Fundability 101:

Realistic Expectations & Honest Non-Profit Self-Assessment

 

 

 

By Mary E. Costello © July 2010

Independent Consultant

Grant Writing & Program Development

Creative Edge Consulting

www.CreativeEdgeConsulting.org

 

 

 

 

As a non-profit consultant, hardly a single day goes by that I don’t come across someone’s online project posting or field a phone call from a prospective customer that doesn’t make me somewhat shake my head. Their intentions may be good, but, often times their plans are built upon severe misinformation and, therefore, deeply flawed assumptions.

 

It is not as though I don’t work with a lot of “newbies.” I actually do. But, what bothers me is how many people enter into the realm of grant writing or organizational development without doing their homework. Being sufficiently educated, thus prepared, helps a person who is just starting out with all this separate fact from fiction… and it makes all the difference in not only outcomes, but, also, keeping disappointments in check.

 

One item, in particular, surfaces almost every day. That is regarding the misconception that grant writers work on commission or receive a percentage of the award as compensation—only if the proposal is actually funded, that is. I will present a whole article on this topic alone. (Probably later this week, since it is on my mind.) For the moment, and this article, I will simply provide a very basic primer for those who seek to understand how all of this works… and doesn’t work.

 

 

Key Points:

 

  1. If you are a brand new agency, and not even providing services yet… grant funding is difficult (but not impossible) to obtain. Absence of a track record, financial records, and proven successes go against you. In many cases, it disqualifies you altogether from many grant opportunities until you have more experience and demonstrated impact under your belt. (Yes, I know… that is a Catch 22!)

 

  1. If you do not yet have your 501(c)(3) approval, you will not qualify for 99% of the grant opportunities out there. You have work to do before you can even consider submitting applications for support. (There are, however, a few ways to speed up this process and even be able to immediately apply for grants and other charitable contributions.)

 

  1. Whether you are an established organization or a new one, serving only a small number of people affects your potential for funding success. It also dictates the amounts you can realistically request.

 

    1. If you only serve 3-10 people all year, and another organization serves 100 to 1,000… or more… who gets the money?  Probably not you. (This is called “impact.”)

 

    1. If you have been in existence for a while, but have had no sizable expansion, you may want to look at that.   Attracting funding for programs that have experienced little to no growth is harder than those consistently seeking to serve more people—and to serve them better. Grow or die. Stagnation certainly doesn’t move people—financially or otherwise.

 

    1. The other problem with very small programs is that their overhead is usually out of line with the rest of their budget. Funders want to see that most of your budget is allocated to client services. If administrative costs are more than 25% of your overall budget, this will hurt you. Expanding programming allows you to spread out these costs to a more reasonable and appealing distribution.

 

  1. Innovation sells. If you look exactly like any other organization that serves your targeted population, why do you deserve funding over another agency?  Grants are a competition. You have to be among the best if you hope to stake claim to any of the limited funds out there. Your programming is as important as your quality grant presentation. In fact, a great application is impossible if your program isn’t great—unless the written presentation is not completely accurate (either intentionally or unintentionally) and the funder would find something quite different if they did a site visit. And, umm…this would not be good. (This is why I incessantly harp on program development and organizational health!)

 

  1. Can you prove your successes? You need to track both outputs and outcomes. For instance, an output would include how many people you served in a given week, month or year. Your outcomes would prove how WELL you served them, such as whether or not they actually learned something or gained knowledge through a training you provided. Their attendance alone only proves they were there. Pre and Post tests demonstrate the effectiveness of what you do. So, if you aren’t doing anything that objectively measures the quality and effectiveness of your programming… you need to put that in place immediately.

 

  1. When it comes to grants, you will hear “no” more than “yes.” If you are able to reach a 25-30% approval rate among all your submitted proposals, you are doing well. This also means that you need to submit multiple applications in anticipation of rejections. (Current national statistics, (the last ones I heard prior to the economic meltdown), stated that only 1 in 10 applications receive foundation/corporate grant funding. That is among all non-profits, not a comment about anticipated success for any one agency. NOTE:  I actually believe the denial rate is even higher.)

 

  1. There are many reasons why your application may be denied, which may have nothing to do with your proposal itself or your programming. But, where you CAN control outcomes, such as your internal operations and the quality of your written presentations, you need to make sure you are at the top of your game. You have nothing to be ashamed of or to regret unless you didn’t do your absolute best. The rest is outside your control. Surrender that up and move on. (You are allowed one hour to feel miserable first.)

 

  1. One grant and one source will not sustain your program. With very few exceptions (such as a governmental grant of great size), no grantmaker will be your primary or sole supporter. Most will only consider support as a reasonable percentage of your overall budget. Average amounts are usually around 5-15% of your annual budget, if that. So, if you claim that you actually have no budget (which I have heard before)… how much do you think you can ask for from a funder??

 

  1. Grants are not free money. You are expected to do as you promised in your proposal. It is, actually, a contract. The only exception to this is if you get general operating funds, which can be used in any way you choose since it is unrestricted. Conversely, any funding received for a specific purpose must be used exactly as you stated (unless you officially work out modifications with the funding source). You will also need to account for this money and the outcomes you proposed. (NOTE: general operating money is harder to get than program or project-specific funding. This is especially true if you are a brand new agency.)

 

  1. There is a lot of confusion about “free money” and government grants—thanks to our friend in the question-mark jacket that insists/insisted there was money for all…just waiting for you to ask for it. Nonsense. 

 

    1. There is no free money—to non-profits, for-profits, or individuals

 

    1. Government grants are highly specific in terms of the purpose of the funding. Most non-profits will not qualify unless they have very large programs that impact on a lot of people. These are also about as competitive as you can get since you are vying for money against organizations from throughout the country, state, or locale. The number of awards is typically very small in comparison to the number of applications received. And, if you are a new organization, it is unlikely you will be in the running for an award at this level. (Though, I did personally win a 2.8 million dollar grant contract from the State of Maryland for an organization I founded—so, it sometimes IS possible!)

 

  1. Your proposal and program has to be better than the rest. A foundation or corporation may get hundreds or thousands of applications each year. They only fund a small portion of these. This is the economic reality, and they have to make tough choices between groups that they really like. Weeding out the not-so-impressive groups is easy for them and is the first tier to what they do. But, as their available budget dwindles with each award officially committed, picking only the last few grantees from a number of very worthy programs is heart-wrenching for them. (A friend of mine who is the Grants Officer at a major Maryland funding source says she loses sleep over these decisions—and, they award over 12 million dollars every year.)

 

  1. If your Board of Directors is not an active governing body, this needs to change. Also, funders will want to know how much each Director contributed personally to the organization, FINANCIALLY, over the last one to two years. If this hasn’t happened with your organization, you need to discuss it with your Board members. You also need to keep these records handy since this is a commonly requested item in grant applications. 

 

(The underlying question behind this, if you haven’t caught on, is that funders want to see that the Board puts their own money where their mouth is. If THEY—the people who should care the most about the well-being of your agency—don’t personally donate, why should a foundation??)

 

  1. If your finances are a mess, getting funders to support you will be difficult. Take care that your accounting, tax reporting, and audits are conducted as required.

 

  1. If your program is just an idea at this point, you must lay out all the particulars on paper before you venture into grant submissions. Proposals require detail. Generalities won’t cut it, nor is it okay to say “we will figure this out if you fund us.” Doesn’t work like that.

 

  1. If you do not have internal expertise for program development or grant writing, you need to find someone to help. Grant writing is not just creative or expressive writing. It is a specialized craft and outcomes hinge on having someone on-board who knows why a question is being asked, (even when it is not obvious to less knowledgeable or experienced persons), or, even, what is lacking in your arguments or implementation plans. In my mind, program development and accountability go hand-in-hand with solid grant writing.

 

  1. Grant funding is specific. Each funder has their own set of priorities, interest areas, giving ranges, and funding restrictions. All applications need to be tailored to these things by following the funding guidelines precisely and never asking for something they already state they will not support. (Geographic area has a lot to do with the starting point in this too.) If you do not “fit,” move on. You will not convince a funder to support you if you do not fit their criterion and focus.

 

    1. Part of these restrictions also relates to the issue of contingency or “percentage deals” with grant writers. Most grant guidelines list what cannot be funded through the granting source. Some will not allow for salaries, consultants, equipment, travel, and a host of other restricted uses. Indirect costs are also a typical non-fundable area, only permitted sometimes… and usually at a rate of only 10-11% of your total request.

 

                                                               i.      Paying a grant writer through a percentage deal, if this is recorded in your budget (which it should be), will likely result in automatic rejection of your application.  Funders want money to go to direct services. Percentages, by both funders and grant writers alike, are considered unethical.

 

                                                             ii.      Also, grants are usually for work not yet performed (unless you get general operating money). Paying someone for work rendered prior to the award would rarely be permitted through a grant.

 

                                                           iii.      Asking a grant writer to work under this framework is unfair. It is likely they will never be paid for their time or expertise—at least, not for every application they prepared for you.  Meanwhile, you didn’t feel a need to take on the same amount of risk by actually paying this professional for their contributions…even though only 20% or less of your success can be attributed to this person. 

 

(NOTE: There is a reason you don’t get many responses to postings for grant writers when you state that this is the compensation plan. It is NOT the norm.  Experienced professionals will not reply to such ads. This is how they make their living. They are actually paid in full for their work, with or without you receiving monies.)

 

  1. If you cannot answer WHY you should be funded before another organization—you need to start here. If you do not know the answer to this, how can a funder be convinced?  Grant applications are your opportunity to state a case for funding support.  

 

  1. There is no set cost to preparing “a” grant since all grant formats and requirements are different—along with how prepared a given agency is in creating the application, i.e.; quality of existing materials, availability of all types of required documents (or those that need to be created from scratch), and so forth. Therefore, even asking for flat fee rates is a bit muddy since there are so many variables in play. (This is why I rarely offer package pricing.)

 

    1. Many newcomers place ads saying they have a budget of $250-500 to work with a grant writer. (I don’t bother responding to these ads.) This is completely unrealistic unless the program only needs a grant writer to minimally tweak their materials. If you are starting from scratch, you will need a whole lot more to make anything happen for your agency. And, writing a grant is not something you whip out in an hour or two unless it is only a form where you fill in basic contact information, which is not common. 

    Narratives take a long time to hone to perfection and a first grant application may take 10-20 hours if you had no previous materials to work with. That, however, does not mean you are “done.” Proposals evolve and become better over time—they are part of a process. Besides, one grant will never be your answer. An ongoing grants program is essential for any non-profit that hopes to survive—especially in the advent of our present economic crisis and limited (and constantly reduced) governmental funding.

  1. It takes money to win money. If you have nothing in the bank, have not raised any money through private donations and fundraisers—you are not prepared yet for the grants game.  Funders want to support organizations that already have shown that they can secure attention and local financial backing. Everyone loves a winner.

 

  1. Telling anyone, including a funder, that you need money in order to keep your doors open…or to provide services at all… is not a very good argument. That would be the equivalent of asking someone to invest in a company that has a good chance of “going under.” Philanthropy is also an investment. You need to remind yourself of this as you approach anyone for their fiscal support. “Crying poor” is just about the worst thing you can do. (P.S.: Non-profit does not mean …no money.) 

 

Funders will support you because you are exceptional—NOT because you are broke. 

 

  1. Funders are more interested in you when you can survive without them… NOW…and in the future. In fact, they expect that of you. If you can’t figure out how to make this happen, you have some work to do in advance of asking anyone for financial support.

 

   

As I close… my greatest advice is this—before you move, educate yourself. Take a good, hard look at your programming and ask why a funder would select your organization over another. If you can’t yet stack up against the best programs out there, perhaps you need to step back and rectify that first.

 

You can do it.

 

 

 

 

 

About the Author: Mary E. Costello holds a BA degree in Social Work from the Catholic University of America in Washington, DC. She is a former Social Work Administrator who specialized in the management of complex human services programs and leading new projects creation. Forming Creative Edge Consulting in February of 2005, she serves clients throughout the United States, including both community-based programs and those of national scope. Programmatic and grant related questions or inquiries regarding her professional line of services may be directed to MaryCostello@CreativeEdgeConsulting.org.