Foundation Giving: Increasing Your Annual Grant Revenues

According to Giving USA, foundations account for 18 percent of the charitable dollar. Do you want to increase your revenues from foundations over last year? Yes? Start by evaluating last year’s grants performance. Did you apply for grants that were in line with your mission? Were your grant narrative goals the same as those outlined in your agency’s strategic plan? Were your grant budgets adequate? How many grants did you submit?  How many of those were awarded? What total amount did you raise through your grant writing? How much did it cost you to raise a dollar? Did you ask for enough funding that you are not running an organizational deficit? Did you leverage your grant writing efforts with other fundraising streams of income? Look at what went right and what when wrong last year and learn from it. Make this year better than last.

Increasing Grant Revenues by Sticking to Your Nonprofit’s Mission

The first thing to look at is whether the grant monies you brought in helped fulfill your nonprofit’s mission or not. Sometimes nonprofits write and submit grants that are a step away from their missions and goals as stated in their strategic plans. Sometimes nonprofits don’t have strategic plans to guide their grant writing. Nonprofits without a clear sense of where they are heading are in danger of veering from their mission and goals. Mission drift can set in. Beware! Once mission drift starts, your organizational identity becomes fragmented. An agency with a fragmented identity is not attractive to donors and will start losing community support. If the situation is not immediately rectified, all sorts of bad things start to happen. You are better off not applying for or refusing funding if it veers you from your core purpose. Be a mission hawk. Always stick to your mission.

Increasing Grant Revenues by Accounting for Both Direct and Indirect Costs

Next look at whether your grant budget revenues made or lost money for your agency. In other words, did it cost more money to implement what you got funded than you raised? Another way to state it is to ask, “Did you take into account total costs of the program, both direct and indirect?” Direct costs are the cost of resources that will be directly used to implement the grant. For example, a counselor or teacher or other direct interventionist; space used to conduct the intervention; food or clothes or rent payments or other direct assistance to clients; or a consultant’s hours devoted to the project. Indirect costs are the portion of overall agency resources that support the program. For example, the executive director’s salary, board development, audit, or fundraising costs. All these costs have to be covered somewhere. Maybe not in the grant budget, but maybe across all the grant budgets. More likely, with fundraising or other revenues that are not restricted to use in specific interventions. I have seen several nonprofits get into financial trouble because they did not take into the total costs involved in order to implement grants successfully. To avoid this, look at your charts of accounts and make sure you are aware of all the costs that need to be covered. And know how you’re going to cover them. Don’t bring in a ton of funds that lose you money.

Increasing Grant Revenues by Assessing Declined Submissions

Mission fulfillment and net income are the two most important issues to consider when assessing last year’s grant submissions. Looking at grants that were declined and analyzing why they didn’t go through is also fruitful. If they allow it, call the program officer or foundation representative. If it’s a government grant, ask for reviewer comments. There are many reasons why grants are declined. You want to find out why yours was. Was it because your mission did not match their interests? Is it because of the way the information was presented in the submission? Was it because they thought the budget was unrealistic? Did they think that you wouldn’t meet your objectives? Did the consider it a stretch given your agency’s organizational capacity? Were they worried their funds would not be allocated properly because of unsatisfactory communications during previous grant projects? Is it because you just missed the cut-off point and they ran out of money to give away? Whatever it is, do your best to find out. What you will learn in terms of where your skills need to be further developed or how your time can be more focused will be worth it. Continually ask yourself what you can do to focus your efforts on where you have the most chance for success.

Increasing Grant Revenues by Running the Numbers

You should also look at the number of grants submitted, number of grants awarded, how much funding you asked for and how much you actually got. How many grants did you submit last year? Of those, how many and what percentage were funded? What were your total dollars asked for? How much and what percentage of dollars asked for were awarded? Run the numbers but know the numbers don’t mean much in any given year. What you want to do is analyze performance year over year and look at the trends. Did what you do to use your time or develop you skills work? Were you able to write more grants? Did you get a higher percentage awarded? Did you do something as a grants writer or was there an organizational that made the agency more attractive to funders? Whatever it is, you want some evidence that whatever change you and/or the organization made is working so you can keep doing it and get even more successful.

I am often asked what the magic number of grant writer should be able to write in a year and what the grant writer’s success rate should be. There is no such number. There are too many overall organizational factors that go into whether grants are awarded or not to be able to subscribe the success or failure rate to any one individual. Every nonprofit is in different stages of growth and health in different areas in different periods of time. It is not so much what happens in a one year period of time so much as what trends happen over time.

A much more significant number is what your cost is to raise one dollar through grant writing. Look at how much revenue you brought in in relation to how much it cost to raise that revenue. According to the Fundraising Effectiveness Project, it only costs, on average, $0.20 to raise a dollar through grants. To figure out what it costs your organization to raise a dollar thought grants, take your direct grant writing costs and divide them be the total amount of dollars awarded. Include in your grant writing costs the salaries and fringe benefits or portion of salary and fringe of those staff who do the grant writing and/or recordkeeping. Add any grants search database you subscribe to. If you also use a donor database, allocate a portion of that cost to grant writing and add that in. Now, divide that number by how much grant money was awarded.

  • If your calculation is greater than $0.20, consider making a change. Look at how you might work more efficiently as we discussed in ___ and what you and your nonprofit can do for your proposals to become more attractive to funders.
  • If your calculation turns out to be $0.20, your organization is on par with the industry.
  • If your calculation is less than $0.20, congratulations! You’re doing a great job.

In Conclusion

  • Use last year’s grants performance as a springboard for improving this year’s results. Be a mission hawk. The more you stick to your mission, the more attractive you will be to donors and the more community support you will raise.
  • Make sure it doesn’t cost you more than you raise to implement your grant programs.
  • Among the many, many reasons grants are declined, figure out why yours was. Ask program officers. See what they say. See what you or organization can do and focus your efforts on those changes that will positively affect your agency’s chances of being funded.
  • Run the numbers, remembering that the meaning is in the trends.

Did you find this article helpful? Is there a particular aspect of grant writing that you would like to hear more about? Drop me a line and let me know.

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