30 May How Your Organization’s Risk Tolerance Influences Your Grant Calendar
Chances are your organization conducts comprehensive grant research to prepare for the upcoming year’s grant calendar. If your organization is like most others, then you now have a long list of potential funders ranked by how likely they are to fund your group or program.
From that list, how do you determine which of these opportunities to include on your grant calendar? In addition to ranking the quality of the match and the relationship you are able to develop with the funder, your organization’s tolerance for risk needs to be considered.
The Higher the Prospect Match Ranking, the Better Your Chance of Funding
And, Vice Versa.
The more grants you apply for that are lower on your qualification ranking, the less likely you are to be funded. For example, if a funder is awarding grants to a similar program to yours in another area, but the funder does not exclude your geographic region, you are more likely to receive funding from it than from one who funds in a more general, similar field or broader geographic area or population.
Investing your time and resources in higher ranking prospects improves your chances of receiving funding. Analyzing and assessing a rank is critical for organizations that have limited time, or a single grant writer on staff, a development director who wears multiple hats, or limited funding to pay for consultants or additional staff.
Who Should Write Your High-Ranking Grants?
Some organizations seek a specific return on investment (ROI) or have a low tolerance for denials. In our experience, many nonprofits want their in-house staff to tackle grants that are less likely to succeed or have a smaller ROI. Why? Because they have already “paid for” the in-house staff. Frequently, this happens because any additional costs to hire an outside consultant needs to be justified to the board of directors, which examines consulting fees more closely than staff costs.
The problem with this approach is that it creates a false perception of the quality of the in-house writer’s skills. Unfortunately, sometimes the in-house writer’s skills are viewed as better than an outside consultant, so the consultant is only given the lowest ranking grants. In reality, the consultant is in a better position to write the high-ranking grants, as this is what he or she does all day, every day.
Is Success Rate Based on the Grant Writer or the Prospect Relationship?
It is more accurate to examine at the end of the year the success rate of grants based on the ranking of the relationship with the funder than the individual writer; then an executive director can present this data to the board and use it as an educational example of how ROI is different based on ranking and relationships.
Not to Discount Lower Ranking Prospects…
Remember, over time, almost all growing organizations will apply for funding sources with a lower probability of award simply because all the “low hanging fruit” has been approached.
If you need funding, you must make an investment in these prospects. The alternative is to live within your grant dollar means because it costs more to write and manage the grant than the grant is valued.
Keep in mind, though, that some administrative staff and tasks must be completed and paid for either way, so then there is value in having staff use their time to bring in additional revenue, even if it has a lower ROI than other funding opportunities.
GPC Competency 2: Knowledge of organization development as it pertains to grant seeking. Skill 7: Identify effects of applicants’ organizational cultures, values, decision-making processes, and norms on the pursuit of grant opportunities.