For many grant writers, putting together budgets and financial information is often the most confusing part of the grant writing process. I know it may seem tedious to tell the grantmakers how much you plan to raise and spend on travel versus office expenses. But when taken with the other information in your application, the financial information shows the grantmakers how realistic and stable your group is. Here are three ways your financial information can make or break your grant proposal:
Your budget and financial statements tell grantmakers how realistic you are about your capacity to raise money. Grantmakers look at your budget and financial statements and compare it to your fundraising plans. They look for a solid fundraising plan that will meet your budget, and for a plan that is realistic based on your past financial experience.
Example: If your budget for this year is twice as much as last year and you don’t have a solid fundraising plan to match up with your budget, your overall proposal is not going to look achievable to the grantmakers.
Example: If you are a new, grassroots group with hopes to raise $200,000 in your first year and your fundraising plan heavily relies on foundations that have never funded you before, your plans will come across as unrealistic and it is unlikely that your proposal will be funded.
You have to make sure that your fundraising plans are solid and realistic or you won’t get funded.
Foundations want to invest in groups that are stable and going to be around long enough to carry out the work described in the proposal. Your budget and past year’s financial information are key to our understanding of your organizational stability.
For example, having a diversity of funding sources and a broad base of individual donors is a key indicator of financial stability and community support. Grantmakers look closely at:
Another key indicator of financial stability is your financial history. Grantmakers look at whether you have any debt, outstanding expenses, or uncollected income and compare that to how much surplus or reserves you have saved up. Many foundations look for groups to have at least three months worth of operating expenses saved up in reserve.
At MRG, we recognize that our grantees operate quite effectively on shoestring budgets and don’t have much cushion. If you aren’t in the most stable of financial situations, make sure your group is taking appropriate steps towards financial stability and that you are striving for a diversity of funding sources.
Foundations like to fund groups that have thought through what they will need to do their work well. Grantmakers look at your budget to confirm that your income and expenses are reasonable and consistent with the work you described in your narrative. If your budget is missing key line items, grantmakers will question how well you have thought through your organizing plans.
Example: If your narrative proposes to radically increase your outreach and organizing work, but you haven’t budgeted for a comparable increase in staff expenses, the overall picture is unrealistic.
Example: If you are a statewide group organizing low-income parents, grantmakers expect to see meeting expenses like food, childcare and travel included in the budget.
Make sure that the expenses you list in your budget complement the scenarios you’ve presented in the proposal narrative.
Ultimately, what this all boils down to is being realistic. We often receive applications that sound great until we get to the financial information. When the financial information shows us that a group is unrealistic about their fundraising plans, their stability, or their capacity, we don’t fund the proposal.
Good nonprofit financial management is vital for all organizations and is the basis for being able to present effective budgets and other financial information. If you don’t have experience with nonprofit financial management, get some help right away. The Nonprofit Association of Oregon is a great place to start learning.
If you are applying for an MRG grant be sure to check out the Grants Guide for sample budgets, instructions and useful tips. If you still have questions, give us a call. We’re here to help!