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Chances are, if you are reading this, that someone at your nonprofit organization has started talking about the grant research and grant development process.
Maybe you are confused and frightened by the daunting task of doing prospect research for your nonprofit, expanding its reach, and leveraging financial resources.
You might even be asking yourself: What is prospect research in the grant development process? How should I get started? What are the common grant prospect research mistakes I should avoid?
No worries. We are here to help! This article will provide you with a crystal-clear understanding of the many dos and don’ts related to the grant prospect research process. This easy step by step guide will help make you ready to achieve great results.
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First Things First: A Primer on Prospect Research
Most nonprofit organizations pursue grants as an effective way to diversify their streams of revenue.
But finding the funding opportunities that perfectly match their vision, mission, needs, and programs is not easy.
Prospect research is the first required step toward identifying the funders that fit your organization’s needs. But how should you best go about researching?
Grant prospecting requires you to utilize comprehensive approaches to thoughtfully identify the best grant opportunities that match your organization’s needs based on several (complex) elements.
Researching grant opportunities and new prospects requires a strategic approach: Using the best online research tools can help put your potential new funders on your radar.
First, you‘ll have to identify a certain number of foundations, corporations or government entities willing to support your cause. Next, you‘ll need to study their grant cycles or “giving histories” (Who did they fund in the past? What has been the size of the awarded grants so far? Do they have any geographic preferences?).
If you aren’t using Instrumentl, you could start by browsing the Foundation Center’s Foundation Directory Online database and GrantStation to search for organizations by focus areas, giving interest, and past grants. Grants.gov is helpful for federal grant opportunities or GuideStar for grant histories and funder’s financial information.
If you’re using Instrumentl, all you need to do is create a project, and then we’ll show you tons of good fit matches based on our matching algorithm. This saves you time in your initial screening process.
In the Air Quality project below, you can see how Instrumentl has identified 110 potential good fit matches from an initial screen. Instrumentl only shows you active and open grant opportunities so you don’t have to spend time evaluating whether or not the opportunity is one you can pursue.
Finally, you’ll have to create a detailed list in which you compile all of your discoveries. It will need to be revised, narrowed down, reviewed and finally approved.
It will make a difference if you start with the right attitude as you gain momentum throughout the process!
That, for sure, won't be the final step of your grant development process since after grant prospecting you will have to actually pursue the selected opportunities.
But remember, one thing at a time is that done well!
5 Common Grant Readiness Mistakes Nonprofits Make
Although nonprofits seek grants as the magic solution for boosting their organizations’ financial stability and diversification, not all of them are ready for these grants in the first place.
Essentially, the expression “grant readiness” defines the current status of your nonprofit when it comes to grants.
Is your organization ready for finding, applying, submitting, winning and managing grants?
There are a few key things to consider that will reveal the answer, and they are all about the organizational capacity of your nonprofit: the tax-exempt status 501(c)(3) and all the required federal/state documentation, having a diverse and active Board of Directors, the existence of a strategic plan, qualified staff, great programs, and grant research or planning skills.
Stay tuned, and we’ll go over together the most common grant readiness mistakes nonprofits make (and how to strategically avoid them).
Mistake #1: Organizational (in)effectiveness
Your organization might just not be ready to apply for the grants. If that is the case, don’t even start with grant prospecting!
Consider, instead, other fundraising activities, such as fundraising events, donors advised funds, or online/gift campaigns to raise funds.
What makes an effective nonprofit, though?
There are a few key elements to consider:
- Do you have a clearly defined mission and vision?
- Do you have a diverse Board of Directors?
- Does your organization have credibility and demonstrated competency in your community?
- Does your organization maintain good programs with qualified staff?
- Does your organization have the ability to mobilize others?
It is not a surprise that many nonprofits register high turnover rates, often due to a toxic culture, low salaries, narrow minded leadership and systems in place that don’t help cope with burnout.
As a result, work processes and systems will be heavily impacted in their performance, and there’s no way for success.
If your nonprofit shows elements of ineffectiveness, point it out to your organization’s decision makers, and wait to get ready before grant prospecting!
Mistake #2: Weak history of programming
This may be hard to hear: funders tend to prefer organizations with a good, consolidated and sound history of programming.
What does this mean to you? The history of your programs (including relevant statistics, impact reports, achieved outcomes, the number of people served in the community, etc.) is the true measure of your success.
Be ready to showcase your powerful impact. All you have to do is effectively present what you accomplished thus far by gathering relevant data and information that clearly shows how your nonprofits’ work makes a huge impact everyday.
Mistake #3: Lack of data on community needs
Never underestimate the power of updated data and colorful infographics when it comes to appealing to the perfect funders for your nonprofit organization!
You won't sound credible if you are not able to support your funding request without a detailed representation of the existing need in the community you serve.
Why? As simple as it sounds: how can you be the best at solving the existing problem if you don’t adequately know (or are unable to document) the main problems requiring a solution?
This data is so tied to the reason why you are serving that specific population, providing specific services and carrying out certain programs in the community.
You may find Instrumentl’s collection of grant writing classes helpful in thinking of ways to build a foundation of data around your community’s needs.
Mistake #4: Lack of diversified financial resources
Most funders will need to verify that not only are you their perfect fit, but that you know how to properly run your nonprofit.
Make sure your organization has a sustainability plan in place when applying for grants: oftentimes an outline of this plan will be a mandatory requirement of some grant applications.
Even if not “clearly stated” in the notice of funding opportunity, your organization needs to prove its financial stability through diversification of funds before submitting any grants.
The grant development process is a complex one, and one has to be fully aware of how to navigate it!
Almost all funders will expect that they won’t be the sole funder of your grant proposal and that you have a fundraising plan on how to secure a variety of resources to successfully run your programs.
Mistake #5: Undetailed budget/ financial plan
If your nonprofit is a healthy one, it will have in place a variety of financial management practices that contribute to building stability, sustainability, and flexibility.
Does that sound like you?
The last, but not least, common grant prospect research mistake to avoid is not being aware of the interdependency between budgeting, governance, programs’ outcomes, and evaluation.
Make sure you do your due diligence and are ready to 1) pursue your financial integrity, thus responding to financial problems that may arise; 2)have a transparent accounting system; 3) maintain financial responsibility (through both cash flow and operating reserves); 4) develop reasonable and realistic budgets in consideration of your programs’ costs and operating/structural expenses.
Essentially, funders need to TRUST that you will be able to wisely manage their money!
Never tried Instrumentl?
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Start saving 3 hours a week and increase your grant applications by 78%.
5 Common Oversights of Grant Prospect Research
Oversight #1: Not being as thorough as you could
Beware: working on grant research can be absolutely exhausting. You will need a lot of energy to stay focused and hit your target!
You don’t want to overlook the importance of your grant prospect research, right?
So… no matter what, stay focused on the steps you are taking and be as thorough as possible.
Most grant database tools will only present you with a list of grant opportunities, and may not exclude inactive opportunities. This puts the onus on you to ensure you are finding good fit funders for your nonprofit.
In the case where you’re using Instrumentl, you can rely on the matching algorithm to conduct an initial screen for you, but from there, you should also do your own due diligence by digging into 990 snapshots, along with the Premium Funder Insights to evaluate which grant opportunities are the best investments for your limited time. If you haven’t already, you can create 14-day account on Instrumentl here to get personalized grant recommendations.
Although the research can be extremely time consuming, the effort will be rewarding!
Oversight #2: Not properly understanding the funders’ interests
When you use available databases for grant prospecting in the market, you will be prompted to seek funders that support your cause through “keywords”.
Some databases will give you multiple names of foundations that are willing to support organizations with similar missions as yours.
Again, dig as deep as you can, dive into their scope, and spend the proper time studying their website to make sure you TRULY understand their funding interests before reaching out or submitting a request.
Oversight #3: Misinterpreting the funder’s eligibility criteria or requirements
Try not to get lost in the labyrinth of the funders’ eligibility criteria or requirements.
In most cases, foundations offer an eligibility quiz for screening potential grantees; but if they don’t, pay extra attention to their requirements when it comes to eligibility.
You don’t want to waste your or their time working on an application that won’t be accepted.
In Instrumentl, you’ll want to pay close attention to the top of each opportunity, as it’ll outline things like what fields of work the funder is funding, desired applicant types, funding uses, and location of projects:
Oversight #4: Not paying attention to the type of application to be submitted
Let's say you found the perfect funder for your nonprofit and, depending on your position, you want to share the amazing results of your research with your supervisor.
Make sure you properly understand (and report) what type of application is required for submission.
Most foundations will accept LOI, may have online “fillable” interest forms, some require an initial contact first (by invitation only) or some will even allow you to submit a full proposal right away.
Oversight #5: Requesting the wrong amount
Not aligning your request with the amount that the funder generally awards to similar organizations is a fatal error.
It can be extremely painful to have your fantastic proposal rejected for this reason!
The takeaway here is that you also must be aware of how much your organization needs to raise from each grant and how (exactly) the money will be used, when you will need it, and what grant will cover what (Organizational expenses? Personnel? Programs? Building renovation?).
Most funders have a consolidated history of giving and preferred grant amounts they typically award.
However, sometimes funders may stray away from their own pattern for their own reasons.
Again, try to request the amount that you actually need in consideration of the funders’ most common grant awards.
5 Common Workflow Mistakes Nonprofits Make When Prospect Researching
Workflow Mistake #1: Not using a great grant search tool
We live in a technology-led world these days, and it makes prospect researching so much easier.
Nowadays, grant writing can be facilitated and streamlined by a variety of additional tools such as Grammarly (to check your grammar and enhance your vocabulary) or Google Drive & Google Docs (to share, store and edit your documents).
When it comes to prospect researching, choosing the best grant research tool can help you simplify the research process.
Ideally, you can find a tool that helps you bring grant prospecting, tracking and management to one place.
Instrumentl lets you create projects so that you can keep an active grant search and save opportunities in the same place, while also referencing 990 data from the same site.
Workflow Mistake #2: Not having your research reviewed
Grant prospect research is the first step towards your grant success rate.
The second one is the strategic approach you will be using to select (and prioritize) the grants your organization will be applying for.
The final decisions about what the best opportunities are for your nonprofit will be made by the leadership of your organization (i.e. Executive Director/ CEO, Board Members).
Submit a first draft of your grant prospect research within an internal meeting, to be reviewed before creating a consolidated list. Why do you need to do it? Because you must verify that you are on the right road, to avoid having to start again from the beginning!
It will save time and will help you easily hit your target.
Workflow Mistake #3: Not creating a grant prospecting worksheet
Not filling out a grant prospecting worksheet is a terrible mistake in the prospect research workflow process.
The grant prospecting worksheet reports the main results of your research (funder, programs/areas of interest, eligibility, amount, deadlines, type of application required).
You NEED to record your results in that precious file in order to keep everything organized and clear.
After creating the initial list, you will have to visit each funder’s website to record as much information as possible in order to rank their potential for being a great match.
Workflow Mistake #4: Not creating a grant calendar
Great job, you created the worksheet! And now what?
You also need to create a grant calendar that mirrors exactly the opportunities you intend to pursue, all pulled from your grant prospecting worksheet.
Why? Simply because you want to be on task and track the upcoming tasks associated with each grant, such as the deadlines and the reporting timeline.
These opportunities are your best leads! Keep track of when you applied, your deadlines, and the final status of the grant.
Workflow Mistake #5: Not cultivating the relationship
While donors do have money, they also have their own philanthropic interests for specific causes that align with their passions.
It is critical to understand the specific donor, care about their goals (and money) and share your passion with them. You also should share stories related to your success accompanied by a clear presentation of the approach you will be using to fulfill your mission and achieve the greatest results.
You will need to nurture the relationship with that lead, which then can become a prospect, then a funder, and eventually a meaningful partner.
Kind words of appreciation and gratitude will go a long way!
You can learn more about the importance of partnership in this workshop with Maryn Boess.
Wrapping Things Up: 15 Common Grant Prospect Research Mistakes to Avoid
We hope you enjoyed our exploration of the most common grant prospect research mistakes to avoid.
It has been quite a journey, hasn't it?
Overall, make sure you gather your data, have strong programs in place, and that your organization is effective in terms of organizational capacity, realistic budgeting, staffing and programming as well as diversification of funds.
Also, when grant prospecting, be thorough with a keen eye to details, and make an effort to understand the funders’ guidelines (areas of interest, eligibility requirements, generally awarded amount, type of application/approach, and deadlines).
By using the best institutional fundraising tool, reviewing your finalized grant research list, and creating a grant worksheet and a grant calendar, you’ll quickly be able to become a pro at grant prospect researching!
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