No one ever said that rolling out a grants program is easy.
Unfortunately, many nonprofits think writing and getting grants is impossible and pass on a valuable source of funding. Or they may try once, get turned down, and decide the situation is hopeless. On the other hand, some charities believe that if they could just get grants, they would be financially successful.
None of these extremes is correct. They are myths. Nonprofits, even smaller ones, can secure grants, but charities should not depend on grants as their only source of income.
Myth #1: We Couldn't Pay the Grant Back
Grants are not loans. They are donations. You do not have to pay them back or pay interest. Foundations give grants to exempt organizations that are doing work that fits with the grant giver's agenda.
Foundations typically work on particular issues. For instance, the Ford Foundation has an interest in "challenging inequality." That mission is broad and covers many subtopics.
On the other hand, the Marshall Foundation in Tucson, Arizona, focuses on education from early childhood through undergraduate. It works with the local university and school districts.
Although grants are not loans, they do come with strings attached. If you receive a grant, you will need to adhere to the grant giver's specifications as well as report back on your results. Part of your grant proposal should include a section on evaluating your project and how you will recognize success.
Expect oversight from your grantor and deadlines you must meet for reporting back.
Myth #2: Getting a Grant Will Solve Our Money Problems
Charities must keep grant funding in perspective. Here are some facts worth considering.
According to a 2019 report by the National Council of Nonprofits, there were 1,298,348 charitable nonprofits in the US and 126,676 private foundations. Foundations contributed just 9% of all income to charitable organizations.
We can see that foundation funding is just a drop in a large bucket of income for nonprofits. The truth is that 80% of nonprofit income is from other sources.
The competition for grants is intense. That is why grant seeking is not a one-off. Successful charities commit to creating a grants program by researching grants all the time and making applications for grants frequently.
Grant proposals are rejected far more often than they are accepted. Grant seeking is a long game and may take years to pay off.
Also, some charities, especially new ones or those that are in danger of failing, think that a grant will solve their problems. As a new nonprofit, grants should not be your first attempt at fundraising. Foundations do not usually fund startups, and they usually do not help organizations that are already in financial trouble.
Foundations generally expect charities that receive funds to be financially stable. However, under certain widespread emergencies, from 9/11 to the 2008-9 financial recession, to the more recent public health and economic crisis, foundations have helped charities in trouble or stepped up the help they already provided to their grantees.
Generally speaking, grants should not be your first or last line of defense. However, there are many ways to develop your charity to the point where you are ready to go after grants.
Myth #3: We Just Need to Send in a Proposal to Get a Grant
Just dropping a grant proposal into the mail does not work. That would be like cold calling a prospect in sales. It's ineffective.
Finding and securing grants is not that much different from other kinds of fundraising. For instance, getting grants involves building a relationship with funders just as you do so with individual donors.
Start that relationship when you do your research. Don't hesitate to call a foundation to test the waters. Would they welcome your application? Strike up a conversation with a program officer or the founder of a small foundation.
As you do your research for funders, take note of foundation trustees and staff and forward those names to your board to see if there are any connections. One may well turn up. If so, see if your board member will make a call to find out more. Even if you start with no contacts, you can still get funding, and, as you gain experience, your contact universe will grow.
And don't overlook networking with foundation staff. Seek them out at conferences, call a program officer at a foundation, and discuss your project and whether it is a good fit. Follow the foundation on social media. Sending in a grant application cold rarely works. So find ways to make a connection before you ever ask for money.
If a foundation rejects your application, find out why and if there is anything you can do better or differently. Always ask if there is another funding source that they can recommend.
Myth #4: Foundations Cut Back on Funding in Tough Times
Indeed, funding goes up and down, depending on the economy and even politics. But foundations are just as likely to step up their funding in hard times as they are to cut back.
Don't be discouraged by the ups and downs of funding. You have to start somewhere. Investing in a grants program is like investing in the stock market. Just keep it up through thick or thin. Eventually, it pays off
Remember, too, that it may be a year or two before any grants start coming through. Some foundations only meet once a year to make funding decisions. Anticipate the lag time and learn about each funder's grant cycle.
Myth #5: We Need Operational Support and Foundations Don't Provide That
It is true that, according to one survey, only 32% of foundations provided operational support to grantees.
However, the thinking on operational support may be changing as foundation leaders come to realize that maintaining the underlying health of the nonprofits they fund must be considered. Most grants do include a percentage of its funds for overhead, although many experts argue the percentage is not enough.
Nonprofits can make sure that their budgets are realistic so they don't end up running a program without adequate funding,
If you ask for support for a strong program and budget appropriately, grants can help your bottom line immensely.
Myth #6: No Large Foundation Will Fund Us
Large national foundations are not the only funders available. Certainly, they get the most publicity and name recognition, but there are plenty of smaller, local funders right where you live. And those foundations usually fund local charities.
Research has shown that the vast majority of private foundations are small, with assets below $50 million and many in the $1-2 million range.
If your nonprofit is small or new or serves a particular area, look for small family foundations. Every state, city, and town has a few of these. They are much more likely to fund a small, local charity than large national foundations.
Plus, it's easier to find connections with those foundations right on your board or among your other donors.
You can also check out your local community foundation. It may give out grants to charities within its area, plus it may have a trove of resources you can tap. Community foundations often have classes on grant writing and other fundraising strategies. Use the community foundation finder at the Council on Foundations.
Myth #7: We Don't Know How to Research Funders
There are lots of resources online these days. The most helpful resource is the Foundation Center. Your public library or nearest university may have the Foundation Center's database that you can use for free.
Spend a day or two trying it out. The Foundation Center also offers free online tutorials and webinars on how to use its database. Check out this seven-step system to find funders.
There are many classes you can take to learn about grant seeking and writing. There are likely to be some right in your community, sponsored by the public library or your community foundation. The Foundation Center also has many online courses available.
Be sure to join a national professional organization such as the Association of Fundraising Professionals (AFP). There will be a local chapter where you can attend meetings, network with fellow fundraisers, and learn about local educational opportunities.
Myth #8: It's Too Complicated to Write a Grant Proposal
It isn't. The most prominent problem foundations see when they read grant applications is that grant writers don't follow the foundation's guidelines. If you just do that, your application will likely stand out.
You can also read sample grant proposals. You can find many examples at the Foundation Center's website, where you can also sign up for webinars and other online resources to learn more about grant writing.
Many foundations prefer that you send a letter of inquiry (LOI), rather than a full-blown proposal. You still need to have a good handle on what you wish to do and what it will cost. But, it saves time for both the nonprofit and the foundation. You can find out quickly whether or not your idea fits with the mission of that foundation. If it does, the funder may ask you to submit a full proposal. In some situations, the LOI will be enough to secure a grant.
Myth #9: Grant Writers Are Too Expensive
First, look internally for someone who could learn to write grant proposals. It might be someone you hadn't thought of...even a volunteer. But, if you do feel that you need a professional, don't hire one because you think it is going to be an instant solution. If someone promises that, beware. Also, never agree to pay a grant writer a percentage of the grant received in payment. That is unethical.
If your organization has never applied for foundation funding, consider contracting with a grant writer who will educate your staff so that you can eventually move your grant writing in-house.
Also, even if you do hire a grant writer, understand that it will still take up a lot of your time. The grant writer has to get the information she needs and will ask you to furnish that information.
Professional grant writers have a range of fees. Some charge by the hour while others charge a flat fee for an entire project. You can also hire a grant writer on a retainer for a specified period, such as monthly or yearly.
Finally, don't let your preconceptions keep you from tapping a funding source that could be a vital part of your fundraising mix. Grant writing takes some work, but it gets easier as your organization gains experience and sets up systems. The trick is to start today and to keep your expectations in check.