Good vs Bad Accounting

A nonprofit organization is only as strong as its accounting team. Though grant writers and administrators spend most of their time developing relationships with funders and preparing outreach documents like Letters of Intent (LOIs) and proposals, the funding they locate would not be sustainable without an accountant to ensure all financial details are being recorded and reported. However, it is not as simple as just applying the same accounting practices that one would use in a for-profit business. The purpose of a non-profit accountant is to manage revenue generated through donations, fundraising, grants, and other funding mechanisms with the purpose of providing support to the nonprofit’s mission. In contrast, a for-profit accountant serves the firm’s goal of making profit, sot their main purpose is to focus on the money the firm is bringing in. 

            Nonprofit accountants are concerned with maintaining consistent and sustainable financial support for mission-driven organizations. They track funding sources for each program or service the nonprofit provides so each can be accounted for separately. What businesses refer to as “equity,” nonprofits call “net assets,” reflecting the fact that a nonprofit accountant is focused on providing a picture of how much funding is available for programs, not the overall value of a company’s assets minus their liabilities. At no point is a nonprofit accountant concerned with how much the nonprofit would be worth to a potential buyer, which is a key distinction setting them apart from for-profit firms.

            The most important best practices for nonprofit accounting are focused on transparency. It is always in the best interest of a nonprofit to be open about how funds are being acquired and distributed, so all stakeholders can see the effect of their contribution. For any fundraising activities, nonprofit accountants should provide receipts to donors and provide total transparency about how funds are being used. For grants, nonprofit accountants often hold the essential responsibility of making sure all funds from a grant are disbursed to the correct program with a thorough paper trail. This is not only a critical part of nonprofit ethics, but an important measure to ensure the nonprofit’s annual tax obligations are fulfilled in compliance with state and federal laws. Inaccurate reporting of these details can lead to steep IRS penalties that will prevent your nonprofit from supporting its mission, so it is crucial to ensure nonprofit funds are managed by experienced accountants. 

Summer Series – Screening Funders

The first hard truth to know about funders is that most of them have no interest in you or your work. Effective nonprofits have relatively narrow missions and run efficient programs that fit the goals of those missions. Because most foundations have similarly narrow funding interests, this means that most foundations out there are not a funding match for any given nonprofit. The first thing you should do when you encounter a new funding opportunity is find their website. If they do not have a website, this should be an immediate red flag. This is probably a private foundation that makes grants at the direction of a board or a single wealthy benefactor. If the foundation does have a website, find the section containing their mission statement. Compare that mission to your own organization’s mission. Do you share a common purpose? Does their mission include funding organizations like yours? Does it reflect the values that guide your work? These questions are usually enough to rule out foundations that have zero interest in hearing from you.

Once you’ve decided a foundation fits with your mission, it’s time to figure out if they will be interested in hearing from you. Most foundation websites have a section with the word “Grants” or “Grantseekers” in it, though sometimes this can be folded into a larger “About Us” or “Contact” section. If there is no such section, you probably have your answer. Foundations that accept proposals want to make their process accessible to grantseekers, so if it’s unclear how to contact them about a proposal, you may want to look elsewhere. However, if the foundation still seems like an amazing fit, there are some creative strategies for outreach that we will cover in a later post. 

If you can find a section on the grantmaking process, the first task is to scan for two key phrases: “We do not accept unsolicited proposals” and “Our grantmaking is by invitation only.” If a foundation does not have an open proposal process, they will likely have one of these sentences on their website. That’s a sign to cross them off your list of potential funders. There are rare cases where a foundation will say they do not accept unsolicited proposals but still provides some sort of contact or inquiry form for interested nonprofits. This usually means that they will make an exception to the rule if they really like your nonprofit, so it’s usually worth at least sending a small note to describe your organization, maybe with a web link so they can learn more. Also, make sure to check that the foundation website is still being updated. If the last grant they reported on their website was from 2008, they may no longer be active. 

In short, the two questions you must ask about every potential funder is “Do they seem like they would be interested in funding my nonprofit?” and “Do they make grants based on unsolicited proposals?” Your initial research list is composed of only the foundations for which you can answer “yes” to both those questions. It may seem like you are spending hours researching to produce a list of only five or ten foundations, but it is better to have a short list of valid prospects than a long list of invalid ones. 

Don’t worry, we’re more than happy to help walk you through this process to make sure the funder finds your project. Contact us for more information and we’ll get you taken care of!

Summer Series – Creative Outreach Strategy

The first six parts of this series on Grant Writing 101 went through the process of grant writing from finding a funder to writing a proposal. However, there will be times when it seems impossible to find funders accepting unsolicited inquiries who also align with your organization’s mission. Some topics inevitably receive more attention from foundations than others, so depending on your nonprofit’s specialty you may find it difficult to even get to the proposal writing stage. If this is an issue your nonprofit faces, it is time to get a little creative with your outreach strategies.

When a funder states that they do not accept unsolicited inquiries or proposals, they usually mean it. If a foundation makes grants by invitation only, it likely has at least one staff member dedicated to finding cool organizations that align with the foundation’s funding mission. Because the nonprofit sector is so wide and diverse, it can be hard to get on a foundation’s radar. Some nonprofits have the clout and connections to stand out to potential funders just by virtue of who runs them. Others must rely on building a reputation in their target community and hoping their success attracts media coverage. However, a nonprofit can speed up the process of at least gaining exposure by sending out what we at Grants Ink call “old school” grant inquiries. These are concise descriptions of a nonprofit’s programs (basically the LOI template condensed down to one or two small paragraphs) that can be sent in the form of general inquiries. The goal here is not to reach out to one specific funder but to make your organization known to as many funders as possible.

The list of funders you use for an “old school” grant inquiry can be broader than your LOI/proposal list. It should still focus on funders with a specific interest in your area of work, but can include those who may not be accepting unsolicited proposals or who do not have any upcoming grant deadlines. Usually these inquiries are sent to the general funder inquiries email address or through the “Contact” section of the funder’s website. The inquiry should briefly introduce the nonprofit’s mission and work. It should then state that the nonprofit is interested in learning more about the funder’s grantmaking priorities and close by thanking the funder for their consideration. 

Most of these inquiries will go unanswered, which is why we recommend sending them out in large batches. The emphasis of the inquiry should not be asking whether the funder is interested in funding your nonprofit but asking whether they are interested in learning more about your nonprofit’s work. If they are, you may have a chance to develop a relationship with them and potentially be considered the next time they look for organizations to invite for proposals. This method does not have a high rate of success but can provide some surprising results and connections you may not have found through more traditional methods. The key is to only contact funders once and keep a record of those you have contacted. If you do not hear back, do not send follow-ups. The last thing you want for your nonprofit is to develop a reputation for pestering funders. However, most funders will not mind a respectfully phrased inquiry sharing some basic information about your organization’s work. Many will ignore your inquiry, but there will likely be a few who at least add you to a list of organizations doing interesting work, and that can be the first step in establishing a funding relationship.

Summer Series – Crafting Proposal Narratives

What is your nonprofit’s story? This is the key question in crafting proposal narratives. Successful grant applicants must be impeccable in providing documentation of their financials and program successes, but that is just the bare minimum to get your foot in the door. When it comes down to a decision between your nonprofit and a competitor, funders will be more likely to decide based on whose story is more compelling. Most nonprofit stories are rooted in personal experience. The person who started your nonprofit likely did so because of something they experienced that motivated them to make a difference. Many times the narrative follows a simple formula: “Our founder started Nonprofit ABC after their experience with X.” Sometimes the story is more complicated. Perhaps your nonprofit grew organically out of a community group that identified a need and worked to fill it. Perhaps it was created to honor the legacy of an important person. No matter the story, the first step is identifying the answer to the question “Why should I (the funder) care about your nonprofit?”

Proposal narrative writing does not require a big vocabulary or complex sentences. The best narratives are simple and memorable. Include only the details that matter most. Provide as much context as the funder needs to understand the problem you are addressing. If asked to describe your programs, focus on what sets your organization apart from others doing similar work. Clearly identify the community you serve and how you serve them. Most importantly, describe your organization’s need for funding. A proposal is more than just asking for money with fancy words. It is your chance to state what your organization does currently and what it could do if it received additional funding. Focus on the gaps in your current programming. You might be providing a service to one community and would like to expand it to similar communities. You might be providing one kind of program to your target community but would like to provide a whole other kind of program. Maybe all you want is to increase your capacity to do the work you are already doing. These are all valid types of funding requests. So long as it aligns with the RFP, the statement of funding need can encompass a wide range of funding requests. 

The statement should make the funder care about the problem the nonprofit is addressing and convince them that the solution it proposes will be effective. It should clearly state what the nonprofit is already doing and how more money would help it do more. No matter the grant size, funders want to see their money have a direct impact on your organization. For a small organization, a grant of $1000 could be a major step. For a larger organization, you could be asking for millions of dollars on a regular basis just to maintain existing programs. It is critical that the narrative conveys some sense of urgency to the funding request. The funder should be able to see how their money would affect the organization’s ability to function. You don’t want to come off as begging, but it is smart to include a specific statement like “If we cannot secure $X in funding, we will be unable to continue to provide Y program to Z community.” Don’t just tell the funder their grant will make a difference; show them how it will make a difference. Upon finishing the narrative, the funder should know what your nonprofit does, why you do it, and what kind of difference their contribution would make. If your proposal does not provide this information, they will have little incentive to offer you funding. If you concisely tell your organization’s story and the story of what it could do with the proposed grant funding, the funder will be much more likely to consider your proposal.

Summer Series – Proposal Writing Basics

Some funders will not invite a nonprofit to submit a full proposal until they have reviewed its letter of inquiry (LOI) and determined that the nonprofit is a good fit. Others will provide a full proposal template on their website for open submissions. Some funders remain open year-round, while others have funding cycles that only open for submissions at specific times during the year. It is always important to verify proposal submission deadlines early and make sure you submit your proposal a few days before the deadline to ensure all details have been double-checked. Sometimes a funder will communicate that there is information missing from the proposal and will give you the chance to fix it, but this is unlikely to happen if the funding deadline has passed.

The basic structure of a proposal should directly follow the request for proposals (RFP), which is a standard document provided by most funders. The RFP outlines the purpose of the grant, the types of entities who can apply, how much each can apply for, and the documentation and narratives each entity must submit for consideration. Some funders will provide a proposal template in a form that can be filled out on a computer or by hand, while others will just provide a list of proposal sections and information required of each applicant. Most funders will have a designated employee who can be contacted with questions about the proposal, usually listed in the RFP or the website. The first step in preparing a proposal is to make a list of all the documents the RFP requests you submit. Depending on the funder, this list may contain documents that your organization does not have on hand or that need to be requested from a different department. For this reason, it is always best to start gathering documents early.

The next step in proposal writing is mapping out the structure of the narrative. RFPs will usually be very specific about what the narrative needs to include. Once you find the list of proposal sections, copy it over into your word processor and turn each item on the list into a section header. Unless otherwise specified, it is best to stick with the standard Times New Roman, 12-point font with all text single or 1.5 spaced. If the RFP includes questions that each section should answer, copy those over as well. When you have finished writing the narrative, a great way to review whether it is complete is to go back and see if each narrative section addresses the questions at the top. You can opt to write in the first or third person, but try to keep it consistent. If you start out saying “We will use this grant for X purpose,” then use “we” throughout. If you start out saying “Nonprofit ABC will use this grant for X purpose,” then use the nonprofit’s name throughout. It is usually better to use the plural “we” rather than the singular “I” unless you are the only person working for the nonprofit. The next post will go further in depth on strategies for crafting proposal narratives. 

Summer Series – Inquiry Writing Basic

Grant writing is a process of sending a lot of inquiries and only hearing back from a few. Because of this, an important timesaving measure you can take as a nonprofit looking for grants is to develop flexible templates that can be used for many purposes. The most important template is a letter of inquiry (LOI). This section covers how to write an LOI template and then adapt it for use with multiple funders. 

The best letters of inquiry are concise and direct. The funder does not have much time to review your inquiry and will be more likely to want to work with your nonprofit if they can clearly identify what problem you are trying to solve and how it fits with their funding mission. For this reason, Grants Ink always starts its LOIs with a diagnosis of the problem. It helps to have a reliable statistic to hook the reader, such as “a recent study from the Colorado Department of Education found that only 53.6% of homeless youth in the state graduated from high school in 2021.” This statistic is specific, comes from a reliable source, and paints a clear picture of a social problem that needs to be addressed. If you were a nonprofit that provided tutoring to homeless youth in Colorado, you could follow this statistic up by saying “We seek to address this issue through our programming focused on tutoring and community outreach.” Most of the time, simply stating your organization’s mission is the easiest way to identify your solution to the problem. 

After the diagnosis of the program, the remainder of the LOI should focus on the specifics of your program. Effective nonprofits have narrow missions and clear program strategies to fulfill these missions. Explain in two to three paragraphs what you do, how you do it, and how you measure success. The final paragraph should state again why your work is so important and reference the funder’s specific fit with your mission. We usually close our LOI templates with a sentence like “We became interested in your foundation because of your commitment to [ISSUE] and would appreciate the opportunity to share more about how our work fits in with your funding priorities.” When a specific funder is identified, we fill in the issue based on what the funder’s focus area is. 

When customizing this template to a specific funder, you may want to focus on a specific program you believe the funder will be more interested in. This can mean deleting and replacing parts of the template, but it is always easier to work from a template than write a new LOI for every funder. Some funders will ask that you submit the LOI as a formal letter with organizational letterhead and address, while others will simply provide an online text box to put your inquiry in and submit. The LOI template can be trimmed down as needed to fit the parameters of the funding request, but it should always contain three key parts: diagnosis of a problem, your solution to the problem, and how your organization fits with the funder’s mission.

Summer Series – Documents

Every funder has a different set of documents they require as part of the application process. Some will ask that you initially send just a simple LOI and will only send their full proposal once they have determined your organization is a good fit. Others will ask for a lot of documentation and program information up front. Nonprofits who have all this documentation in a centralized folder will have an easier time navigating the different requirements of the funders they come across.

Here are a few of the documents it is useful to have on hand when beginning the grant writing process:

  • Copy of the organization’s registration with the state(s) where it operates. This will usually be provided by the state Division of Corporations or a similar entity, usually part of the office of the Secretary of State.
  • Mission statement and/or organizational vision. 
  • Most recent federal tax return and/or audit forms from the Internal Revenue Service (only organizations with larger operating budgets are regularly audited by the IRS).
  • Most recent annual operating budget or annual profit and loss (P&L) statement.
  • Employer Identification Number (EIN), also sometimes referred to as Taxpayer Identification Number (TIN).
  • Organization’s DUNS number (if you don’t have one, you can get one at here) – This number is used to provide potential funders with easy access to a basic profile of your organization.
  • Articles of Incorporation and any documents about the organization’s corporate structure and bylaws.
  • If you are pursuing federal grants, you will also have to be registered with the federal System for Award Management (SAM). Some non-federal grants will require a Unique Entity ID from SAM, which you can obtain without fully registering with the system. SAM registration is a time-consuming process with a lot of paperwork, but it is necessary to receive federal funds of any type.
  • Vision, mission, goals and yes….objectives!
  • A basic LOI template, the process for which is explained in the next blog post.

If you’d like a full copy of the list (hint: it’s over 28 different documents) hit us up and we’d be happy to share!

Summer Series – Finding Funders

Hint: Google is your ally!

The actual “writing” part of grant writing is important, but it is not the only place where time can easily get wasted. It often takes nonprofits longer to find grants to apply to than to write the proposals. Funder research is one of the most essential services that Grants Ink and similar firms provide to their clients. In fact, many clients only hire Grants Ink to do the funding research and do the grant writing on their own, which should indicate how hard this process can be. 

Most clients’ first question is where to start. For most grant writers, it starts where all other online research starts: Google. Really any major search engine will do. It sounds simplistic, but some of your best results will come up just from searching something like “grantmakers/foundations in [INSERT FIELD].” The major grantmakers in that field will usually optimize their sites to pop up early in search engine results, which will give you a sense of the prominent players in the field. 

Keep the field general and do multiple iterations. For example, if you’re trying to fund a nonprofit that provides afterschool music education to youth in Miami, search “grantmakers in music” then “grantmakers in youth” then “grantmakers in Miami” and so on. If the results seem too general, try “grantmakers in music education” or “grantmakers in education Miami.” A good exercise before starting is to brainstorm all the “buckets” or “silos” your organization fits in. What population do you serve? Where do you serve them? How do you serve them? These questions will give clues as to the best search terms to use.

When it feels like you have exhausted search engine results, it is time to turn to more specialized databases. There are several online grant databases such as Foundation Center Online, GrantWatch, OTHERS FILL IN DETAILS, but most require a paid subscription to use. If your nonprofit has the budget or intends to apply for many large grants that will offset the cost of these services, it may be a worthwhile investment. These databases can provide granular data about foundations that give insights into their grantmaking, such as geographic focus, support strategies, and funding priorities. However, you can learn a lot from free databases. 

Our favorite free databases at Grants Ink are Nonprofit Explorer by ProPublica and Grantmakers.io, both of which compile and index grantmaking records from foundation tax returns (specifically IRS Form 990). Nonprofit Explorer lets you look up a given foundation and find out if they have made their 990 forms public. Grantmakers.io makes 990 forms searchable so you can search for specific topics and types of grants across many foundations.

Another neat trick is to see if there is an umbrella grantmakers organization working around your topic, such as Grantmakers for Thriving Youth or Grantmakers for Education. These organizations will often have lists of their member organizations on their websites, which is like a pre-made list of topic-focused funders that can then be screened. The next post will cover strategies for screening potential funders. 

Extra, Extra! Did you know that Google offers grants to nonprofits in the form of FREE Emails, Google workspace and $10,000 per month of advertisements? Contact us for more info!

Summer Grant Writing Series

Summer grant writing like a pro!

This series of posts is designed to provide a simple guide to the basics of grant writing for those new to the process. It covers the promises and pitfalls of the grant writing process with a focus on cutting inefficiency. Whether your nonprofit opts to do your own grant writing in-house or to hire a contractor like Grants Ink, the process will always draw on your precious resources. Hiring a firm to do your grant writing may save time, but it will always cost more than doing it on your own. At the same time, doing your own grant writing from scratch is a timely process that can end up costing more in lost work hours than your organization can afford. This guide is meant to help your nonprofit get the most benefit from your grant writing activities at the least cost.

We’re help to help you acquire sustainable funding for your for profit social enterprise or nonprofit organization. Contact us for more info!

Grant Writing Consultants – The Insider Edition

From one writer to another…

Hi, I’m Lorinda. Working as a grant writer and trainer for more than a decade, I’m an entrepreneur at heart with a passion for supporting other business owners in their quest for success. Community causes are always at the forefront of my mind, and my hope is to share years worth of business experience to support nonprofits in their essential efforts of making this world a little brighter. I spend most of my time in Miami, Florida enjoying the sun and reading a good book. 

It’s easy to see grant writers as the magic few who are tasked with the responsibility of acquiring needed funding for a charity’s project or more often times, to keep their doors open. More often than not, people reach out to a grant writer consultant (aka freelancer) when the org is strapped for cash and has no other avenue to salvage their programs. Grant consultants are seen as “the last option” for many desperate clients who otherwise have no options for accessing needed funding. The sad reality is that this desperate cry for help is more often than not a bust for both the grant writer and the client. It leaves both parties unsatisfied because of the overburden of stress and desperation looming over their heads. The grant writer signs away their life by being expected to resolve years worth of poor financial planning on the nonprofits side in a matter of a few months, while the nonprofit feels like they’ve spent their last precious few dollars on a gamble. Both parties enter into an almost impossible agreement where no one leaves happy. It happens time after time, client after client, and in my opinion is why grant writers get such a bad rep.

Solution

Instead of reaching out to a grant specialist when times are tough, there needs to be a shift in perspective. I follow a lot of spiritual teachers – those who believe in the energetic nature of the world. If you come into a working relationship with a mindset of lack, that’s exactly what you will yield – not enough money, dissatisfaction with results, and overall failure. This is true of both the client and the grant writer, and creates a pitfall for both parties. 

Not all the blame is to be put on the nonprofit client – not by a long shot. There are MANY circumstances where the grant writer – desperate for a new gig – enters into a contract that they know has bad energy, yet does so to pay his or her bills. I’ve been there, especially in my early years as an entrepreneur. Chasing opportunities and putting my services on the “clearance rack” was how I operated in the beginning and all it led to was disappointment and a lack of job satisfaction. This is why so many grant writers and personnel responsible for grant writing activities quit. Unrealistic expectations, an overwhelming sense of lack and desperation, and overall bad juju. 

A better approach is for nonprofits to reach out to grant writers when things are going well for them. From an energetic perspective, a feeling of abundance will bring more abundance! 

Grant writing should be seen as an essential task of any community operation, not a response to crisis. Grant writers should also value themselves, create standards, and only take jobs they know they’ll be successful at. Choose clients whose mission empowers you. Work with people who respect your professionalism (and prices) and I guarantee you’ll see a shift. Be in a mindset of abundance, success, and happiness in what you’re doing. That is what will yield the $$.