Is your nonprofit organization ‘grant-ready’? 

Foundation grants can be one of several revenue streams in a nonprofit organization’s sustainable fundraising plan. In 2022, foundation funding accounted for about $105.21 billion, or 21% of total U.S. charitable giving. As a share of all revenue streams, including government funding, program revenue, and investment income, foundation and corporate grants made up 15.3%. 

Naturally, most nonprofits will try to secure a grant at some point. Candid offers many resources to support organizations in searching for funding opportunities, writing grant proposals, and standing out among applicants.  

But before you start seeking a grant, ask yourself: Is your organization really ready?   

Before you get started

Here are some basics you should be aware of before applying for grants: 

First, getting a grant is a labor- and time-intensive process. From the first phase of writing a proposal to actually receiving a check could take six to nine months. If you need funds immediately, a grant probably isn’t going to come through in time.  

Second, most grants (especially first-time grants) are restricted to program expenses. General operating support, or unrestricted grants, can be used to meet any organizational need, but those grants are largely the exception, rather than the rule. One of the first things you need to do, then, is to detail your expenses in a budget and determine what is eligible for grant funding.  

No one funder will offer all the funding you need for your program, so you’ll need to submit multiple grant proposals. Ask yourself if you have the bandwidth to prepare one or more proposals. It takes time to gather all the information funders typically expect in an effective proposal, as well as to conduct the pre- and post-application legwork to bolster your case. If you’re already understaffed, this is time you may not be able to give to this process. 

You should also be aware that when you apply for a grant, potential funders will likely want to look into the details of your work. Therefore, it’s important that your house be in order and that you are prepared to be transparent about your operations, strategy, finances, and staff. Would you be comfortable inviting a funder for a site visit? Are your staff and board ready to speak with a foundation representative about the organization’s priorities?  

The minimum requirements 

There are certain minimum requirements that most foundations look for in potential grantees. Here are a few: 

1. Are you a 501(c)(3) organization as defined by the IRS? By law, foundations can only give to organizations if they are set up for a charitable purpose, as defined by the IRS. You’ll need to show potential funders your IRS letter of determination. You can learn more about filing for 501(c)(3) status here. While you’re at it, make sure your Candid profile is up to date. Many potential funders will consult it when they’re doing their due diligence. 

2. Do you have a track record? Foundations want to see that you’ve been operating for a while and have an established track record of effective programs. Consequently, it’s difficult (though not impossible) for a brand-new organization to get a grant. Not only do you need to explain what you’ve accomplished, you also need to provide metrics and/or anecdotal evidence that your programs are making a difference. Be prepared to demonstrate that you are intimately familiar with the needs of your community and know that your services are meeting them.  

3. Do you have capable leadership and an effective board? To show that your nonprofit will be a good steward of any grant funds received, you need to demonstrate that it’s a well-run organization with sound governance. You may need to present your overall operating budget and audited financial statements. Potential funders may also want to know whether your board members understand their responsibilities and whether you have good HR practices in place. If your nonprofit is new, you can strengthen your case by highlighting your leadership’s previous track record at other organizations. 

4. Are you already financially viable?  Funders like to see that potential grantees have a diverse revenue stream. Most grant periods last only a year or two, so you will need to secure other sources of support—other grants, individual donors, or perhaps earned revenue.  

Have you determined that you meet the minimum requirements? The next steps in seeking a grant include identifying and researching potential funders and crafting proposals. Candid offers numerous resources to help with those tasks, starting with Foundation Directory. But first, make sure you meet funders’ basic requirements and are ready to invite funders to examine the inner workings of your organization. Seeking a grant takes time, effort, and resources. Set yourself up for success by making sure you’re ready to start the process. And once you get that first grant, it should get easier to secure additional grant funding to advance your mission. All that preparation will have been well worth it. 

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