How Does Your Budget Influence Grantseeking?
A conversation between Cynthia Adams, CEO, and Ellen Mowrer, President, of GrantStation.com, Inc.
My President, Ellen Mowrer, and I were discussing budgets a few days ago and I told her how much interest is shown whenever I mention budgets in a webinar.
Let me set the stage here.
Ellen is a numbers person. She develops and analyzes the State of Grantseeking survey and report we do every six months. As our discussion ensued, she was throwing statistics at me left and right. She sees budgets through an entirely different lens than I do. Her analysis is based on survey responses, and lends itself to establishing budget benchmarks for nonprofit organizations. I, however, can look at the same statistics and my take away is how that information can be used to grow the organization. Maybe these observations are the same, but I think not!
So we decided to put this to the test and have a conversation to see how providing the same information cues up different responses.
Ellen: One thing I am noticing is that the success and challenges of nonprofit organizations are clearly demarcated at under or over $1 million annual operating budgeting. (This break-point number has been increasing over the past 14 reports.)
Cindy: Can you give me a little more context?
Ellen: Well, organizational age is one example. While 78% of those organizations with budgets over $1M are 25 years of age or older, that age range is true of only 40% of those organizations that have budgets under $1M. And age matters, because nearly 33% of organizations with +$1M budgets reported Federal funding, while only a little over 25% of under $1M budget organizations received Federal funding
Cindy: So, it seems that government funding, specifically Federal funding, is closely related to budget size and age of the organization. Would you say that is true?
Ellen: Yes, I would say that is clearly indicated. Another example of the +/- $1M budget divide is staffing and the successes and challenges that come with staff, or the lack thereof.
Among organizations with annual budgets under $1M, nearly half employed one to five people, while another 25% were all volunteer or employed less than one full-time person. However, among organizations with annual budgets over $1M, 45% employed 11 to 75 people, and 41% employed over 75 people.
Another apples-to-apples way of comparing staff size is this: 11% of under $1M organizations employed 11 or more people, vs. 87% of over $1M organizations.
This difference in staff size has a measurable effect on grantseeking success. Among those organizations whose budget is under $1M, 76% applied for a grant, and of those, 73% won an award. Among organizations with budgets over $1M, 94% applied for a grant, and of those, 94% won an award.
Cindy: Those are really rather striking numbers. Obviously, an organization that has a staff that is trained and experienced in grantwriting will have a higher success rate than those who do not, but these percentages seem really high.
Ellen: You are right that the higher success rate for organizations with +$1M budgets can be directly attributed to staff with a dedicated grantseeking function. In fact, in those cases the report clearly indicates that 90% of those with grantseeking responsibilities were staff members.
Cindy: My take away is that any organization with a budget over $1M should have at least one dedicated grantwriter on staff. How about smaller organizations, those with budgets less than $1M?
Ellen: Among smaller organizations, 63% reported grantseeking as staff responsibility, but 10% relied on volunteers and 14% relied on board members. So, their success rate goes down.
Cindy: I think it is interesting that 24% of the smaller organizations rely on board members and volunteers to write and submit grant requests. And I wonder if it wouldn’t be wise for smaller nonprofits to include grantwriting training for volunteers as part of any capacity building request. They could use the statistics uncovered in this report to help build the case for funding this type of training.
Ellen: That makes a lot of sense. In the recent report, when asked about the greatest challenges to grantseeking, a lack of time and/or staff was the most frequent answer by organizations with budgets under $1M, while competition for awards was the most frequent challenge of organizations with budgets over $1M.
Cindy: You have to wonder if those small to medium sized organizations with budgets under $1M would say the same thing if lack of staff time wasn’t the problem. I mean, would they say that competition is the main issue?
Ellen: Perhaps, but the latest report definitely demonstrates some solidarity. Although the order of importance changes, all organizations cited competition for awards, the lack of time and/or staff, funder practices and requirements, and relationship building with funders among the top most frequently chosen grantseeking challenges. So, they are somewhat interchangeable.
Cindy: I think there are ways to address most of these challenges, such as lack of time and/or staff. In that case, you can establish a grantwriting committee. And I think competition can be partially addressed by building a solid request, particularly focusing on the statement of need and clearly linking it to the outcomes that will be generated via a specific project. Building a relationship with the grantmaker is also something that is within the control of the nonprofit. But it is nigh impossible to change funder practices and requirements.
Ellen: I’m curious as to how a grantwriter at an organization can build a relationship with the grantmaker?
Cindy: If you replace the word ‘relationship’ with ‘credibility’ I think you’re on the right track. It is not as if you want to become great pals with a funder. What you’re really trying to do is gain the funder’s respect when it comes to your organization and the work your organization does. You want them to feel confident that if they invest their money in your organization that the outcomes will be admirable, and they will be proud to be affiliated with you.
Ellen: It’s interesting because you so often see webinars and books that talk about building that relationship between a funder and an organization, but you seem to be shrugging your shoulders at this concept?
Cindy: I just believe that if a proposal is well developed, the need is clearly identified and documented, and the proposed project is a result of careful analysis of the problem, then there is a good chance it will get funded without there having to be a strong relationship with the funding organization.
And there are ways to build credibility into your proposal, such as quoting from your mission statement between the statement of need and the project description. A quote from the mission statement at this juncture clearly says to the funder, “Here is the problem, and it is our mission to address this issue.” And that is just one place where an organization can build credibility within a letter of inquiry or full proposal. There are many others!
Ellen: So, you are saying building a personal relationship per se with the funder isn’t necessary?
Cindy: Well, it certainly doesn’t hurt. Having a connection with a board member of a top staff person can help move the process along much faster. You aren’t completely plowing new acreage if you have a personal connection. You’re just tilling up an existing field. However, creating those connections isn’t always possible.
Ellen: One other point – not every organization is meant to be a +$1M annual budget organization. Sometimes, an organization serving one neighborhood, town, or county can quite effectively meet their mission on $500,000 or less each year.
The question then becomes, can organizational time devoted to grantseeking (as opposed to fundraising or event planning) be a more effective use of overall time when balanced against the dollars generated? And that is something that all organizations must answer for themselves.
Cindy: And I would warn small to medium sized nonprofits that scatter-shooting grant requests (sending out the same request to numerous potential funders) is just about the worst thing you can do. If you don’t have the time to write individual requests to potential funders, then you shouldn’t adopt grantseeking as part of your overall funding strategy. However, if you do want to include grants as part of your revenue stream, then carefully identify the right grantmakers to approach and develop compelling requests.
Ellen: According to the latest State of Grantseeking Report, 75% of those organizations that submitted just one grant application won an award. And the number of applications submitted increases the likelihood of winning awards. Ninety-one percent of our respondents who submitted three to five grant applications received at least one award and 97% of our respondents who submitted six to ten grant applications received at least one award. So, one way to increase your organization’s chance of winning grant awards is to submit at least three grant applications.
Cindy: So, the numbers do speak to this idea of doing your research and applying to the grantmakers that really align with your organization’s mission and project.
Ellen: Thank you for talking this out with me, Cindy. Your experience always helps to ground the data in the real world, and make numbers actionable.
- Review the latest State of Grantseeking Report.
- Consider building grants training into a capacity building request.
- Join GrantStation to FIND new grant opportunities in our searchable databases, BUILD a strong grant program with strategic planning tools, WRITE powerful proposals using step-by-step tutorials, and WIN grants to fund your organization’s mission.
Share this article
the GrantStation Insider.