Common Misconceptions About Grant Funding
There's a misconception about nonprofit organizations and
funding. While all 501(C)(3) nonprofits are grant
eligible, many are not grant-ready.
A grant-ready nonprofit typically has some experience behind them and proven programs. Their experiences helps them to understand the ins and outs of the grant funding
process and can make a competitive and compelling funding case.
A Fable
An 18-year-old Highschool graduate who works at the local supermarket and a 35-year-old college graduate who is the grocery department manager of that same grocery store walk into a bank to ask for a home loan. Only one leaves the Bank with the loan. Who do you think it likely was, and why?
A bank's goal is to make sure the loan they provide is as safe as possible and that the loan gets repaid to the Bank.
The Bank's mindset is often similar to Grant Funders. Grant Funders want to make sure their funding makes an impact. If a nonprofit is already making good strides, the funders will likely think, "wow, imagine how well they will do if they have more funding." If you need funding to get started or to run basic daily operations, you are likely to be perceived as high risk in the eyes of the funder. They will deploy their funds elsewhere to organizations with a proven ability to make an impact with their existing programs.
Is your nonprofit's experience new and inexperienced like our friend, the 18-year-old Highschool graduate? Or is your nonprofit mature, established with a proven track record, and secure like the 35-year-old grocery store department manager with a college degree? Both are employed and contributors to society. However, which one is in a position to use the loan best?
Grant funding is not easily acquired
Of the estimated $488 billion given to nonprofit
organizations in 2021, only about 19% ($90 billion) came from foundation
grants. The hard truth is that most nonprofit organizations, like our 18-year-old friend, are not ready or established enough to
compete for grant funding.
Grant funding is not a quick process
The grant proposal and review process can often take a very
long time. Depending on the size of the grant, expect the process to take
upwards of a year. Then, the distribution of funds may take longer and be
spread out over the course of several years.
Grant funding is not a long-term solution
If your budget depends on more than 20% in grants, the
likelihood of your grant acceptance decreases significantly. Additionally,
grants are typically for a short-term
injection of funds to help launch or expand a program. The foundation doesn't
want you to depend on them forever.
Grant funding is not the key to nonprofit
funding
Grant readiness requires diversified revenue. Organizations
with significant community donations, program service revenue, and corporate
partners are far more appealing. Remember, foundations don't want to depend on
them. They want to help you and then move on to the next organization so the
foundation's mission is achieved.
Summary
Understanding the misconceptions about grant funding puts
your organization in a better position to build grant proposals. Ensuring your
organization is fully prepared to begin the grant-seeking process gives you a
leg up on every misinformed and ill-prepared nonprofit.
BryteBridge's nonprofit experts can help determine your
organization's grant readiness and prepare competitive and compelling funding
proposals. Reach out to our team to learn more.