Grants are an excellent opportunity for nonprofits to gain funding, particularly for specific projects or initiatives. However, it's time-consuming to apply for a grant, win the grant, and implement the funding in your organization. 24% of nonprofit agencies surveyed said that a lack of staff was one of their greatest barriers to applying for a grant.
The typical employee will make 118 mistakes a year at work. Combine that with trying to apply for a grant on a pressed deadline, and issues are bound to arise. However, employees don't have to face grant applications without a lifeline. In this article, we'll discuss some common problems in nonprofit grant management so that organizations can avoid errors and dig into how nonprofit grant management software can streamline processes.
Grant Management Challenges for Nonprofits
The federal government alone spends about $500 billion in grant funding annually, allocating resources to nonprofits meeting community needs. This creates a sea of opportunity for organizations to navigate through, requiring research and keeping abreast of deadlines to even attempt to earn funding.
Organizations deal with many challenges when applying for grants, including:
- Detailed Reporting Requirements: Grantmakers have strict rules on how the funding should be implemented, which can be confusing to navigate.
- Inconsistent Reporting Demands: Many nonprofits secure multiple grants, and each one will have different grant reporting requirements--it's a challenge to keep the needs of each one straight.
- Different Financial Sources: A grant may only cover one part of a specific initiative, meaning the nonprofit has to collect money from other sources and keep track of both.
- Outdated Administrative Workflows: A nonprofit that's been around for decades often uses older tech and manual processes, which consume time and make them more likely to include mistakes in grant applications.
- Time-Consuming Grant Research: Grants often cover specific needs, meaning that it takes nonprofits a significant amount of time to find one to apply for that works for their project. They may not be awarded the funds even if they choose a grant that aligns with their needs.
Common Grant Application Mistakes
While these umbrella issues exist in nonprofit grant management, more granular problems occur in the application process. Completing a grant application can take weeks, so set aside at least 6-8 weeks to write a grant proposal. However, during that time, staff members often divide their time between working on the grant and their typical duties. It's easy for work on the grant to slip through the cracks when professionals are putting out other fires.
To prepare your organization for the possibilities of difficulty, here are some common mistakes to avoid in the grant application process:
- Poor Proofreading: Spelling and grammatical errors make your organization look unprofessional. Be sure to have someone on your staff who didn't read the grant do the final proofread for a fresh set of eyes on the document.
- Unnecessary Jargon: Not all grant reviewers will understand complex industry verbiage. Research the funder to see if your team needs to write the application in conversational language.
- No Data-Driven Ideas: Organizations must include trackable metrics to evaluate project success, giving granter's more confidence in your ideas.
- Vague Budget Estimates: Applications must have detailed budget explanations and precise figures charted in a way that's easy for the organization to understand.
- Missed Deadlines: Organizations get busy, but waiting until the last minute to apply is a surefire way to miss it entirely. Plus, grants submitted early are more likely to win funding--60% for those who applied early vs. 25% who applied late.
- Replicating Proposals: Do not reuse the same proposal for different pitches. Grant proposals must be tailored to each organization to actually win the funding.
5 Grant Funding Mistakes to Avoid
Completing the application process is only the first step of nonprofit grant management. The real work happens when the grant is won. This is where the organization has to implement the grant as in their proposal. There is typically a process they have to follow, with nonprofit financial compliance being key.
Once grant funding has been secured, avoid these five common funding pitfalls for nonprofits.
1. The Budget Doesn't Match the Proposal
If someone creates a budget with manual calculations, it will be riddled with errors. Sometimes, organizations think that they can do more with the money than what's possible. It's essential to check all proposals for mathematical errors. Organizations must consider factual data from internal systems to create the grant budget.
Utilize grant management software like PlanStreet to build a budget from actionable data collected in your organization, so you know exactly how much an initiative will cost.
2. Relying Too Much on Grants for Funding
Grants can be a great way to earn funding for an organization, but they may not be the best way. The Stanford Social Innovation Review found that 90% of organizations focus on one dominant category for the bulk of their revenue. This doesn't mean an organization found one grant or funder to cover the budget. If an organization has succeeded in government grants, they should seek out multiple government funding resources.
However, the flip side is also true: if your organization is having trouble making grants work with your funding needs, then maybe it's time to consider other pathways, such as philanthropy or service fees.
3. Spending Excessive Time Applying for Grants
Every nonprofit must consider the overall organizational health when applying for grants. They will focus so much on securing funding for a specific program that they may neglect other important areas of the nonprofit, such as infrastructure, staff development and retention, and fundraising.
4. Inadequate Compliance
Every organization must carefully read grant reporting requirements for accurate nonprofit grant management. Without proper grant tracking, nonprofits might fail to meet deadlines, track spending wrong, or document outcomes incorrectly. Inaccurate nonprofit financial compliance comes with consequences (particularly for restricted grant funding, where the funder specifies how to use the money), such as adverse publicity, litigation, or even prosecution.
5. Making No Plans For When the Grant Ends
A grant may jumpstart a program, but nonprofits need a plan for when the grant ends. If not, they could hurt the community members relying on the services. An abrupt end of projects and services can sour reputations in the community and cause organizations to lose critical staff.
How Grant Management Software Helps Nonprofits
While some of these mistakes seem overwhelming, emerging technology offers ideal solutions. Grant management software helps nonprofits meet grant reporting requirements, track applications, understand budgets, and more.
Here are a few of the benefits of grant management software for nonprofits.
1. Streamlines the Grant Management Process
Grant management software creates a central hub for all data and documentation related to the grant. Use document builders to create personalized grant applications, including relevant data from your organization. Analytics and grant reporting tools for nonprofits allow your team to gain data-driven insights that funders might be looking for, increasing your chance of success.
Once you win the grant, tracking tools in grant management software like PlanStreet make it easy to stay compliant. Track deadlines with calendar features, so you always send required updates to grantors on time. See the history of a grant and understand how it has been used thus far with unified reporting. Plus, once your team spends all of the money from a grant, it can no longer be tied to funds in the software.
2. Simplifies Financial Management
Financial management is critical to nonprofit funding compliance. Utilize PlanStreet to disburse funds. You can attach the grant type and amount used for every case activity. This automatically deducts funding from the grant, so you can stay on top of funding amounts and compliance. Do this on a micro level and keep tight control of your budget, ensuring no funding goes to waste.
3. Improves Donor Relations
Donors want to see how the money they gave you improved the community. Grant management Software facilitates transparency. Organizations can provide donors with access to portals to share vital information, see exciting outcomes, and communicate in one place. Create easy-to-read reports in PlanStreet to give donors a visual picture of the advancements made due to grant funding.
Reach Funding Goals and Stay Compliant With PlanStreet's Nonprofit Grant Tracking Software
Avoid pitfalls organizations often fall into when applying for and implementing grants with PlanStreet's comprehensive grant management software software for nonprofits. Our software simplifies financial tracking and offers comprehensive metrics you can add to your grant applications, increasing your chance of winning and creating better organizational processes along the way. Schedule a live demo today to see how PlanStreet can customize grant management software to meet your organization's needs.