Nonprofit Fundraising: Are You Choosing the Right Grants?

Grants are an important source of funds for nonprofits, but some may come with strings attached that can create more headaches than positives for your organization. A strategic approach can help you be sure you’re applying for the grants that best meet your needs.

Nonprofit Fundraising: Are You Choosing the Right Grants?
12 mins read

Tips for reviewing your nonprofit’s grant prospects.

One of the questions I’m often asked is: “How do I find grants?” But I don’t hear the more important question: “How do I know the grant is right for me?”

Grant funding is great, but often comes with requirements such as financial tracking of the award, measuring the program, reporting to the funder, and more — so look before you leap!

First, let’s start with the most basic question.

Who has money to give (and what strings are attached)?

As many nonprofits are probably aware, multiple sources offer grant funds. However, not all grant sources are the same. Here are some particulars of places you might find funding:

  • Private foundations — These vary a lot in size, may (or may not) have a website, and absolutely have a 990 you should check out to make sure you’re a good fit.
  • Corporate foundations — These foundations are associated with a company and will also have a 990 you can review.
  • Corporate giving — This is simply giving by a company (but without a 990).
  • Community foundations — These oversee donor funds, and most also offer grant initiatives.
  • Governments — federal, state, county, and city branches can be a good source of funding. However, these often have many requirements. Any awards will also probably be a reimbursement (you spend the funds, then invoice the government), meaning you have to already have funds to spend.

Now that we have an understanding of who offers grants (and what some of the attached strings mean), let’s move onto our next question.

How do I find them?

There are several different ways to find grant prospects. Because I know that many nonprofits operate on tight budgets, I’ll give you the free sources first. To find grant prospects without paying for a database, you can:

  • Search related organizations — Look at their list of funders. If they have already supported a similar organization, these funders might be interested in supporting your programs, too!
  • Sign up for newsletters — Newsletters that relate to your organization’s focus area—such as rural areas, environmental, education, etc.—often include funding alerts. Larger funders will have newsletters, too, so make sure you sign up for newsletters associated with both your niche and funders at large. After all, it’s easier and more convenient to have information come into your inbox than to go out searching for it.
  • Search large, local companies — See if any large companies in your area offer a giving program. Companies like to give where they are located, so searching who is in your area is an easy way to begin identifying grant prospects. This would be applicable for both corporate foundations and corporate giving.
  • Search foundation 990 tax forms in Guidestar — The foundation’s 990 shows if they accept applications, if there are any deadlines, and who (and where) they have funded in the past. Registration for Guidestar is free and you get a certain number of lookups per month.
  • Search federal grant opportunities — You can search grants or sign up to receive email notifications of all (or targeted) grant opportunities. However, keep in mind federal grants are best for a larger organization; one with a multi-million budgets.
  • Use Google — I know, this is probably what you started with. But just in case, don’t forget this easy route of searching for funding prospects. The search engine has a whole suite just for nonprofits!

Of course, if you have the means, it can also be worth your while to pay for access to grant databases. Here are a few, along with some tips that might save you money:

  • The Foundation Directory lists thousands of foundations. Subscription costs between $400 — $1500 per year, depending on the level of access you want. However, your local library may have a subscription you can access for free, on site, with a library card.
  • GrantStation costs around $200/year but regularly offers discounts. Grant Professional Association members receive access as a member benefit — this membership costs $225 annually (per person) but has many other benefits as well. Might be worth it to sign up the grant writer on your team!
  • GrantWatch has a sliding scale based on the amount of time you want to access grant opportunity lists, anywhere from $18 for one-week access to $200 for annual access.

These are just a few ways to find funding opportunities — there are many more. Like everything in grant funding, you have to do your research (i.e., read user reviews, talk to other nonprofits) to see which approaches work best for your programming, budget, and timeline.

Remember, there is no one-size-fits-all in terms of grants — and research is no exception. You have to know what is the best fit for your organization in terms of seeking them out as well. Now, let’s move onto the really exciting stuff.

I found a grant! Now how do I know if it’s right for me?

For starters, you should read through and ask yourself the questions on this Grant Assessment Checklist.

Okay, I’ll assume some of you did not click on that link. After all, you’re a busy nonprofit professional, and you maybe don’t have time to be clicking extraneous links and asking yourself questions and whatnot.

But that’s okay, because I’m going to give you four best practices to make sure you match your programming with available grant opportunities.

  1. Read, read, read the funder’s eligibility and guidelines. It’s easy to miss something the first (or even second and third) read through. Check out the table below for tips to quickly scan grant guidelines.

Tips to Quickly Review Grant Prospects  

Watch for these words:

  • Research (unless you are looking for research funds)
  • National (unless you provide services nationwide)
  • Prize (one award so not a good use of your time)
  • Location name, such as the Silicon Valley Community Foundation (and it’s not where you are)
  • Schwab, Fidelity, and similar — those are Donor Advised Funds, and there is no open application process (or requirement for them to payout). Ever. However, it is a problem being addressed by other folks. Check it out and please consider supporting payout requirements for Donor Advised Funds.  

Also watch for:

  • Geographic priority areas listed by the funder (and you aren’t there)
  • Program priorities that do not match what you do
  • Specific criteria that you do not match (for example, you must have provided services for at least three years, your CEO has been in place for at least two years, etc.)
  • Small foundations with few awards and low assets — this means less chance of an award!
  1. Call and discuss the opportunity with the funder. Then, communicate this information to your departments (especially program staff). This will help you make sure a grant is a good fit for your organization — and is achievable.
  2. Do not create a program to match funder’s criteria. Trying to create a program to get a grant leads to mission creep and lack of sustainability, especially if the award is not at least $100,000.
  3. Consider other “fits” as well (like ethical considerations, for example). Where does the funder make their money? Does this conflict with what your organization does or who you serve?

Do not waste time applying to grants that don’t fit what you do. If you are not eligible, do not provide services in the funder’s geographic priority area, and/or there is a low chance of an award, do not use your precious time applying.

But Carolyn, you protest, grants are good. We need money. Everyone knows grants are the best way for my organization to get funding!

Of course, nonprofits need money. However, grants may not always be the best way to obtain funding.

Four Reasons Why Grants May be Problematic

1. You can lose money on grant awards.

If it is a small award, say $2,500, and you have multiple, high-paid staff writing and submitting the application, reports, and financials, you could spend more than the amount you receive.

2. Grant funding is notoriously unstable.

Funders often want to give one time. They might change their giving priorities year to year. Perhaps they are supporting another issue this year (ask arts organizations about their funding during the pandemic). They might also be bored with you (rude, but who knows). Maybe they only want to fund you for three years tops.

Basically, funding (and funders) is fickle. Unless you know that your funders are the minority who will support your organization year after year, it’s better to assume the funding will stop sooner rather than later.

3. (Most) grant funding is restricted.

Despite years of effort by the nonprofit sector, the majority of funders provide restricted funding. A shocking number will not even fund salaries. Way too many do not fund any administrative costs, meaning no money for the basics — like rent, software, and payroll — that nonprofits need to run.

There is indication that this lack of operational support might be changing, but the reality is that many funders still refuse to cover the essential costs to help your organization be successful.

4. Diversification of funding is best.

I normally recommend no more than 1/3 of your organization’s revenue is from grant funding. Diversity of funding streams increases your sustainability by ensuring access to unrestricted funds.

Of course, there are many different ways to tap into sources of unrestricted funds. For how to fund your nonprofit without grant writing, check out this article!

Remember, grant applications take a lot of staff time and effort to apply to. Spend time carefully reviewing all requirements before you write. Then, read them again.

When you see a new grant, you will get excited about the prospect of the money. We could do so many things — think of the people we could help! I understand your excitement but implore you to keep a cool head. Remember that no is as valid as yes when deciding whether to apply. Think about what you are not doing because you are spending hours applying for that $2,500 award. Who are you not serving in your pursuit of this funding?

Be strategic about where you spend your limited time. Nonprofits live in survival mode, leading to panicked, not thoughtful, pursuit of grants. All those strings connected to grant awards can tangle you up — so make sure the grant is truly right for your organization before jumping in!

About the Author

Over Carolyn Owen’s 25 years of grant writing and research experience, she has increased revenue for a wide variety of organizations and has written for local, national, and international nonprofits as well as municipalities, helping them obtain millions of dollars in grant awards.

She has submitted to private and corporate foundations, community foundations, state, county, and city funding, as well as numerous federal agencies including HRSA, EDA, BJA, CDC, USDA (multiple agencies), DOT, DOE, VA, ACF, HUD, AmeriCorps, SAMHSA, and NFWF.

She is an active member of the Grant Professionals Association.

Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. Views represented in Blue Avocado do not necessarily express the opinion of the publication or its publisher.

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