As a nonprofit finance leader, maybe you’ve experienced this scenario before: A well-intentioned member of your organization hears about an amazing grant that could fund a new project. They rush into your office with breathless anticipation of all that your organization will be able to do with this newfound funding. In a torrent of excitement, the staff member charges off at the chance to increase grant revenue.
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But how do you know it’s truly worth their time? It’s important to not lose focus on your primary objectives—both strategic and operational. Here are five questions that can help you determine whether a grant is a star (i.e. worth pursuing) or a black hole (i.e. not worth your time).
- Does this grant—and the associated program—fit within the clearly defined bounds of your mission?
As the financial leader of the organization, you need to lead the staff down the path of answering a few questions to determine if this grant is a star or blackhole before the cavalry rides off with their grant writing pens held high. This should be a relatively easy question to answer. If not—before moving to the next question—it may be time to have senior leadership and the board take a strong look at your stated mission and ascertain if it is still on-message today.
- Does the grant and project fit within your long-term strategic plan?
If you are asking yourself what your strategic plan is in the first place, stop here and revisit the first question! A strategic plan must be a living, breathing, organic document on which you base key decisions. Find your plan, then answer whether or not this new offering fits.
- Does your organization have the capacity to execute with high quality on this newly proposed program?
If yes, then proceed – but don’t go into this new initiative wearing rose-colored glasses. You still need to evaluate these factors:
- Are there programs that fit into your plan that are scheduled to begin beyond the current operating cycle?
- How is your unrestricted giving? Is it flat, growing, or declining?
- Does your organization have processes and technology in place to effectively manage grant restrictions and reporting requirements?
- Will this funding be in place for the foreseeable future?
If this is a one-year grant, what is the likelihood that it will be on a renewal schedule for at least several years moving forward? If it’s not likely to renew, is your development team ready to obtain support for continual funding of this program without the grant?
- Will operating funds for administrative overhead be covered in the grant, or will the organization need to find alternative funding sources for these costs?
Does the grant provide an indirect cost allocation to cover administrative expenses, or will your organization have to reallocate administrative budget to cover a portion of program costs? Before you move forward, you need to ensure that the full costs of the related program will be covered. If the grant doesn’t cover all of your program costs, then you need to develop a plan to fund the uncovered costs via an alternative funding source.
If you can fully answer all of the above questions, then the grant and associated program are likely worth further exploration. Here’s to a star in the making!
Editor’s Note: This article has been slightly updated since its original 2015 publish date.
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