The Grant Readiness Checklist: What Funders Want to See
As you are looking at your annual fundraising plan, you may discover some gaps in revenue that you need to fill. This may be a good opportunity to look for grant funding. And for good reason – in 2024, foundations in the United States distributed an estimated $103.5 billion in grant funding, according to the Giving USA Report.
Grants can play a vital role in nonprofit fundraising, and having a reliable infrastructure of grant income your organization is able to return to each year goes a long way toward sustainability efforts, funding diversification, and program development. When managed well, grants can supercharge an organization’s long-term impact and sustainability.
Before you start going after grant funding, however, it’s important to evaluate if your organization is ready for this kind of funding, and how you can make yourself more competitive in the landscape of grant support.
Before you get started, consider these points…
Writing grants is a labor and time-intensive process. From the first phase of writing the proposal (which can take anywhere from 5 to 20 hours, depending on the depth of the request), to actually receiving the check, it could take six or more months. If you are in need of funds immediately, grants probably aren’t your best bet.
Most grants (and especially if you are new to the funder) are restricted to program expenses. Unrestricted and general operating support are typically reserved for long-time funding partners and are generally the exception rather than the rule.
A single funder will generally not consider funding your entire program. So think about how you will pay for expenses beyond the grant you are submitting. You’ll likely need to submit several proposals and put together a funding plan for diversified income streams, to sustainably support your program.
Click to take our no obligation, free quiz to see if your nonprofit is ready to apply for grants.
So what is grant readiness?
Grant readiness describes whether your nonprofit organization is prepared to successfully apply for, receive, and manage a new grant. Being grant-ready means a nonprofit has the administrative, governance, financial, leadership, and programmatic know-how to win and deliver on grants.
The minimum requirements:
A 501(c)3 IRS Determination Status, or a fiscal sponsor (although many grant funders will not consider a grant to a fiscally sponsored organization).
A track record of successful programs and their measurable outcomes for 3 or more years. Foundations will nearly always require an established track record of effective program administration. If you haven’t been operating for 3 or more years, it’s challenging to show long-term effectiveness and secure this kind of funding.
Capable leadership and an effective Board of Directors: To show that you have the capacity to steward grant funds, you will need to demonstrate your nonprofit is well-run and with sound governance. You will typically need to share a Board of Directors roster, which nonprofit best practices dictate should be made up of at least 3 unrelated people, who do not have conflicting roles in the organization (for example, it’s not well looked upon for your Executive Director to also be the Board Chair, especially if it is a paid position).
Healthy Finances: All foundations and grantmakers require sound financial statements, including annual and program-specific budgets, up-to-date profit and loss statements and balance sheets, class restrictions for programmatic vs. overhead expenses, and a copy of the annual form 990. Many foundations also require your financial statements to be audited. It is imperative that your nonprofit organization is financially viable and has the capacity to administer restricted funds, and looking over your financial statements is the way foundations will determine whether or not you can effectively administer a grant award.
We have developed a tool to help you measure your organization’s readiness to launch a foundation support program.
Click the button to take the evaluation, which will give you a score to help you understand where you currently are, and what you might need to work on to further develop grant readiness at your organization.
