Posts Tagged ‘Grantseeking’

Due diligence and advice for grantseekers

A few years ago, I was engaged in the process of conducting workshops for program officers and foundation executives who were seeking ways to more skillfully approach due diligence in grantmaking.

At LaPiana Consulting, we collaborated with Grantmakers for Effective Organizations (GEO) to update their guide, Due Diligence Done Well, and many grantmakers have embraced the principles we presented since then.

As an Executive Director, I didn’t always embrace this process. With some foundations and program officers, I felt we were developing a relationship designed to create positive community change. In other cases, I felt as though I was being quizzed without a clear sense of what the questions were designed to reveal about my organization and its work. Even today, the grantmakers I talk with experience this dichotomy in a similar way, with the most successful experiences yielding strong relationships and the most frustrating never getting beyond a “sales pitch.”

Although one part of the due diligence process might be considered “good hygiene” – collecting the basic legal and financial documents needed to ensure that the foundation can comply with its own requirements – due diligence should primarily be about building a shared understanding of how the grantmaker and grantseeker can work together to benefit the field or community about which they both care.

Given that, how can you as a nonprofit leader participate in the due diligence process to ensure that it is mutually beneficial?

Submitting a proposal or letter of inquiry is just one point in the process. Foundations ask for information in the proposal or LOI to make a basic determination regarding fit with the grantmaking focus of the foundation. If there is a fit, the next steps are all about deepening their understanding of your organization and gathering the additional information to make a funding decision. Even in the presence of an existing relationship, there’s more to learn. Here’s some of the advice we give to grantmakers and its application to you as a grantseeker:

Get clarity regarding the process:

Unspoken assumptions about how the process will unfold will almost certainly lead to misunderstandings or disappointment. Ask the grantmaker about his/her information needs and the best way for you to supply information. Discuss expectations and timelines.

Red flags:

One program officer said that an immediate red flag comes when a grantseeker (wrongly) claims that his/hers is the only program in the region, state or country that provides certain outcomes or works with a particular population. Grantmakers invest time in understanding what is happening in the field and community; you should too. You can point out what differentiates you from similar work done by others, but be realistic in the depiction of those differences. Grantmakers should and will spend time talking to foundation colleagues and others in the field and community as they gather information.

Build a relationship based on mutual respect and trust:

Engage in a dialogue. A meeting with a program officer shouldn’t be regarded as a sales meeting or one-sided communication. Ask the program officer about the information he/she is seeking and discuss the best way to convey that information. If you do plan a presentation, make it short and leave plenty of time for discussion. Also, think about what you want to know, especially if this is a foundation that you haven’t worked with before. What are the expectations regarding measurement and outcomes? What does the foundation know that can help you be more effective?

Be honest. If you’ve had struggles in delivering programs or have faced organizational challenges with your board or in retaining staff, talk about it. What have you done to address these problems? You need to pass the “smell test” – if you are painting an unrealistically rosy picture or trying to gloss over any problems, the truth will eventually emerge and if it comes from another source, it will harm your credibility.

Be respectful. Program officers understand the power differential and most want to “level the playing field” by demonstrating that they – like you – are concerned about how to achieve your mission. Also, just like you, program officers work hard and are juggling multiple demands on their time. I have heard more than one story from program officers about prospective grantees who call the program officer to criticize the time the decision is taking or complain that the program officer is talking to others in the community. I don’t know of any program officer who has decided against making a grant based on the poor manners of the Executive Director, but it sure doesn’t help the relationship. Frame your questions in nonjudgmental ways.

The grant decision isn’t the end — it’s the beginning of a new stage:

If the decision is affirmative, there’s a lot of work ahead. What benchmarks or requirements are set in the grant document? What do you need to do if there’s a change in the budget or if something isn’t working? How often will you “check in” with one another about the grant? You should expect different answers to these questions based upon not only the significance of the grant in terms of your budget, but the significance of the grant in relationship to the foundation’s grantmaking budget.

Always think about the future:

If the decision is negative and your grant application was not accepted, seek an opportunity to learn how you might better communicate your work in the future. But don’t seek that discussion as a way to convince the grantmaker that he or she should reconsider the decision. You may need to accept his/her decision as a learning experience and move on, but you should also conduct a final conversation in a way that can leave the door open for reconnecting in the future. 

See also:

Storytelling for Grantseekers: A Guide to Creative Nonprofit Fundraising

The Ask: How to Ask for Support for Your Nonprofit Cause, Creative Project or Business Venture

The Ultimate Insider’s Guide to Winning Foundation Grants

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Everyone loves a good story

Why do we continue to write boring fundraising materials and grant proposals that ask for our readers’ stamina rather than their enjoyment? Storytelling isn’t a fad. It’s here to stay and will remain the preferred way we learn information.

Some of the most memorable fundraising materials I worked on in my past life as a development director were the pieces that involved telling a unique story about why a donor supported the university. One campaign in particular, we asked donors to vote for his/her favorite professor with a donation and a story about the instructor. The gifts came pouring in that year because people love to tell a good story as much as they like to hear one.

Captivate your donors

Our latest Page to PracticeTM book feature of Storytelling for Grantseekers by Chery Clarke not only addresses the often daunting task of grantwriting but the numerous ways you can captivate your audience with a good story in your fundraising communications.

Storytelling and development collateral can intersect in the following ways:

  • The elevator speech can use an effective hook. An elevator speech can be translated into a powerful, concise, revised version of your mission statement.
  • A grant proposal for general operating support can serve as an agency’s internal case statement. External case statements must tell compelling, emotional stories.
  • Appeal letters have the most obvious connection to storytelling because they need to be vivid and persuasive for people to donate.
  • In a brochure, the stories can be complemented by visuals.
  • Your web site should tell your organization’s story.
  • Annual reports, in addition to providing evidence for the agency’s financial health, present another opportunity to relate your story.
  • Even though government grant applications are longer and more structured, you can still infuse stories into the need or problem (antagonist) and the objectives sections.

If you keep the storytelling approach in mind, you can use it whenever possible, including in sections about your credibility or the sustainability of your program. However, storytelling is not always appropriate given the space limitations and formal tone of government applications. With more practice, you will know when it is appropriate and when it isn’t. Even though some parts of grant writing are technical, such as the goals and objectives section, persuasive writing can transfer to many careers, including marketing, technical writing, journalism, speechwriting and more.

Join us for our next live author interview in our monthly series at CausePlanet and ask Cheryl Clarke all of your burning questions or simply listen to gather all of her helpful insights. Clarke recently released the second edition of her popular book Storytelling for Grantseekers: A Guide to Creative Nonprofit Fundraising.

It’s chock full of useful techniques for nonprofit communications of any kind-from newsletters and appeals to annual reports and, of course, grants. Our interview will touch on Clarke’s book and much more through our interview questions.

Where are you using storytelling in your work?

If you found this glimpse into our book feature helpful, consider subscribing to our summary library of recommended nonprofit and corporate titles or visit our summary store for a la carte choices. You can also sample a summary for free.

Visit to purchase her books and learn more about her list of client services.

See also:

Influential Fundraiser: Using the Psychology of Persuasion to Achieve Outstanding Results

Fundraising When Money Is Tight: A Strategic and Practical Guide to Surviving Tough Times and Thriving in the Future

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Agreement in the trenches: Less is more with foundation proposals

I consider myself to be an optimist, but I am also a skeptic. So when I read Martin Teitel’s article on foundation proposals and his assertion that mediocre proposals are not funded, I wanted to check this against both my personal experience as a funder and the experience of a group of development professionals.

Does Martin Teitel’s point align with development professionals’ opinions?

Teitel asserts there is no bell curve for funding proposals; anything less than perfect-fit, outstanding proposals do not get funding. In his experience, the proposals that are sent in as part of a mass submission from an organization fall short. This is a waste of resources on both sides, contributes to the inefficiencies in the sector and does more harm than good for organizations.

The perspective of foundations and the perspective of development professionals often differ. These sides disagree on outcomes, the size of grant awards and the length of proposals and more. However, in this case, the development perspective matched the foundation one.

Does activity=results?

I asked a handful of friends to share their experience in submitting proposals that were either rushed and not of top quality, an indirect fit with guidelines, or part of a mass mailing for their success rate. To a person, they said these proposals were rejected. And yet, all of them had submitted sub-par proposals in their careers. There is significant pressure to produce as a development professional and at times activity can be confused with results.

Misguided beliefs

There are some misguided beliefs that fuel this sort of proposal submission fallacy. We like to believe our cause is the most important, most relevant and most urgent one that exists, and that if we just share the information, others will be converted to that belief. The other is that foundation money is “easy” to get. From an objective view, neither of these beliefs is true. There are a multitude of important and worthy causes competing for limited resources and foundation dollars that are rarely simple to obtain or maintain. Foundations funding is not easy or consistent. Teitel suggests rejection rates for proposals are as high as 95 percent. In my experience, this is high, but rejection rates at 75 percent are not uncommon.

Cold prospects and multiple rejections

Aside from the inefficiencies Teitel cites, a number of rejected proposals can actually work against an organization. Foundation staff can be a good resource. In the discussion about your organization and funding priorities, if the program officer says, “In the 65 years of the foundation, no similar organization has ever received funds,” then do not apply. Don’t just send in an application because you thinks/he is wrong. S/he is not. You will not be funded. Harsh, but true. Save your time for the hot prospects, not even the warm ones. Being under resourced should make us more frugal and protective of our time, not the opposite. If you think some headway can be made in the future, don’t just send in a proposal, but continue conversations, gather data, follow the foundation’s communications and perhaps eventually submit an exemplary proposal. In my experience, organizations have a better chance with their first proposal, not their seventh or eighth. Foundations do fund new programs and organizations, but after discussion and education, not after 10 rejected proposals. One piece of data requested by trustees is often organizational history of requests-–proposals submitted, rejected and funded. If there are 10 rejections, the eleventh is an easy decision.

Return on investment

As development work increases in sophistication, I am encouraged to see more and more organizations calculating the return on investment for development efforts. Structuring foundation proposals in the way Teitel suggests takes time but provides larger returns. It can take just as much time to build a relationship and do research as it does to craft a proposal for a foundation where there is no fit. The return on this work is very different and can be more rewarding when the return increases–-both in resources for your organization and in personal satisfaction.

Educate boards and executive staff against the more is better thinking around proposal submission. Track time and results to make a strong case. And you can always ask your friendly program officer to share this message with those who disagree. Instead of wishing you all good luck, I wish for you a very few, exemplary proposals.

See also:

The Ultimate Insider’s Guide to Winning Foundation Grants

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When seeking grant funding, remember your financials tell a story

The competition for grant funding is high, and foundations and other grantmakers are faced with making very difficult funding decisions during every grant cycle. Many foundations, for example, decline more than half the proposals they receive. Tightening funding streams also means that some funders have less resources for grantmaking than in the past, making funding less secure for even long-time grantees. With all these challenges facing grantseekers, all nonprofit organizations can benefit from taking the time to ensure that every aspect of their grant applications are telling positive stories about their organizations.

Grantwriters often spend significant amounts of time crafting the narrative sections of their proposals. While the narrative is an essential component of grant success, many organizations fail to realize their financial information often tells equally important stories about their organizations. For many organizations, the financial information is often attached as an afterthought but plays a significant role in how a grant reviewer interprets a grant application.

To share financial information with a grant application, here are some suggested topics to cover. In other words, here are some stories your financial information can tell about your organization:

Positive information: Nonprofit organizations record items like multi-year pledges, cash reserves, building a capital fund and other positive situations in many different ways. While most program officers are skilled at interpreting financial statements, it is sometimes difficult to discern what these mean for an organization. If an organization is building significant cash reserves for a capital campaign but does not explain the purpose of the fund, a grant reviewer can interpret such a fund as sitting on too much cash. He/she may think the organization is not using it to advance an organizational mission or it is at a comparatively lower level of need for funding compared to other applicants.

Negative information: The last few years have been difficult for many nonprofit organizations, with organizations dipping into cash reserves, experiencing deficits or shrinking budgets. These scenarios are obvious on financial statements, yet financial statements almost never come with any explanation from the applicant organization. If your organization’s financial statements reflect one of these situations, it can be important to explain the root causes, how the situation has affected your organization and the steps you are taking to control or reverse the situation. Without these kinds of explanations, a funder is often left with only one reasonable interpretation: the negative trend will either stay steady or continue, making a grant a risky proposition.

Scope of activities: Financial statements often help verify an organization’s priorities. If an organization is seeking funding for a specific program and states in the narrative the program is a top priority, a grant reviewer can use financial statements to gauge whether or not the program is reflected as a priority in how the organization uses its financial resources. Financial information can also help a grant reviewer assess the depth of an organization’s programs. For example, if an organization states that it serves thousands of individuals but has a very small cash and in-kind budget, a reviewer can conclude that an organization is not providing a high level of service or may be exaggerating its reach.

When submitting grant applications, it is always wise to minimize the red flags. Many funders do a preliminary review of proposals that does not include phone calls, site visits or requests for additional information. If your proposal contains a few red flags with regards to your financial information, a funder can decide to decline your application during the preliminary review, which never gives your organization the opportunity to provide additional information that might eliminate concerns. Because so many nonprofits are facing financial challenges, many funders will be far more sympathetic when an explanation and course of action are shared, rather than leaving a funder to make an interpretation on his/her own.

Many grant applications, including the Colorado Common Grant Application, allow applicants to submit a budget narrative. In reviewing hundreds of grant applications in recent years, I have seen very few organizations use this optional attachment but have seen dozens of financial statements that tell a negative or unexplained positive story about an organization.

These scenarios leave the grant reviewer to interpret the situation, rather than rely on information directly from your organization to explain the situation. To help increase your success with grant funding, take the time to see what story your financials are telling about your organization and if it leaves room for negative interpretations. Take the time to help your financials tell a more complete version of your organization’s story. By taking the time to explain your organization’s financial situation, you can help minimize red flags and maximize your organization’s chances at funding success.

See also:

Storytelling for Grantseekers

The Ultimate Insider’s Guide to Winning Grants

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Financial due diligence: What grantmakers look for and what you should know about it

Grantmakers are by necessity becoming more selective in how they allocate their resources. Many are looking for data to help inform increasingly difficult funding decisions. Across the sector, we are seeing a genuine desire among grantmakers to better understand how to effectively use financial information as part of the due diligence process. The challenge is that interpreting financial data can be time consuming and complex, running the risk of creating additional burdens on grantmakers and grantseekers and at times drawing incorrect conclusions.

Due diligence, as defined by Merriam-Webster Dictionary, is “thoughtful research and analysis of an organization prior to a business transaction.” For grantmakers, the due diligence process is a multifaceted one, combining subjective insights and judgments about organizational capacity, governance and leadership with objective data analysis such as financial review. This financial dimension should begin with the examination of audited financial statements and/or IRS Form 990, the current agency budget and some details as to the stability of revenue sources. This information should, in theory at least, help to answer some very basic questions, such as: Did the organization operate at a surplus or a deficit? Does the organization have sufficient cash-on-hand? Is there a healthy reserve base? But it is not always that simple.

Take for example the fact that the total change in net assets (read: surplus or deficit) may include revenues restricted for future use. In other words, what appears to be a surplus may in fact be—on an unrestricted basis—a deficit when you extract those restricted or “spoken for” dollars. Conversely, what looks like a deficit may be an unrestricted surplus if the organization released more restricted revenues than it brought in for the fiscal year. The available cash-on-hand may also have restrictions, rendering it technically illiquid. Or, the unrestricted net asset base may be comprised entirely of property, plant and equipment. Welcome to nonprofit accounting!

The point is it is not an easy task to open up an audit or a Form 990 and interpret an organization’s financial statements. Many of us—nonprofit executives and grantmakers alike—have not had formal nonprofit finance training. In this topsy-turvy world of nonprofit numbers, meaning-making can become overwhelming to the point where the desire is to run for the hills. Yet, there is valuable information to be gleaned from analyzing the numbers. And, for those who take the time to learn how to read and interpret nonprofit financial data, we will have at our disposal a language through which

we can communicate. It is not rocket science, but like any language, it takes time to learn and will likely involve a certain degree of trial and error before getting it right.

When it comes to financial due diligence, there are really only a couple of things to know. First, financial due diligence should provide some insight into whether an organization is at risk of going out of
business. Common indicators of risk include an audit with a qualified or adverse opinion, negative net assets and/or payroll tax liabilities. If you are a grantmaker, these are the kinds of red flags that should give you pause and require follow-up. If you are a nonprofit executive, you should have a well-articulated plan in place to address these issues, and this plan should be communicated proactively to your funders.

Second, and perhaps more importantly, financial due diligence should result in an increased understanding of an organization’s operating model, structure and financial position. It should also result in more successful grant structuring. The documents to review might include one or more years of the following: audited financial statements and management letters, IRS form 990, year-to-date internal financial information, current organization-wide budget, documents describing the status of revenue sources (received, committed, pending) and fundraising plans. If you are a grantmaker, the financial analysis you conduct should lead to insightful questions to ask your potential grantee. If you are a nonprofit executive, you should be prepared to actively engage in this dialogue and impress upon your funder a deep understanding of the financial dimensions of your nonprofit business.

Financial due diligence plays a key role in helping a funder to gauge their level of confidence in “investing” in a nonprofit. But due diligence is not merely a tool for managing risk—it can also be a powerful relationship-building opportunity. As described in Due Diligence Done Well, a guide by Grantmakers for Effective Organizations and La Piana Consulting, the due diligence process can help funders develop a better understanding of the day-to-day realities of their nonprofit partners, and nonprofits gain insight into funders’ philanthropic goals and strategic priorities. When put to its best use, financial due diligence will help to build and sustain a lasting trust between these two interdependent parties. This, in turn, can translate into generating more sustainable sources of revenue for nonprofits at a time when nonprofits desperately need it.

See also:

Winning Foundation Grants

Storytelling for Grantmakers

Cash Flow Solutions

Cash Flow Strategies

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