I find when Founders have misconceptions about nonprofits and grant writing, they make some serious mistakes. When I was writing grants, these were the mistakes Founders made and the misconceptions that led to those mistakes. Understanding these misconceptions is the first step in not making the same mistakes.
Grants will Fund us
Grants will fund us is a misconception I hear often. Some Founders believe that once they are officially tax exempt, grant money will pour in- they just have to apply. They think they’ll get a million dollar grant that will set them up and fundraising won’t be needed. It’s a field of dreams mentality- if I build it, they will come.
This misconception leads to the mistake of chasing grants that you won’t qualify for. You wind up not building the infrastructure your organization needs and other funding streams that will be sustainable for your nonprofit right now. You spend valuable time on the things that won’t move the needle forward. Yes, you may get really lucky and get a few small grants but they will be few and far between.
Instead, Founders would serve their nonprofit better if they asked, “How do we become grant ready?” By doing this, you will build the infrastructure needed to sustain fundraising efforts and attract donors. Becoming grant ready has an added side effect of becoming funding ready- no matter the income stream.
Grants are a One and Done Activity
Another misconception is that grants are a one and done fundraising activity. People new to grants think you sit down, write a grant, mail it out, and get a check in the mail. It’s almost magical.
When you buy into this misconception, you run into all kinds of trouble. Grants are a process and require more time than most people think. Planning is about 80% of grant writing. Writing the grant is 20%. Then, if you get a grant award, you have to keep track of expenses and receipts so you can report back how you’ve spent the money. And that’s at a minimum. Some Foundations want press releases, social media coverage, and other creative ways that give them community awareness. Some will have a list of expectations you have to meet. Government grants come with a manual on how to execute their program.
Founders can avoid the mistake by asking, “how do we set up the grant process”? This acknowledges that grants will take time and resources to accomplish your grant goals. Creating a process for your organization that works for your nonprofit helps you direct and manage resources that will give you the best chance at getting the grant.
Grants are Free Money
The last misconception I want to address is: Grants are free money. Many Founders have been told somewhere along the way that grants will fund them. I suspect they were told this by a grant writer trying to gain their business or just too inexperienced in grant writing to understand the process. But somewhere they painted a picture that if you write it, funding will come and the field of dreams vision is further reinforced.
The free money myth leads to Founders putting all their hopes in grants and ignoring the costs at the expense of the organization. I’m sure you’ve heard the saying, “Nothing in life is free.” Grants are no different.
Instead, ask, “how do we understand the costs?”
Grants can have added costs if you aren’t careful. State and Federal grants often have requirements on computers and equipment. I’ve also seen organizations get into trouble when they forget to add in the human resources needed to run their program. If there isn’t funding outside of the grant or volunteers, you will find yourself scrambling to meet the client’s needs. If you don’t have the required infrastructure in place, you will have to find a way to pay for that needed infrastructure.
There is such a thing as opportunity cost in business. It’s a term that actually comes from economics and Oxford Languages defines opportunity costs as “the loss of potential gain from other alternatives when one alternative is chosen”. In other words, opportunity cost is the value of what you lose when you choose between multiple options. This loss can be money but can also be time or other resources. So, when you focus solely on grants, you aren’t focusing on infrastructure or other funding opportunities. Sometimes you must ask yourself, “Is what I may gain from this option worth the sacrifice of the gain from this other option?”
Grants are a process that requires resources, skills, and infrastructure to be successful. In order to be successful with grants, you must become grant ready and do the things that build the resources, skills, and infrastructure needed. There is no shortcut.
Join the Nonprofit Founder’s Club™ Facebook group for how to be grant ready.