Why Your Nonprofit Needs a Grant System

Many nonprofits have misconceptions about grant writing. They may have been taught that after researching funding opportunities they simply need to follow the instructions and complete the application or proposal. Nonprofits may also falsely believe that a grant writer is a sole practitioner who creates, writers and delivers funding for the organization. In actuality, the writing of the grant is in the middle of a much larger and comprehensive system where every individual involved has a key role in preparedness and management.

By establishing a grant system, the nonprofit sets the focus firmly on the organization’s purpose, core programs, delivery of results, and its impact on the target population and greater community. The grant system helps your nonprofit achieve its programmatic and organizational goals, demonstrate its relevance, and create a justification for sustainability. This proactive and focused approach establishes a process to manage the anticipated grant awards upfront before a single word is written. As a result, a grant system makes the actual grant writing process much less mysterious and frustrating for nonprofits of all budget sizes, levels of experience, and overall sophistication. This white paper will identify common patterns and mistakes and provide suggestions on how to create a grant system.


What is a grant system?

A grant system is the intra-connection of grant preparedness, grant writing and grant management working together for the purpose of receiving, distributing and stewarding funds through ethical, lawful and prudent practices. It consists of three components and several subcomponents, each working together to move the entire grant process through goal setting to program replication. Building a grant system for the first time requires team input, coordination and practice. However, once a grant system is established and adopted as an organizational practice, it only needs to be revisited on an annual basis. Nonprofits that employ a grant system establish grant goals, build a grant team, and set up a contract tool kit and other elements in anticipation of forthcoming grant awards before completing a grant application.

Nonprofits with a grant system know they are “grants-ready” to write grants to support core programs. They intentionally avoid applying for grants that don't meet their criteria. Instead, they are ready to start the process when they find a grant opportunity that matches their mission and core programs. They realize that grant funding is not free money and are instead fully prepared to properly steward the funds entrusted to them per the approved program design and funding contract.

What are the three components of a grant system?

A grant system consists of grant preparedness, grant writing and grant management. Each component is linked to the others and does not stand alone. During the “life” of a grant, the nonprofit will focus on one component at a time, while referring to the other two elements to help guide the direction, progress and results of the program.

Grant preparedness

Grant preparedness is the proactive action a nonprofit organization must take in order to gain a competitive advantage to compete against every other nonprofit for limited funds. Its subcomponents include grant goal setting, team responsibilities, program and budget design, evaluation, program analysis, process analysis, and research.

Not taking all the grant preparedness steps or failing to thoroughly complete them causes problems. For example, when nonprofits react to grant opportunities primarily for the money something unfortunate happens called mission creep. This behavior is not a best practice. It rarely ends with an approved grant, and if it does, it’s nearly impossible to sustain because the nonprofit can’t justify its existence.

Let’s say a fictitious nonprofit we’ll refer to as We Do Good Things (WDGT) waits for grant opportunities to show up in an email invitation so it can then create a new program to teach homeless how to find jobs that might bring in up to $150,000. By forgetting its mission, which is to provide housing to the homeless., WDGT has done no one any good because it ignored its mission and strategic plan.

Another example of poor grant preparedness might be creating an unrealistic expectation of how many grants can be written and submitted in a single month. The CEO expects 10 grants, but when weekends and holidays are factored in, the average number of days available to submit each grant is only two. Even if the same core program is the focus of every grant, more time is required to customize each submission to the specific funder.

Grant management

Grant management is fulfilling all explicit and implicit obligations under the contract by monitoring, evaluating and reporting results through ethical, lawful and prudent practices. Agreeing to receive a funder’s grant award is not winning free money. There is a significant level of responsibility taken on by the nonprofit organization to deliver the results as proposed in the request and promised in the contract. Nonprofits end up with problems when they don’t refer to the contract while managing the grant.

Some examples of poor grant management might be a nonprofit that requested funding for one program such as teaching swim lessons to toddlers, but due to complications with licensing and liability, it delivered a beach clean-up program instead without communicating the change to the funder. Another could be spending grant funding on after-school teachers even though salaries were not covered by the grant while hoping to ask for forgiveness from the funder later. Also, failing to strategically steward every grant award in a timely and efficient manner opting instead to let a year go by without connecting to the funder except to submit required reports and request additional funds.

Another example of poor grant management involves mistaking grant monitoring -- a key element of grant management -- for program tracking. Grant monitoring is ensuring that the organization complies with the contract by submitting progress and financial reports, sending program photos and reviews, and conveying the overall success of the program. In contrast, program tracking is recording program outcomes including, but not limited to, the number of events, activities and people served along with the evidence of program impact through testimonials, photos, social media posts, annual reports and other forms of recording.

Grant writing

Grant writing is the intersection between grant preparedness and grant management. It is the culminating activity of program design. It is the promise of proposal delivery. There are only four sections to a grant proposal: narrative, budget, compliance documents, and supporting documents. The narrative has several elements including organizational history, statement of need, and program design description. The budget includes the program budget, the operating budget, and all related financials and the financial report. The compliance documents are those that are required by federal, state and local governments and the funder. The supporting documents include reviews, brochures, annual reports, letters of recommendation, news articles, and other documents that demonstrate the nonprofit’s program results.

Problems with grant writing include not referring to the grant guidelines and directions, not specifically answering the questions, not demonstrating how proposed results will further the funder’s and/or the nonprofit’s mission, and not testing the proposal against specific, measurable, achievable, relevant and time-bound (SMART) goals.


What happens to nonprofits without a grant system?

Nonprofits for years have survived without creating well-developed grant systems, but they are not thriving. Without a grant system, non-profit organizations ironically put themselves at risk, spend valuable resources, and set up barriers to success that they work hard to avoid. The time required to create a grant system is a small investment compared to the time it takes to fix legal or ethical problems, the financial cost of doing the same old thing, or the mental frustration of not finding success in obtaining grant funding.

Risks

Problems abound such as ethical errors, legal errors, and moral errors. A Washington Post investigative report discovered that from 2008 to 2012 over 1,000 nonprofit organizations had indicated on their federal disclosures that they had discovered a “significant diversion” of assets. These were losses attributed to theft, investment fraud, embezzlement and other unauthorized uses of funds.

Costs

The cost of grant writing escalates when nonprofits try and create programs spontaneously to react to new grant opportunities. Hours are spent dreaming up a new program, creating an untested budget and making up answers to the funder’s questions. The result can take upwards of 120 hours with four or five team members contributing to various parts costing the organization. Creating a grant system would take a fraction of the time.

Barriers

Nonprofit grant teams that lack the proper mindset or have no knowledge of the grant system face the greatest barriers to success. Perhaps they believe they should get money because they’re awesome or that they shouldn’t have to write grants because their nonprofit’s cause is so unique. They may think the words on their website explains everything a funder should know. Additionally, either they think that grant writers are the architects of the entire grant application process or that it will be easy for anyone to sit down and fill out the application without a proposal template.

How do I begin to create a grant system for my nonprofit?

A grant system can be done fairly quickly, however, it requires strategic thinking and planning with a team of professionals who can work together collaboratively. The mission and vision of the organization is the destination. The organization’s strategic plan and the grant writing strategic plan are the roadmaps to the destination. Every member of the grant system has a responsibility to help the organization reach its destination.

Start with the end in sight – Think in advance about your desired results. If the nonprofit’s mission is to deliver educational programs to incarcerated youth, the desired outcomes might be that every student passes the class, receives a certificate, graduates with a degree, and goes on to higher education. The outcomes might be improved attitude, self-esteem, and a better outlook on the future and life. The next step for the nonprofit is to share the results through white papers, presentations, and/or roll a model program that is rolled out for replication. Start by creating a grant system that strives to deliver the programs that demonstrate the results of the nonprofit’s existence. The nonprofits that do this well are highly successful, with or without receiving grant funding.

Consider sustainability – Nonprofits that achieve anticipated program results stand a better chance of sustainability because the vision is clear, and the mission is unwavering. They know what they are going to do with their results as they are designing the program. They build sustainability into the design because they have a determined mindset. Know how you will continue to deliver program results before you begin. Be the example of the best nonprofit for what you do.

Plan for ongoing stewardship – Stewardship is the nonprofit’s responsibility to manage the financial gifts entrusted to it through all fundraising efforts including grant writing. Successful stewardship includes establishing a relationship with the funder in the grant preparation phase, strengthening it during a site visit in the grant writing phase, and committing to routine communication throughout the grant management phase.

Prepare for tomorrow’s success by investing time today

All nonprofits can benefit from a grant system. Small or emerging nonprofits can establish a grant system by putting the key components and subcomponents in place. Midsize nonprofits with either limited or inconsistent grant success can examine how their current process is working, identify the gaps, and create or update the subcomponents for a more effective grant system Major nonprofits with years of experience and consistent grant success should analyze each subcomponent to determine if the team is achieving maximum capacity and results. Even the most sophisticated nonprofits have room for improvement. Establishing a grant system with a holistic approach will strengthen the organization, create efficiencies, and ultimately generate more revenue through grant writing.

By changing your mindset and making critical adjustments, your organization can employ the “what, how, and why” of your grant system to achieve success. When each member of your nonprofit’s grant team has a realistic expectation of their accountability and responsibility, then the entire experience is more effective, manageable, and enjoyable. Through attention to grant preparedness and grant management, the future time your organization will spend on grant writing will not only be condensed, but successful grant outcomes will be attainable.


© 2020 by Venn There Grants Consulting, LLC

561.531.3943