The Lifecycle of a Nonprofit's Relationship with Grant Funders

If you work for a nonprofit organization, you know how impactful grant funding can be. You probably also know how critical ongoing funder relationships are. 

Establishing and maintaining relationships with grant funders is important at every stage in the grant management journey—even after the funding has ended. In this guide, we are going to outline the entire lifecycle of a nonprofit’s relationship with grant funders. Understanding the nuances of relationship-building at each stage will help your organization maximize its chances of success and increase its sustainability. 

Let’s get started!

Building a relationship with grant funders starts with identifying and researching funders whose missions align with yours. 

Applying for grants takes considerable effort, so proper prospect research will ensure you don’t waste your time—or the funder’s time—applying for grants that you’re not eligible for or that don’t align with your goals. The best nonprofit-funder relationships are built on a foundation of shared visions and missions. 

Luckily, there are tools that you can use to identify good-fit funders quickly and efficiently, such as Instrumentl’s grants database. 

Using Instrumentl, you simply input your nonprofit’s funding focus and search criteria and then Instrumentl curates a list of potential funders and active grants in seconds. You can then filter through your matches based on location, category of funding, award amount, and more! 

Once you’ve found possible funding opportunities that meet your organization’s mission and goals, you can make initial contact to continue the lifecycle of a nonprofit's relationship with grant funders. 

Some funders may ask for a compelling letter of inquiry (LOI) before allowing you to submit a full proposal. 

An LOI is a short document—around two pages—that outlines the specifics of your organization and the program you are seeking funding for during the grant application process. 

This shorter document is your chance to make a solid first impression with the funder and to start establishing a relationship with them. Make sure that you clearly articulate your mission alignment and how impactful your potential partnership could be. 

You can save some time by using our LOI template found here! Then, if the funder approves of your LOI, you’ll be invited to submit a full proposal.

After making initial contact, you should be ready to develop your proposal to try to convince the funders why you deserve their support. 

During this relationship-building stage, it’s important to make sure that you follow the specific instructions and guidelines outlined by the funder. This will show them that you are taking the application process seriously and are fully invested in pursuing a potential partnership with them. 

Proposal development for nonprofits can take weeks or even months, depending on the complexity of the funding opportunity. The funder will specify what they are looking for in your proposal, but they usually follow the same similar structure:

• Project title
• Executive summary
• Organization background
• Needs statement 
• Project narrative
• Budget
• Goals and objectives
• Evaluation plan
• Sustainability plan

Remember that the purpose of this important step is to convince the funder that they should award your nonprofit funding. So, you’ll want to take the time to ensure your application showcases your shared visions and how impactful your partnership would be.

All grant funding opportunities will have application deadlines, so you will need to ensure you have the time and capacity to complete and submit your proposal on time. 

Not meeting funder deadlines is a sure-fire way to start off your relationship on the wrong foot, or worse—have your application thrown out. 

Remember we mentioned using Instrumentl to find grants that align with your mission? You can filter your grant matches within Instrumentl by their application deadline so that you can decide whether you have the ability to complete them on time. 

Instrumentl also has customizable grant calendars where you can share tasks and deadlines with your entire team so that nothing gets missed! 

You may find in the lifecycle of a nonprofit's relationship with grant funders that there is no set time in which the funder will review and evaluate your application. 

Some funders may let you know right away if you received the grant, or they may request more information about your grant proposal. If more information is sought, you will need to be timely with getting back to them to show you are serious about the opportunity.

Eventually you will receive an ultimate decision from the funder.  

Regardless of whether you win the award, you should be prepared to write a thank you letter for being considered (or for being awarded!). 

While certainly frustrating, a grant rejection isn’t the end of your grant proposal journey. Funders usually give feedback about why your proposal was declined, and you can use this information in your next pre-award management venture. 

For example, were there mistakes in your application or were there organizational issues? If they don’t offer feedback, ask! Knowing what you did wrong is the first step to bettering your grant applications in the future.

If you do receive the award, congratulations! Now you can move onto the next step—nonprofit grant implementation.

Just because you won the award doesn’t mean your relationship with the funder is over—it’s actually just getting started! 

With any grant reward, there are numerous responsibilities to managing your grant effectively and maintaining compliance with funder requirements. 

Nonprofit grant implementation and management is a team effort! We suggest holding an initial team meeting to review the funder’s grant requirements, reporting and compliance obligations, and essential due dates for successful grant implementation.

We cannot emphasize enough the importance of regular communication and engagement with grant funders to maintain a positive, productive relationship. 

You’ll want to make sure you keep the funder updated throughout the life of the grant with meaningful communication. This could include:

• Regular updates on the program
• Personal success stories of who is positively impacted
• Invitations to events 

Remember that you are building a relationship with your funder, which means they should be treated like a partner, not just a dollar amount. 

Not only will ongoing engagement reassure the funder that their award is being spent appropriately, but it could also open doors to more funding in the future.

Throughout the lifecycle of a nonprofit's relationship with grant funders, your organization needs to adhere to grant evaluation and reporting requirements. This means your team will need to provide thorough and accurate reports and an evaluation plan to demonstrate the impact and accountability of the grant award.

Your team can put together a step-by-step evaluation plan that includes the following:

• Quantitative data—this is the numbers!
• Qualitative data—the narratives of WHO is being helped
• Internal and external evaluations—have the intended outcomes been met? 
• Problems or challenges—where have your methods been ineffective?

Your grant funder will also have specific reporting requirements that your team will need to meet. These reports typically include: 

• The program’s financials 
• An overview of the work that has been accomplished
• Any changes to your original plan
• Impact data
• Outcomes
• Supporting materials

Every grant eventually comes to an end, so this is where you can find out if there are any renewal opportunities or if the relationship will conclude professionally. 

Some grant makers offer continuation funding that provides renewal opportunities to a previously awarded grant cycle. Your chances of securing this type of funding go up when you have stronger funder relationships. 

A one-time grant, on the other hand, will ultimately reach a conclusion. These grants end on a specific date or when the project is completed.

No matter if you receive a renewal or a one-time grant, you will want to promptly thank the funder and acknowledge their support through respectful communication. Expressing gratitude is key to building and sustaining a positive relationship with your funders now and for future opportunities. 

Then, you can continue to acknowledge their award using your website, social media, and through personal communication. This gratitude is important to building a foundation for future opportunities.

Prioritizing strategic, thoughtful engagement at each phase of the grant life cycle is important for successful, sustained relationships with funders. The steps listed above should help you develop positive relationships with your grant funders that could foster future award opportunities.

After the “Stewardship and Gratitude” stage, you can repeat the steps if you end up working together again. Remember, cultivating funder relationships can drive ongoing projects and new initiatives, expand the partnership, and even diversify new funding sources through recommendations.

By using the steps above, you can foster your nonprofit’s relationships with grant funders throughout the entire lifecycle of the grant. Establishing these partnerships can help you secure sustainable funding and support for your organization for years to come. 

If you need help finding funders who align with your nonprofit’s mission, you can create a 14-day free account on Instrumentl. Happy grant seeking!