Nonprofit organizations (NPOs) might not be revenue-driven, but that doesn’t mean they operate on a wing and a prayer. Fundraising and sound financial management are critical to their service delivery. Grants are particularly useful to fund specific initiatives, either to launch something new or broaden the scope of an existing program. The thing is, NPOs must be grant-ready before submitting applications. Specialists in nonprofit accounting services are on hand to whip NPOs into grant-ready shape.
NPOs must meet certain criteria before funders will consider their application. One of the most important of which is proof that the grant will be properly managed and used exclusively for the program as agreed.
We’ve created a checklist for you to determine your degree of grant readiness and identify areas that must be strengthened or improved upon.
What Is Grant Readiness?
To be grant-ready, NPOs must demonstrate their ability to manage a grant on an administrative, governance, and financial level. They must also prove their leadership qualities, especially regarding the implementation and management of actionable and practical plans.
There are certain steps to take along the road to grant readiness.
Get Your Team Onboard
Collaboration, cohesion, and accountability are key components of a healthy, well-functioning team.
Divide the overall grant readiness mission into the following four groups:
How are funders/sponsors acknowledged on external channels?
If you use outsourced accounting for nonprofits, you’ll have to work together to ensure that all financial documents, including budgets, are current and that fundraising areas have been assigned accounting codes. The team working on the finances should also put together a report that demonstrates how grant funding fits into the overarching financial plan.
Create a report or presentation that clearly shows the role that grants play in the NPO’s mission and goals.
Detail the project that the grant will fund and define its goals. Describe how the project’s performance will be measured. Compare probable performance with and without the grant.
Analyze Your Nonprofit
It’s important to analyze your nonprofit objectively from five viewpoints.
1) Organizational Background
What is the organization’s history? Include information on the original mission, vision, and values. Emphasize achievements, milestones, accomplishments, and awards. Provide an organizational diversity statement for staff and board members.
2) Tax Documents
There’s no need to go into any narrative here, just provide the bare information; IRS tax-exempt status letter, most recent 990, and current year W-9.
3) Financial Information
There’s also no need to elaborate whimsically on the finances. Simply work with your outsourced accounting services for nonprofits to provide a detailed budget for the current fiscal year and the most recent audit. If the audit isn’t available you can provide the most recent financial statement.
You can be a bit more expansive here as you list and briefly describe the board members, with special mention of their affiliations. Include information on internal policies, like non-discrimination, and outline the current strategic plan.
5) Program/Project Information
Be as detailed as possible here. The description of the program should be evocative and compelling, interspersed with information like outcomes and metrics. You need grant funders to really feel why the program is important and have the figures to support their strong emotions.
You can also consider adding supporting information and documentation, including
- Letters of support from key partners
- Solicitation license (where applicable)
- Program plans and budgets
- Data from previous programs, including key metrics that are regularly tracked
- Listing of project/program staff and their qualifications
- Testimonials and other media items about your organization’s work
- Photos, videos, and other internal media
Grant Readiness Checklist
You can determine your grant readiness by answering the questions in the checklist below:
- Do you have a nonprofit status designation from the IRS [501(c)(3)]?
- Is your mission statement well-defined?
- Is your NPO financially stable?
- What are your current and long-term strategic plans?
- Do you have a strong track record?
- Do you have community support?
- Do you have strong leaders who are actively supported by the board?
- Do you have fundable programs?
- Do you have sufficient and sufficiently experienced staff to implement project activities?
- Can your accounting and nonprofit bookkeeping services easily include grant-related duties to their existing responsibilities?
- Can your outsourced accounting system track grant funds as separate from other organizational funds?
- Can you track grant-specific activities and data?
- Do you have someone on your staff who can professionally evaluate grant performance?
- Do you have the infrastructure to implement the project?
(Read more on NPO grant accounting.)
Don’t worry if you can’t answer each question in the affirmative. They are points to consider when you’re assessing your readiness and preparing your grant application.
The best way to ensure that all your financial ducks are in a row is to outsource your financial needs, including your nonprofit’s CPA services. Outsourcing these services will not only save you money and reduce the chances of fraud, but the accurate and detailed reports will stand you in good stead when you apply for grants.
At Lescault and Walderman, we assign a dedicated team of experienced financial experts to provide bespoke financial services for any need, including grant readiness. Your unique needs will be managed by at least two professionals to ensure faultless quality control. Whether you need a bookkeeper or CFO, we’ve got the infrastructure to support you.
We use only the best and latest software to maintain the high standard of our services. Sage Intacct ERP more than meets grant readiness needs, with features that include grant tracking, automation and revenue recognition, and a clear audit trail.
(Read more on Nonprofit Accounting Services.)