Developing an Annual Grant Strategy that Wins

If you're a seasoned grant manager, you know the process of developing an annual grant strategy isn’t just a task, it’s an investment that can deliver substantial returns well beyond the initial effort put into its development.

Like you, I know how frustrating it can feel to guide grant strategy development on top of all the other responsibilities you have—especially amidst the ongoing challenge of aligning with funders’ expectations without straying from your mission.

Effective planning and strategic focus can make this balancing act more manageable. Forward-thinking nonprofit leaders are now utilizing innovative, technology-driven approaches to develop their grant strategies. No longer do they have to rely on outdated approaches such as manual research or tracking.

Not only are these innovative and tech-driven solutions simple to use, but they work.

While some nonprofit leaders might feel intimidated by the price of innovation, growth-minded visionaries understand it’s costing them a lot more not to invest in their own organizational infrastructure—which an effective and efficient grant strategy depends on.

In this blog, I’ll guide you through an in-depth exploration of building an annual grant strategy. By the end, you’ll have a clear path forward for your organization to help you go further, faster.

As a nonprofit leader, new ideas come and go like traffic in a busy city, but there’s sometimes that one that just keeps driving to the forefront of your mind.

As you go about your daily work its visits become more frequent. You begin to share it with team members to gauge their interest, and their collective excitement grows yours. After months of strategic program planning, you’re prepared to detail this new initiative with your board. You approach them with a mix of enthusiasm and nerves, knowing that your big vision will quickly be anchored by those five brutally essential words: “How will we fund this?”

How prepared will you be to respond?

As a great leader, you can lean into your excitement and mitigate the nerves of your board by confidently outlining funding opportunities uncovered during your annual grant strategy development.

After all, you’re already in the job because your board believes in your ability to execute; what they need to see is an annual grant development plan so well-strategized that they can visualize a clear path to the successful launch of your new initiative. Thanks to your effective grant strategy development, your board agrees to green light your project and encourages your pursuit of funding.

This scenario isn’t just what’s possible after executing a successful grant strategy, it ought to become what’s normal.

So where should you start?

All good strategies assess reality for what it is, and then begin with the end in mind. The following three questions should help you and your team discover where you are now and where you’re going:

1. How much cash-on-hand do we currently have?

Determining your financial runway is critical. The distance of your cash-on-hand runway could significantly impact which grants you pursue, especially if you’re searching for grants to cover current costs as opposed to launching a new project.

For example, I recently found a grant for youth sports programming I wanted my organization to apply for, but after assessing our cash-on-hand and need, I quickly realized we’d run out of youth programming funds three months before we’d hear anything back from this particular foundation. We dog-eared the grant to pursue next year.

2. How much recurring revenue is already committed for the upcoming fiscal year?

Conduct a thorough analysis of your projected revenue, drawing on historical financial trends from the past three to five years. This process tends to reveal significant patterns in donor behavior and funding cycles. By scrutinizing these past revenue streams, you can develop a more accurate and realistic forecast for the year ahead, uncovering key insights that will inform and refine your fundraising strategy.

3. How much revenue will you need to sustain your current initiative and/or potentially launch a new one?

Great grant writers don’t just review the total amount of expenses, they assess expenditures and the fruit of their outcomes through strategic tools like outcome mapping or an Outcomes-based Evaluation.

With your organization's financial landscape thoroughly assessed and a clear understanding of your funding needs established, you’re ready to enter the planning phase.

The old nonprofit adage “better together” rings especially true when it comes to planning. In fact, the biggest leadership mistake in annual strategic grant planning is going at it alone.

Instead, you want to ensure key internal stakeholders are at the table for the planning phase, including representation from finance and program leaders (whether they’re volunteers or paid staff). Representation from both of these diverse parties is critical; financial experts tend to be realists, and front-lines program leaders tend to be much more optimistic. Both voices are equally valuable.

Keep in mind, even if you’re the captain of the ship, you’re not out sailing the seas in this meeting, you’re bringing your crew to the deck to chart a course. These questions can help serve as guiding buoys for your initial meeting:

What percentage of revenue am I, my financial team, and my board comfortable with coming from grants?

Similar to balancing a healthy diet, diversifying revenue ensures healthy financial stability.

Most (but certainly not all) healthy nonprofits won’t exceed 30% to 50% in grant funding, depending on the size of the organization. The central question is, how much risk are you willing to take based on your current circumstances and in light of your strategic plans? Only you can decide—but as a friendly heads up, the balance between risk and certainty might just be found in how diverse your other revenue streams are.

What is our timeline?

Grant planning is like gardening; a clear understanding of the timing and grant busy seasons is essential for a fruitful harvest. Establishing a clear timeline ensures that all activities, from research to submission, are aligned with a foundation’s funding cycles and your team’s needs.

How will we measure and report on program outcomes?

Pursuing grant funding without a plan for how to effectively measure and report program outcomes is as useless as a captain charting a course without using navigation and a map along the journey. Plan methods for reporting and data collection to show the quantifiable impact of funded programs, meeting the expectations of the grantors and your organization’s best practices.

If we’re awarded funds, what is our team’s capacity to add reporting and follow-up on top of our current priorities?

At some point, even the best jugglers can’t handle one more ball thrown into the mix. Assessing your team's ability to manage additional reporting and follow-up responsibilities if awarded funds is vital to future morale. Do your due diligence to ensure current priorities won’t be compromised and that new responsibilities are feasible.

What is the contingency plan if we don’t receive this funding?

You wouldn’t take a road trip without a spare tire, and you don’t want to apply for funding without a backup plan either.

Be mindful of the differences in why you’re pursuing grant funding: Not securing funds for a new project can result in a postponed launch, but the failure to obtain funding for ongoing initiatives can have more severe consequences, like having to downsize staff.

This planning phase requires collaboration among key stakeholders, blending the realistic insights of financial experts with the optimism of program leaders to chart a strategic course for successful annual grant plan development. 

‍The next crucial step in your grant strategy journey is grant research and prospecting. This phase is where you will explore and identify potential grant opportunities that align with your mission and financial goals, laying the groundwork for successful funding acquisition.

Regardless of where your organization is, grant research and prospecting is the land of opportunity. As a nonprofit leader, knowing how to harvest the land of grant prospect research is indispensable.

That’s precisely why you don’t want to rely on outdated grant research methods like manual reviews of 990s. Why cross a foggy ocean in a rowboat when clear skies and a ship await?

Modern techniques and tools streamline the grant research and prospecting process. Instrumentl, for example, uses smart matching technology to automatically connect nonprofits with active grant opportunities that align with their missions and meet their fundings needs.

Whatever grant prospecting tools you end up using, make sure to:

• Precisely nail down who you’re serving (i.e. what is your target population?)
• Determine the specific resources will you need to serve them
• Search for diverse funding sources that can help meet those needs, such as:

1. Private Foundations
2. Religious Organizations
3. Federal Government
4. State Government
5. City/County/Local government
6. Corporate Foundations

Most importantly, be reminded that aligning grants with your project's specific needs can never come at the cost of creeping from your mission.

Each grant you consider should not only align with your objectives but also fit within the practical confines of your operational capacities and strategic goals.

‍Pro Tip: When you invest in your organization’s internal infrastructure through grant prospecting software, you can better customize your grant searches, protecting yourself from mission creep on the front-end and allowing you to quickly identify grants that seem tailor-made for your organization.

Writing a winning grant application has as much to do with research and storytelling as it does mission alignment, and the right tactics can help you raise millions. The writing process is meticulous, but with laser focus and intentionality it can be a positive, uplifting, and rewarding process.

Get organized by outlining

Before you even sit down to write, outline the grant application guidelines and track everything with your team, divvying up each person’s responsibilities with deadlines for everything that you’ll need on submission day.

Share responsibility efficiently

A strategic approach used by successful grant writers is to organize and distribute the workload efficiently. They often create a shared document, like a Google Doc, where specific questions from each grant application are listed. This method allows team members to collaborate effectively, with each person contributing to different sections of the grant proposal.

Tell stories

Above all, note that the power of storytelling cannot be overstated. It’s not just about the numbers; the best grant writers turn data into story, and doing so often requires a team effort. Enriching your grant application with compelling and detailed narratives is essential for illustrating how your work positively impacts those you serve. Describe real-life examples and success stories to bring your data to life.

If you need help, consider this fact: the stories shouldn’t support your data, your data should support your stories. Remember: your goal is to create a vivid picture in the grantor's mind, one that clearly showcases the necessity and transformative power of your work.

By marrying detailed research with powerful storytelling, your application stands a greater chance of being noticed and getting funded. Now, you just have to wait!

At no point in time will you appreciate the diligence and hard work you put in more than when you’re waiting to find out if you’ve won the award.

It’s a vulnerable feeling, but maintaining a focus on the well-thought-out strategy can provide confidence regardless of the outcome. Be prepared to celebrate your wins and learn from your losses.

Celebrate your successes by acknowledging the efforts of everyone involved, and view any rejections with an attitude of opportunity for growth and learning. And don’t forget to ask when you might be welcome to reapply based on the feedback provided.

Achieving funding goals is a stepping stone toward greater organizational impact, but be mindful that there are as many opportunities to learn from success as there are from failure. Once you’ve celebrated your win, consider asking these three key questions to help you sustain the vision:

1. How can I build a stronger relationship with funders?
2. How will receiving this grant impact our current grant strategy?
3. What plans need to be developed to sustain funding for this project after the grant is complete?

There is no better time to tell others about your organization than when you’ve just received word of a major gift. Share the good news before you buckle down and get to work on executing your project.

Remember, each step in this journey—from planning to execution—is an opportunity for growth, learning, and sharing your story, ensuring your organization's mission thrives well into the future.