What you don't know about grants might surprise you

The most common question I get from nonprofit leaders when they hear about my business is “Do you do grant writing?” I used to say yes, but then the conversation typically continued like this:

Nonprofit: Great! There’s a grant we’d like to go after and applications are due in two weeks.

Me: Ok. Tell me about the program this grant will be funding.

Nonprofit: {crickets}

Me: Ok. Then tell me what you’d like to use the grant money for.

Nonprofit: General operations.

Me: Did you read through the grant to see if they allow for their funds to be used that way? Most don’t allow for use of funds to pay for payroll, rent and other operational expenses.

Nonprofit: {crickets}

Me: I could help you try to find funding to help with specific programs that you have, or even see if we can find a funder who has a particular interest in helping nonprofits with a mission like yours who will allow funds to be used for operational funds. What is your budget?

Nonprofit: How much can you get us? And it’s ok if we pay you out of the grant money, right?

Me: {crickets}

It seems there is a general misunderstanding about grant funding among nonprofit leaders. Funders put very specific grants together to assist nonprofit organizations with advancing a mission that they are connected to, generally through a proven program.

Imagine going to a bank for a loan to start a business and telling the loan officer that you want a business loan and when they ask what your business will be doing you tell them you'll do whatever they would be most likely to loan you money to do. And when they ask you how much money you were planning to borrow, you respond with, "However much you're willing to loan me." Sounds silly, right? Because business loans just don't work that way. You need to have a specific business in mind, with a well-written business plan including financial projections.

When you apply for a grant it's not all that different. You must present a compelling narrative with data to back it up that entices a funder to support your program. You are selling a product. Plain and simple. Grant funders are investors with big hearts. No matter how philanthropic they are, no matter how much your heart bleeds to do good in the world, a funder will not give you a dime if you can’t make a case that says you’re a good investment.

A really great grant application can’t be slapped together in a few days, or even a few weeks if a program hasn’t already been established and well-documented. This is why I encourage nonprofits to spend more of their time on Program Development than on grant applications.  A program might be an activity the organization has been doing for years. Actually this is even better. If you’ve been doing a “thing” for years, let’s get it all down on paper. What exactly is it that you do in this “thing”? How much money does it cost? Who does it help? How successful has it been? How could it become better? By developing programs and keeping them documented and updated (and tracking results) you are then in a very good position to apply for grant funding. I do recommend, however, that instead of trying to fit your program into a random grant opportunity that crosses your attention, you seek out grants and funders that are a good fit for your organization, your mission, your core values, and - most of all - your program.

To answer the other nonprofit question: no, you can’t pay a grant writer from the grant funds. Funders are usually very specific about what is and isn’t allowed in spending their money. Typically you can’t even use the funds to pay staff, unless you can directly tie a portion of their time to the specific program that’s being funded. You CAN generally use a portion of the funds (sometimes defined with a maximum percentage of the entire grant amount) for administration and management of the funded program. Any costs incurred in putting the grant application together, however, is the financial responsibility of the nonprofit.

Other items overlooked in the name of grant seeking:

• Funders don’t offer grants to nonprofits that don’t yet have their IRS tax exempt status
• Most funders won’t consider grants to nonprofits less than three years old
• If a nonprofit appears to need funding to stabilize or sustain the organization, funders shy away quickly; they want to enhance what you have, not hold you up
• Every penny of grant money an organization gets must be tracked and accounted for
• If your program actually costs less than you anticipated, often times you will be required to return the extra funding
• Many grants are reimbursement-based; the nonprofit has to spend their own money first then send detailed reports to the funder in order to be reimbursed for allowable expenses
• If your program actually costs more than you anticipated, it will be up to your organization to raise the additional funds.
• Some foundations enjoy funding the same projects year after year, others fund new or different projects each year. Be sure to know which you’re looking at especially if you are expecting ongoing funding.