If you’ve started searching for grants, you probably know how confusing it can be to make sure your nonprofit is grant-ready.
There are many steps to take in this process, but in this article, we are going to go deeper and explain the organizational, programmatic, and financial checkboxes that your nonprofit needs to fulfill if you want to be competitive for grants.
Let’s dive in.
P.S. To save the full PDF of the infographic to assess your nonprofit’s grant readiness, you can access it here.
Organizational Signs Your Nonprofit Is Grant Ready
Ensuring that your nonprofit has a solid organizational foundation is the first step in nonprofit grant preparation.
If you haven’t yet, you will need to register with your state to establish your organization’s formal creation. You can then file for 501(c)3 status through the IRS website after you have been legally incorporated with Articles of Incorporation. This helpful guide can walk you through the process from start to finish.
A strong mission statement should have three parts:
What your organization does
How you do it
Who or what you impact
Grant funders will review your mission statement to ensure it aligns with their giving priorities before proceeding with the grant funding process.
For example, Habitat for Humanity has a compelling and succinct mission statement that clearly encapsulates what they do: Seeking to put God’s love into action, Habitat for Humanity brings people together to build homes, communities and hope.
Board of Directors and Stakeholder Engagement
Having an invested and diverse board of directors, along with key community stakeholders, is one of the main signs of grant readiness.
“Is the board open to introducing the mission to colleagues, acquaintances, friends, and family? If not, results will be hindered.”
In addition to your board, having the support of community stakeholders can help establish your credibility to funders.
Demonstrating Organizational Credibility
One of the clear signs of grant readiness is having the proper expertise and staff needed to implement the grant successfully.
Demonstrating organizational credibility will communicate to funders that you are prepared to manage the grant effectively and appropriately throughout its entire lifecycle. Even if your nonprofit is new, you can still demonstrate organizational credibility. Sarah Lange, nonprofit industry expert and CEO, explains how:
“If you’re seeking funding for a new program, focus on the experience of those who will be running the organization and delivering services.”
Community Establishment and Partnerships
Established community partnerships are a clear sign of grant readiness.
Community partnerships are strategic collaborations between your nonprofit and organizations that share a common goal, such as:
Other nonprofit organizations
These community partnerships can either be formal or informal. Formal partnerships usually involve legal agreements and clearly defined roles and responsibilities, while information partnerships have a simple verbal agreement, a lack of formal structure, and are usually for smaller, one-time events.
These partnerships give credibility to your nonprofit and also show funders that your organization has support from its community.
Documented outcomes and program results clearly illustrate to funders that your work is successful. Rachel Grusin, Project Coordinator for the Legal Aid Society of San Diego, explains that:
"Funders need to know that their support is going to a capable team. So, provide clear evidence of your past successes, the impact of your work, and how you have utilized previous funding. Sharing stories and data that illustrate your impact can be very persuasive."
Having clear impact measurement and community outcomes will boost your nonprofit’s credibility and competency in the eyes of a potential funder.
Programmatic Signs Your Nonprofit May Be Grant Ready
Grant readiness also requires strong and carefully-thought out programs.
Strong, Sustained Program Implementation
Funders want to be assured that they are backing strong and sustained programs that will live beyond the life of the grant funding cycle.
If you are searching for funds to develop new programs, you should have a clear sustainability plan that communicates how they will continue to thrive even after the grant has ended. You can do this by documenting other sources of funding your nonprofit already has in place.
Finally, here are some financial signs that your nonprofit is grant-ready:
Robust Financial Strategy and Tracking
Financial readiness means having a well-developed financial strategy with appropriate tracking measures in place.
It’s important to be able to track different sources of revenue accurately so that they can be allocated for the right purposes. Funders will appreciate your organization having a strong grant accounting system in place that enables you to assess the financial performance of grant-funded projects and inform future budgeting and strategic planning.
Detailed Organization and Program Budgets
In order to be grant-ready, you must have a program budget that clearly outlines how grant funds will be used within the grantor's guidelines. At a minimum, these budgets should include the following:
All the sources ofincome for your project, including the grant you're applying for, matching funds, and any in-kind contributions.
The salaries and wages of staff working on the project.
Any other needed expenses like supplies, equipment, travel, and overhead.
Rachel Grusin, Project Coordinator for the Legal Aid Society of San Diego, emphasizes that you should “recognize that a well-crafted budget is more than just numbers; it's a data-driven illustration that reinforces your proposal's goals and demonstrates your organization's ability to manage funds effectively and efficiently.”
Comprehensive Funding History
Your nonprofit is grant-ready if it can demonstrate a comprehensive and successful funding history. This funding history will give the grantmaker an accurate picture of where your nonprofit currently finds itself financially and where it is headed in the future.
Depending on the size of your organization, you may want to use grant management software to manage various funding sources, the amounts awarded, and the dates of funding.
Jacob B. Chase, CEO of Chase Consulting Solutions, explains how “Solid financial management is crucial. Funders look for diversified funding sources, responsible budgeting, and a history of financial stability.”
Internal Support for Financial Reporting
Having adequate internal support for financial reporting is also one of the important signs of grant readiness.
Potential funders will specify what tax filing requirements your nonprofit will need to be in compliance with to be eligible for the funding opportunities. Most federal grants will require 501(c)3 status and your most recent 990 form. But, some grants may also ask for recent audits that are conducted by an external auditor.
We cannot stress enough the importance of being grant-ready before pursuing funding.
If you’ve gone through this checklist and your nonprofit is ready to go, we encourage you to consider using Instrumentl to start researching and managing your grants. If you’ve never tried Instrumentl, you can get personalized grant results for your nonprofit bystarting a 14-day free trial.
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