How to Make Your Grant Applications More Business-Like

How to Prepare for a Grant Application: A Nonprofit Checklist

I’ve seen a lot of articles about being grant-ready lately. They tend to discuss granting readiness in fundraising in general, with emphasis on targeting major donors and how to put the machinery in place to identify how much wealth each contact has.

This article is not about that. It will focus on the kind of funding readiness a small nonprofit should have in order to apply for a grant from a foundation. Far less has been written about that sector, and although it’s true to say that nonprofits apply for government grants and donors far more frequently than they do foundations, there are still many who rely on money from foundations to further their mission.

For those nonprofits who are new to the game and want to ensure that they are ready to apply to foundations for grants, let me lay out for you what I believe to be the best possible way to view the process.

Treat approaching a foundation for a grant like applying for a bank loan.

Am I serious? Yes, I am.

Let’s examine and compare the two processes.

To apply for a bank loan, you will check your credit score, gather financial documents like pay stubs and ID, then submit an application online or book an appointment at a local branch. Wait for approval, review the final contract terms, and sign to receive your funds.

To apply for a grant from a foundation, you will get your financial information together, gather information regarding your existing funding, and prepare a clear explanation of what you need the money for. Then, depending on the foundation, you might submit a Letter of Inquiry, complete an application or otherwise make contact with the funder.

If funding is awarded, you will also need to understand any restrictions, reporting requirements, and other conditions attached to the grant.

Different processes.

Before someone gives your organization money, they want to know that you are prepared to use it responsibly.

But there is a similar principle behind both:

1: Prepare before you apply.

For a bank loan, you would:

Ensure your accounting is in order
Calculate how much you need and what monthly payment you can afford
Shop around to compare terms and interest rates

For a grant application you should:

Ensure that your accounts are accurate. (Some foundations do require audited statements.)
Provide information regarding your income, ie any fees for services, events, other grants or major donors who support you.
Ensure that your organization has the capacity to provide the reporting that a foundation requires in exchange for the money.

The important thing is to have your financial information in order before someone asks to see it.

And just as you would shop around before choosing a loan, you should research foundations before deciding where to apply.

Look at:

What they fund
Who they fund
Where they fund
Typical grant amounts
Previous recipients
Application requirements

Our guide on how to find foundations for grants explains how to build that prospect list, while our guide on how to qualify foundations for nonprofit grants can help you decide which ones are actually worth pursuing.

2: Gather your documents

The bank will require the following:

Identification: Government-issued photo ID like a driver’s licence or passport.
Proof of Income: Recent pay stubs, and tax returns.
Financial Details: Bank account information and a summary of your current debts and monthly expenses.

For a foundation, you will need:

Proof of registration as a nonprofit with either the IRS or the CRA. Your business number or letter of determination.
Proof of your means to stay sustainable, ie your income.
Financial details, ie your accounts.

For a U.S. 501(c)(3), that may include your EIN and IRS determination letter. The IRS explains that determination letters are issued when an organization establishes that it meets the requirements for the tax-exempt status it requested.

For a Canadian registered charity, that may include your CRA registration information, Business Number and financial statements. The Canada Revenue Agency’s guidance on charity financial statements explains the financial statements registered charities are required to maintain and submit with their annual information return.

And be sure to read our guide what can grant funding be used for, a detailed guide for nonprofits.

3: Prepare your documents ready

The bank will want you to:

Have a business plan: Show how you will use the money and pay it back.
Financial statements: Gather profit and loss sheets, balance sheets, and tax returns.
Legal IDs: Bring government identification and business registration or incorporation papers.
Personal history: Be ready for a check on your personal credit and finances

It really isn’t so different for the foundation you’re applying to. They will want:

Your carefully prepared plan of attack to achieve your goal and further your mission, along with evidence (either statistical or empirical) or the benefits of your planned approach, ie, your case for support.
Those financial statements to show transparency for your organization.
EIN or CRN number and letter of determination
Further evidence of your transparency.

And it needs to be more specific than:

“We do important work and need more money.”

Know what you are asking for.

Maybe you need $10,000 for equipment.

Maybe you need $25,000 to grow your program.

Maybe you are seeking $50,000 for general support.

However big or small your request is, you should be able to answer questions such as:

How much do we need?

What are we going to spend it on?

Who is going to benefit from it?

What do we expect to achieve?

How will we know if we’ve achieved our goal?

Foundation research is useful.

If the foundation usually awards grants between $5,000 and $10,000, making a $150,000 grant request right away will signal the donor that you haven’t done any groundwork.

Historical giving can show you what the foundation supports rather than what the foundation says it supports.

Researching historical giving of foundations prior to applying will make your grant request makes the process so much more efficient.

4: Submit and review

At last, we’re ready to request that loan, or that grant.

In the bank, you will:

Fill out the application form on the bank’s website or in person with a loan officer.
Allow the bank to run a hard credit check.
Read the final agreement carefully to check for setup fees or prepayment penalties before you sign.

Meanwhile, the foundation process runs in parallel:

Fill out the form or send your letter of inquiry.
Allow the funder access to your accounts.
Check exactly what the funder requires from you in return for the disbursement.

And that’s it. That’s the whole process. Once you are sure you have your paperwork in place, you understand exactly what you are asking for and you have identified foundations that genuinely align with your organization, you’re in a much better position to apply.

Another observation I want to make that aligns applying for foundation grants to the business world, is that when you apply for a grant, you are, in reality, applying for a job.

You are applying to work for the funder to effect a change in the world that they wish to see. You have the skills and ability to make that change for them, but you lack the money required to set it in motion. The funder has the money but needs to employ a nonprofit, ie, you, to carry out the work. The only benefit enjoyed by the funding organization is the knowledge that the work is achieving the benefits and outcomes it would like to see.

The more efficient your reporting is, the more likely your nonprofit is to receive further funding from that funder. Collect the statistical evidence that proves you are effective. Make it available to your funder. Make it available on your website. Share your success.

Collect the individual stories that demonstrate your success and share those with the funder too.

This strategy not only rewards your funder for their generosity but also stands you in good stead for future applications to other funders as you grow.