Grants represent the most effort for the least predictable return.
The question, therefore, is to first determine what resources will be needed before an organization contemplates launching a grants program!!
Researching grant sources, planning projects, preparing proposals and budgets and managing funded programs all require a lot someone’s time/labor – all of those comprise the “opportunity costs.” What, then, will the nonprofit organization have to give up to work on preparing grant proposals?
As Hank suggested in his June 1 posting, cultivating major donors is (should be) a high priority for most organizations. Most fundraisers can judge how likely it is that their efforts will result in a gift, and they move ahead in their pursuit of potential donors based on that judgment.
Annual fund experience generally is predictable, and the organization can assess the return on its investment. Similarly, special events (especially those created by Natalie) yield results that can be consistent from year to year.
On an annual basis, only about 5% – 10% of grant applications are funded. That’s not very impressive, and a good reason why organizations need to assess the benefits they will realize from pursuing grants.
But, before they do that, they should have predictable, consistent sources of hard money income. That is, those sources of funds they can rely on from year to year.
If they are at a stage in their development where they honestly can say they can rely on their normal income sources and, if they can envision special initiatives that are beyond the scope of their operating revenues, they can consider if a grant program is warranted.
If it is, they need to devote resources to funder identification, proposal writing and grants management. Such infrastructure is necessary for the pursuit of grants. If these resources incur unacceptably high opportunity costs, the organization is not ready to engage in a grants program. Their efforts are better directed to more productive sources of funding.
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Have a question about starting or expanding your grants program? Email me at Andrew@GrantServices.com..
Hank Lewis with Development Consultant Associates has over thirty years as a fundraising consultant and is a specialist in Board and Leadership Development, Capital Campaign, Bequest Program and Major Gifts.