10 Critical Mistakes Nonprofits Make When Building Relationships with Grant Funders

Building relationships with grant funders is essential. However, there are some common mistakes that could jeopardize your efforts. These mistakes are often overlooked due to the complexities and requirements during the grant funding process.

This article will discuss the top 10 critical mistakes nonprofits make with grant funders and how to avoid them for more successful funding partnerships. 

Let’s get started!

One of the main mistakes nonprofits make when trying to cultivate relationships with grant funders is overlooking the funder’s vision and priorities for their grant. 

Granting organizations have their own missions and values which will guide their funding decisions. It is important that your team carefully researches and understands these visions and priorities so that you can assess how closely they align with your nonprofit. If you don’t, it can lead to strained relationships down the road and lost funding opportunities. 

Solution: One strategy in nonprofit grant identification is using grants databases like Instrumentl to identify and research funders that align with your mission quickly and efficiently. Using Instrumentl, you just input your nonprofit’s funding focus and search criteria and then the Smart Matching system curates a list of potential funders and active grants in seconds. 

For example we found a grant in Instrumentl from the UNFI Foundation that clearly states the organization’s mission and focus areas:

Another critical mistake nonprofits make with grant funders is neglecting personalized communication. 

Generic and lazy communication can undermine your relationships with your nonprofit’s supporters.

For example, not addressing the funder by name, sending a generic thank you, and missing reporting deadlines are just some ways you can sour a relationship. 

‍Solution: Personalized and thoughtful interactions, whether it is over the phone, via email, or face-to-face, will help you maintain a positive and productive working relationship. This includes keeping the grant funder up-to-date on your program’s progress and how their support is making an impact.

Communicating your successes is definitely key to building relationships with grant funders, but just as important is acknowledging and reporting on failures. ‍

Nobody likes to discuss where they have gone wrong, but refraining from being transparent and openly discussing setbacks and challenges can have a negative impact on your relationship down the road. 

Not only that—funders want to help you solve any problems that may arise, but they cannot help if they are kept in the dark. Failing to acknowledge and report on failures could even breach trust and hurt your credibility.

Solution: Being honest with funders about any challenges or failures that may arise will help you maintain a positive and credible working relationship. Admitting failure doesn’t show weakness; on the contrary, it will illustrate your transparency and honesty with your grant funder.

Building relationships with grant funders also requires networking within the broader funding community. Yet, many nonprofits don’t realize they are missing opportunities by not engaging and investing in these connections.  

By underestimating the power of networking, nonprofits can quickly find themselves in a place of isolation. 

‍Solution: Your team can do some research to see if your community holds events for nonprofit groups or if there are local conferences that funders might be at. You also could consider inviting local funders to your own events so that they can see your mission in action. Finally, don’t forget to leverage your Board of Directors and their networking connections as well.

Improving funder relations also means not ignoring the importance of continuous engagement.

Without maintaining regular, meaningful contact, it will be difficult to establish sustaining relationships with grant funders. 

Solution: Continuous engagement doesn’t mean you need to be in touch with the funder daily or even weekly. What it does mean is fostering meaningful touch points in a few easy ways:

• Scheduling regular meetings and/or phone calls to share updates and successes about the grant funding. 
• Thanking grant funders in meaningful and personal ways, such as on a dedicated page on your website or through social media.
• Sending reports to your grant funders about the impact of their support. 
• Inviting your grant funders to visit your site or participate in events.

These are just a few ways you can ensure your nonprofit and grant funders maintain continuous engagement throughout the life of your grant. Cultivating these relationships during the post-award grant process can possibly set you up for more funding in the future.

Underinvesting in team training can lead to miscommunications and missed opportunities in funder relationships. However, since this is more of an internal issue, it is often overlooked. 

You want your team to have the skills and resources needed to navigate funder relationships successfully. From developing proposals to budgeting the award to creating impact reports, it’s important for your team to be equipped and prepared for every interaction they have with funders. 

‍Solution: Your organization can invest in professional development for your team. Some funders even offer workshops, trainings, or access to experts to help nonprofits improve their operations and achieve their overall goals.

This is one of the critical mistakes nonprofits make with grant funders that is pretty cut and dry: change happens, and you will need to adapt to any evolving funder expectations. 

Grant awards are not always static, and your team needs to be able to nimbly respond to possible changes that the funder presents.

Failing to adapt will derail your relationship eventually. 

‍Solution: The best way to prepare for changing funder expectations is to stay informed and adaptable throughout the life of your partnership. Constant communication is key here.

Having poor financial management or inaccurate reporting could lead to severe trust and credibility issues with funders. 

Poor grant accounting or failing to meet the funder’s reporting requirements could lead to losing out on future funding, or worse, having to pay the grant back. It can also damage your nonprofit’s credibility and reputation. 

Solution: Following grant accounting best practices can help ensure your team doesn’t mismanage grant funds. You also can invest in a grant calendar so that you don’t miss any reporting deadlines. For more insight into how to create an effective grant report, check out this template and guide. 

One of the biggest funder relationship mistakes you could make is not seeking their feedback or ignoring their advice. 

Not leveraging funder feedback can incumber your nonprofit from improving and hurt your funding success rate in the future.

It also communicates to funders that you don’t value their insights or opinions. 

‍Solution: If a funder gives you feedback, make sure to take it seriously and to take note of it so that you don’t forget. Instrumentl also has a webinar that can help you learn how to ask for funder feedback in the most productive way.

Finally, the last mistake nonprofits make when building relationships with funders is overlooking opportunities for additional support. 

Monetary awards are not the only thing funders offer to their grantees. Many funders also offer free training and resources. For example Amazon’s Imagine Grant not only provides technology to nonprofits, but also support and training for technological projects.

Solution: Make sure to research any opportunities that may be available beyond funding. You can also ask your funders if they have any additional resources that can help you maximize your impact.

These are just ten of the critical mistakes nonprofits make with grant funders. Making sure to avoid these pitfalls can help you establish meaningful and effective funder relationships. 

For more tips and strategies for building relationships with grant funders, check out this guide. And don’t forget to sign up for Instrumentl to get matched with good-fit funders instantly!