the most common sections of grant proposals and the information you should include.
- Cover Letter. The cover letter comes first in your proposal, although it is written last. Don't just dash it off, though. It should introduce your organization and draw in the reader. Consider it the front door of your proposal, so make it as inviting as possible.
- Summary. The summary comes second, not last. It gives a taste of what is to come in a brief, concise way. Make it no more than a page long.
- Need Statement. Here is where the rubber meets the road. Explain what you wish to do, why it's important, and why your organization is perfectly positioned to do it.
- Goals and Objectives. The need was the problem you hope to solve. Goals and objectives explain what you plan to achieve and how you will do so.
- Methods, Strategies, or Program Design. In this section, you will explain how you will go about achieving the goals and objectives. Explain your timeline and who will do what.
- Evaluation. Funders want to have some proof that your program worked. Explain how you will evaluate your outcomes in detail. What will you measure, and how will you measure it.
- Other Funding or Sustainability. Although a funder may only provide support for a limited time, they will want to know how your program will continue to serve the community. How will you fund the project in the future? What other sources of income might you have?
- Information About Your Organization. Explain your mission and history. Why should the funder trust you to carry this project forward?
- Project Budget. How will the funder's money be allocated? What are the direct and indirect costs? Detail expenses and income.
- Additional Materials. Include in your proposal package information about your overall finances, such as copies of recent audits and 990s. Provide a list of your board of directors and your IRS tax-exempt letter.
Should You Hire a Professional Grant Writer?
Pros and Cons of Hiring Outside Help
Are you even sure that you want to write grants? Perhaps it would make more sense to hire a professional grant writer for a fee. What are the pros and cons of hiring an outside professional grant writer?
Pros: The professional grant writer can focus and get the job done quickly. That's his or her only job. She knows how to meet deadlines since her job depends on it. You still have control, since you can terminate a grant writer if you are dissatisfied. The grant writer has the experience and knows his way around all of the databases and how to search for appropriate grant opportunities.
Cons: It's hard to find precisely the right person who fits well with your organization. You won't be the grant writer's only client but will have to share their time with others. An outsider does not have the institutional memory of an insider. Finally, a professional grant writer might just cost too much.
Common Proposal Writing Mistakes to Avoid
Avoiding common mistakes can be more helpful than you might think. Martin Teitel gives us the view from the other side of the desk as the ED of a foundation who has seen thousands of proposals over the years. He says that there are five common mistakes that proposal writers make.
- Talking about problems more than solutions. Teitel reminds us that a proposal is not an educational communication or a newsletter article. Although a proposal should explain the question one wants to address, the emphasis should be on the solution proposed.
- Suggesting general solutions to specific problems. Your goal in a grant proposal is to convince the funder that you can and will solve the issue at hand. To do so means to drill down on the solution and be very specific.
- Using buzz words and jargon. You and your team may understand the terms and acronyms specific to your field, but don't use that language in your grant proposal. Translate everything into simple language that paints a picture for the reader.
- Creating budgets that don't make sense. It's not only mathematical errors that can undermine your case, but also not making sure that the budget makes logical sense within the context of the project proposed.
- Repeating exact phrases from the funder's guidelines. Cutting and pasting just doesn't work. Be creative in wording your proposal in a way that is original yet conforms to the guidelines. Also, do not cut and paste information from prior grant proposals. Such repetition can be dangerous and easily detected when a bit of information doesn't fit, such as a date or a name.
Although there are many aspects of setting up a grants program and then putting together successful grant proposals, attendance to the tips above may help you get started and keep you on track.