Is Your Nonprofit Grant Ready? The Ultimate Readiness Guide
New and small nonprofits are often eager to start applying for grants. But securing those large dollar amounts comes with a good deal of work.
Creating your organization’s grant readiness checklist is the first step towards winning a grant. The process is competitive, but with these proven steps, you will take off running in getting your nonprofit grant ready.
In this article, we’ll answer what it means to be grant ready, signs to watch out for when it comes to your readiness, as well as give you a grant readiness checklist to work with by the end.
Let’s dig in.
What Does It Mean to Be Grant Ready?
Grants can offer substantial and meaningful funding for your organization. To some newer organizations, grants may look like large stacks of free money. But this is definitely not true. Winning a grant is not like winning the lottery; you must be strategic and deliberate when applying for grants.
The first step of this process requires that you must first review your organization’s grant readiness. Grant readiness is a measurement of your organization’s capacity to research, apply, win, and manage grant applications successfully.
Winning a grant is not easy; on average, the odds of receiving a grant is between 10 - 20%. Often, organizations are unsuccessful in obtaining the grant award because they practice episode grant seeking, fishing for funds through intermittent series of desperate gambles.
To ensure that you are not simply gambling your time and resources in applying to grants, you want first to consider these proven strategies for getting grant ready.
How Do You Get Grant Ready? Common Signs to Watch Out For
A nonprofit organization's grant readiness typically can be determined by evaluating three types of signs: organizational, programmatic, and financial.
Organizational Signs Your Nonprofit is Grant Ready
Ensuring that you have a solid organizational foundation is the first step in getting your nonprofit grant ready. Grant-ready organizations should:
- Have been incorporated with Articles of Incorporation and received tax-exempt 501(c)3 status.
Determine which agency in your state, often the Secretary of State, that regulates the formation of corporations and look at the filing requirements for tax-exempt organizations. After being incorporated, you can then file for federal 501(c)3 tax exempt status through the Internal Revenue Service (IRS).
- Have a clearly defined mission statement.
A mission statement that is unique, clear, and realistic is crucial to securing a grant. Funders want to see the value of your organization and its vision for impacting the community.
- Have an invested and diverse Board of Directors, along with key community stakeholders.
Board members serve as the leadership of the organization and should be engaged in organizational growth and fundraising. Beyond your board, having your community's support can also help when applying for grants, particularly when it comes to speaking on the impact of your nonprofit in your area.
- Demonstrate organizational credibility and competency.
A successful grant application must convince the funders that your organization has the proper expertise and staff to implement the grant better than any other nonprofit.
You should have a concise description of the organization's history as well as its reason for existing, its community, impact, and accomplishments. A professional staff dedicated to the overall mission and vision of the organization is equally important.
- Be established in the community with both formal and informal partnerships.
Partnerships with educational institutions, businesses, government agencies, school districts, faith-based organizations, or other nonprofits allow you to serve the community more effectively. Not only does resource sharing between collaborative partners allow for more sustainable programs and services, sometimes it’s even required for grant opportunities. If you're looking for how to build partnerships for your nonprofit, check out our workshop with Maryn Boess on partnership.
- Measured outcomes in impact on your community.
When measuring outcomes, it's important to be able to speak on outputs such as how many people were served, or how much time was given back to the community. Clear outputs bolster the prior point on credibility and competency. If you do not have these, you may want to first collect data or write case studies on your past initiatives before applying for your first grant.
Programmatic Signs Your Nonprofit May Be Grant Ready
Too often, nonprofits find a grant opportunity and then rush to design a program that meets the specific requirements and scope of the funder’s priorities. This leads to a stressful and chaotic scramble to prepare a proposal that will likely not be successful.
To be fully ready to submit an award-winning grant, an organization should:
- Have strong and sustained programs that are already operating.
Getting grant ready requires that you first ensure your current programs are running successfully and sustainably. If you are looking for funds to develop new programs, you should have concrete plans in place for the implementation and delivery of services. New programs should be made in compliance with the organization’s mission and values, not just to meet funding requirements.
- Have a concise description of programs or services that includes goals and objectives, activities, and any key outcomes since if you've already implemented the program or service.
The majority of grant opportunities available will be restricted to serve a specific program or set of services. You should have a clear and concise description of the program/service and all of the key staff members, resources, and evaluative measures.
- Have strong organization capacity.
Staff should be sufficiently qualified for serving your clients and be dedicated to furthering the organization’s overall mission.
- Maintain reliable data demonstrating a specific need within the community that comes from the last three years
As of 2020, there are over 1.6 million registered nonprofits in the United States. Funders will want to know the direct impact you have within the community and what they would be investing in by awarding your organization to continue that work. It is essential to collect accurate information about the community you serve, the issues they face, and the positive change you wish to see.
- Have SMART objectives outlined.
Ensure that with your proposals, you are implementing specific, measurable, actionable, realistic and time-bound objectives. We dig in with Dr. Bev Browning on how to accomplish this in this grant writing workshop.
Financial Signs of Grant Readiness
Lastly, you should carefully review your organization’s financial situation. All funders will be interested in where their dollars will be spent and how it will be handled. As such, many grant applications will require proof of your organization's fiscal capacity to handle new funds.
Financial signs of your grant readiness include:
- A strong financial strategy with appropriate tracking measures in place.
Having a well-developed fundraising strategy involving diverse streams of funds, including earned income, grants, individual donations, and fundraising activities.
- Most recent overall organization budget and individual program budgets.
Budgets should be developed and reviewed annually by the Board of Directors. Your organization must show a history of responsibly managing awarded dollars and a transparent accounting system that tracks expenses separately for different funding sources.
- An accurate list of past, current, and pending funding.
Depending on the size of your organization, you may want to consider creating an Excel Sheet or using grant management software to manage various funding sources, the amounts awarded, and the dates of funding. This is important when giving an accurate picture of where your nonprofit currently finds itself at, and where it is headed.
- Adequate internal support when it comes to reporting.
It needs to be known before you apply for grants who will be involved in the grant reporting process. Having proper administrative and accounting bandwidth within your team makes the tail end of the grant lifecycle much more manageable.
- A recent tax return (990).
For many funding opportunities, a 990 Form is all that is required. But some grants may ask for recent audits that should be conducted by an external auditor.
Grant Readiness Checklist: The Ultimate List of 5 Questions to Answer
Still wondering when to apply for grants?
With this five-question grant readiness checklist, you will be able to measure your organization’s grant readiness and determine if now is the time to apply.
1. Are you eligible?
Many grants have specific requirements to determine your organization’s eligibility to apply for funds. Assuming that your organization has already been incorporated, the first step to becoming grant ready will be securing your organization’s 501(c)3 tax-exempt letter. These letters can be requested from the IRS for all public nonprofits with registered 501(c)3 status.
If you do not have a current 501(c)3 status, you may be able to consider partnering with another organization who is and who can serve as your fiscal sponsor.
You may also be asked for:
- EIN (Employer Identification Number)
- If you are applying for federal grants, you will have to register at grants.gov and sam.gov and a DUNS number (Data Universal Numbering System)
- Additional requirements may be spelled out in the RFP (Request for Proposal) or RFA (Request for Application).
2. Do you have a clear purpose and vision?
Funders are looking for organizations that are unique and do not duplicate similar services in their particular area. Your mission statement should clearly outline your specific strategy of addressing an issue in your community and stand out among other organizations working towards similar goals. Not only should your purpose be clear in your organization, but you should also ensure that your mission is realistic and accomplishable.
For example, Tutoring Chicago’s mission statement is to deliver the power of education through one-to-one tutoring for economically disadvantaged children.
It’s clear that their strategy to address the issue of access for education is through a one-to-one tutoring model.
3. Do you have impactful programs and good standing in the community?
Like your mission statement, your organization must have innovative programs that can demonstrate a measurable difference for those served. All nonprofits should conduct regular analysis of program impacts and staff successes that is verifiable through hard data.
It is also important that your programs maintain a good reputation for service delivery and assisting clients with their needs. Another way to highlight your organization to funders is through letters of support from community leaders and partners.
Continuing on the Tutoring Chicago example, they further explain their programs on page 3 of their 2019-2020 Annual Report, detailing their SMART, LIT and 7th Grade Programs.
From these descriptions, it’s abundantly clear the community impact on children that Tutoring Chicago’s different programs have on the students they serve.
4. Do you have adequate resources and infrastructure?
These include both physical and nonphysical resources. Does your organization have adequate facilities, transportation, and financial resources to sustain current operations?
How about financial tracking abilities or a donor management system, updated software, and computer systems?
Are staff appropriately supported with sufficient capacity for your current clients, are there efficient operating systems in place, and an enthusiastic base of volunteers to help your organization?
5. Are your finances in order?
Before accepting a new influx of funds, you first must ensure that your current finances are stable. You should have diverse revenue streams that are tracked accurately across your organization’s various programs and services. If you’re expecting your nonprofit to grow, and grow quickly, you want to ensure appropriate financial management systems are in place beforehand.
Continuing on the example of Tutoring Chicago, you can see how page 4 of their Annual Report shows a diverse set of revenue streams ranging from public and private grants to events and individual donors.
Their report also details assets and liabilities, as well as expenses for the organization.
Wrapping Things Up: Is Your Nonprofit Grant Ready?
The competitive world of grants can be intimidating, but it’s also exciting and can significantly impact your organization. By honestly evaluating your organization's grant readiness, you can ensure that you are in the best position to successfully win a grant.
And although grant writing is not easy, there are plenty of helpful resources online to help you start securing funds for your organization.
If you’re looking to start finding good fit funders for your nonprofit, try Instrumentl free for 14-days. Instrumentl’s unique matching algorithm will only show you active open grant opportunities that your nonprofit can apply for so you can start winning more grant funding.