Your nonprofit probably relies on a couple of different revenue streams to sustain its programs and operations—great! Are grants part of your budget or strategic plan?
Grants make up a critical portion of the nonprofit funding landscape, yet tons of growing nonprofits put off learning about them and seeking grant funding. After all, if things are running smoothly (enough) with your current programs and revenue sources, why shake it up? Is the time needed to find and apply for grants even worth it?
If you’ve wondered these questions, this guide’s for you.
The fact is that grants unlock amazing opportunities for organizations, and while the process of applying for grants may seem daunting, it’s a learnable and highly valuable skill. We’ll take a look at why you should apply for grants and orient you to the world of grant funding so you can take your first steps with confidence.
Yes, it should. Most nonprofits (small, medium, large, in every mission area) already do.
Nonprofit Impact Matters found that, as a whole, the nonprofit sector generates about 32% of its revenue from government sources (including grants and contracts) and 3% from foundation grants. It’s generally recommended that grants should make up a healthy 10-20% of a nonprofit’s annual budget. This will naturally vary for every organization, but the point is that grants should be in the mix to some extent.
Revenue diversification is part of responsible stewardship for nonprofits.
If you over-rely on one stream, like annual donations, you create risk. If that stream dries up (or just slows down) for whatever reason, you don’t want to be left standing in a shrinking puddle. Maybe an economic downturn causes donors to rein in their annual gifts, or an unforeseen expense crops up like fixing a leaky roof. If limited money has to be diverted to cover operations, other parts of your budget will suffer as a result.
This is a common challenge for nonprofits, especially today. Individual giving has declined, and bigger donations from much smaller groups of donors are taking increased precedence for many organizations.
Thankfully, giving from foundations continues to grow. The rise of new forms of giving like donor-advised funds (directed by individuals but technically given by foundations or corporations) has also opened up new ways to build connections with both donors and funders.
You enter the world of foundation and corporate giving by seeking grants. By learning to navigate these worlds, you can overcome your limiting factors. Diversification helps you build a safer, more sustainable budget that enables more steady growth each year.
Let’s look at the full range of benefits that grant writing brings to nonprofits when they make it a consistent priority:
Of course, learning any new skill requires an investment of your time. Each stage of the grant seeking process takes time, too. Rushing through grant research or sending the same vague proposal to multiple funders at once isn’t likely to generate the results you want.
At first, remember that any little bit of intention you can put toward grant writing will count. If you’re starting from zero, there’s nowhere to go but up. Secure that first grant with some hard work and faith in the investment, though, and feel your energy soar!
Think of past investments your nonprofit has made that paid off after you put in the work to prepare and learn, like improving your email strategy or hosting a big in-person event for the first time. Consider their results and the ROIs they generated, not just financially but also in terms of the skills you learned. They probably made it a lot easier to draft better and better emails or plan your next standout event.
Grant writing is the same way. Invest time in learning, put your skills into practice, and see how grant seeking gets easier and more efficient over time.
You’re not on your own, either. A wide variety of grant writing classes (some free) and collaborative training communities are easily available online these days. AI tech in grant writing tools helps grant newcomers reach efficiency faster than ever, too.
Once you’re ready to begin your grant writing journey, what kinds of opportunities can you find? Let’s take a look at the variety of grants available and what you’ll need to start pursuing them.
The easiest way to categorize grants is by their source. Grants for nonprofits generally come from three types of organizations:
Within the grants from any of these sources, there are further subdivisions you can encounter. These are based on how the grant’s funding is structured and how it will be paid out to your nonprofit if you win it. These structures include a number of factors:
Each of these categories and grant structures brings additional considerations and reporting requirements to keep in mind as part of the full grant lifecycle.
For example, federal government grants usually bring intense financial reporting requirements. Grants paid in installments will ask for specifically formatted reports on what you’ve done with the payments so far and what still needs doing. Matching grants have a variety of diverse requirements. Funders should always provide detailed instructions for their grant opportunities so that you’ll know what to expect and can prepare accordingly.
And here’s an obvious (but often forgotten) tip: If you ever have any questions about a grant’s requirements, just reach out to ask! You’ll get your answer and let the funder know you exist.
To sum up, here’s what you’ll need to start making grant writing a priority for your nonprofit:
Grants give nonprofits the funding, diversified budgets, and connections they need to thrive. A growing organization that excels at grant writing will quickly stand out as an active, engaging member of its community. Why not make that your nonprofit?