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Why was our grant rejected? 5 Reasons and Solutions

Updated: Sep 28, 2022

You recently received a grant rejection letter or email, and now you’re wondering what went wrong. That’s because most rejection letters, or declinations (to use the fancy term), lack specific details about your application. They usually go something like this:

“Dear nonprofit:

Thank you for your application to our annual funding opportunity. We received many worthy applications. However, the number of applications received greatly exceeded the funding that we had available. Unfortunately, your project was not selected for funding.

Please know that our decision is not a reflection of the importance of your organization or the work you do. We invite you to apply for our grant opportunity next year.

Thank you and we wish you success in your grant-seeking efforts.


Funder President”

As you can see from the example, the funder usually won’t give you any clues as to why your grant application was rejected. So, it’s going to be up to you to figure it out to prevent it from happening again. And, I am going to help you.

Every grant rejection is unique, however, there are some common reasons and solutions, which I will share with you below.

Reason 1# Your Organization Was Not a Perfect Match

Have you ever read the story of Cinderella? In Cinderella, the prince travels to all the houses in the kingdom looking for the woman who belongs to the lost glass slipper. In the entire kingdom, only one foot was able to fit into the shoe, despite every maiden trying it on. Well, grant funders aren't usually that selective, but just like Cinderella’s prince, they are looking to fund nonprofits that are their perfect match.

You will know that your nonprofit is not a perfect match if the funder rarely or never gives grants to nonprofits like yours. For example, if you are a disability provider, and the funder has never funded disability providers you will likely get a rejection. Another example is if you are a national nonprofit, and the funder provides 90% of their funding to the local community, they will probably pass on your organization. When your organization is not a good match, your application is probably rejected very quickly.

Solution: Before submitting an application, determine who IS a perfect match for the funder. There are a couple of ways to figure it out. You can review the funder’s IRS 990 (nonprofit tax document) which includes a list of previous grant recipients. You should also review the funder’s eligibility criteria. Last, I recommend that you reach out to the funder and ask them.

Reason #2 Your Project Doesn't Fit Their Priorities

Your grant application may have been rejected because your project is not aligned with the funder's priorities. You will know that your project was not a good fit because the funder didn’t give a grant to any projects like the one your organization wanted to fund.

Solutions: Before applying, carefully read the Grantmakers’ request for applications (RFA). The RFA will outline the types of projects the funder is interested in supporting. If your organization can not or does not want to create a project exactly how the funder has outlined, I recommend that you do not apply. Your application will be far less competitive when there are many applications and little funding available.

Reason #3 Your Budget Was Off Target

Your grant application may have been rejected because they didn’t like how you wanted to spend the money. You will know that your budget was off target by comparing your proposed use of funds to successful applications. For example, your established drug prevention coalition is seeking $200,000 for salaried staff for one year. The funder gives grants of $200,000 for one-time start-up costs. While the funder doesn’t prohibit funds going to salary, payroll is an ongoing, not a one-time expense. Based on this information, the funder will be less interested in supporting a grant for salary than a grant for equipment.

Solutions: Before applying, carefully read the "budget “and "funding limitations" sections of the grant funder’s application. The application usually describes eligible costs and funding preferences. To be successful in the future, you should create a budget that is aligned with the funder’s giving history and funding priorities. I also like to give them a budget that includes the total project cost, so they have the flexibility to amend the budget to their preferences.

Reason #4 Too Much Competition

Your grant application may have been rejected because there were just too many applications. You will know there were too many applications because the percentage of estimated awards to applications received is low, let's say less than 30%. That means 7 out of 10 applications were rejected.

You may also notice there is a small number of awards. For example, the funder estimates giving out 5 grant awards, and any organization in the US can apply. If we were playing the lottery, we would consider these very bad odds.

Solution: When the likelihood of winning a grant is low because of competition or limited funds, I suggest every organization considers the Opportunity Cost. The Opportunity Cost is a formula you can use to determine how much money you will invest in writing the application and managing the award. Read our article, “Should we apply for a grant? Use the Opportunity Cost Formula” for instructions. I usually recommend not applying, unless the nonprofit and the project are a perfect match. But again, it is a case-by-case situation, and you will have to decide if the odds are good enough to try.

Reason #5 Weak Program Design

Finally, your grant application may have been rejected because of a weak program design. Program design relates to your project’s goals, outcomes, activities, partnerships, and plans for evaluation and communication. This is usually the culprit when Reasons 1 through 4 don’t make sense. Program design is the hardest to address because your nonprofit may have to change how it works and it may cost more money.

Here is an example of poor program design. Your hospital submits a grant application to your state’s community health agency for a diabetic exercise program. The purpose is to help people in the community lower their diabetes risk factors, like being overweight.

The Grantmaker loves these types of programs, but you didn’t get the grant? Why not?

Looking closely at the funder's past grant awards you notice the government agency tends to support projects that address health equity with community-based partnerships. Your project didn’t talk about health equity and you only have one unfunded grant partner. In this scenario, the project and organization are a great fit, but the program design is missing elements that are important to the funder.

Solutions: Before applying, decide if your project qualifies for priority points and addresses the funder's preferences. While not requirements, preferences influence who is ultimately awarded a grant. They may even be the tiebreaker between two really good projects. When I notice that a nonprofit doesn’t want to add the funder preferences into their project, I recommend they abandon the application. The chance of success is just too low. There will be grant opportunities that are a better fit in the future, and nonprofits should create projects that accomplish their goals, instead of bending and contorting to meet grant application requirements.

To summarize, I think there are 5 reasons why grant applications are rejected.

Reason #1 Your Organization Was Not a Perfect Match

Reason #2 Your Project Doesn't Fit Their Priorities

Reason #3 Your Budget Was Off Target

Reason #4 Too Much Competition

Reason #5 Weak Program Design

You may not have control over the end result, but you do have control over your approach before applying and after rejection. If you are feeling a little down after receiving a NO, you may also be interested in What to do after a grant is rejected?

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