Updated: Oct 26, 2022
Whether your organization should or should not apply for a federal grant is an important question. But it is especially important because, once you start, you will need to dedicate time and resources to complete the job.
Federal grants help organizations build and expand new or existing programs. Typically federal grants fund innovative programs or new ideas. They do not typically support ongoing direct services. Federal grants are usually a large sum of money given over several years. The benefit is that you have to apply for fewer grants and may have a more consistent cash flow. The downside is that there may be more competition for those grant funds since you compete with organizations nationwide.
Is Your Nonprofit experienced and established?
Federal grants are awarded to organizations with a history of working with a population on a specific issue. Federal grant applications ask applicants to provide proof with data, examples, evaluation plans, and letters of commitment from partners. Established organizations are three years and older. Federal grants require budgets, financial audits, a list of the Board of Directors, and other organizational documents that newer nonprofits may still need to create.
Is Your Nonprofit cash positive?
Most federal grants are paid by reimbursement, meaning you spend the money first and get reimbursed later. Your nonprofit should be able to continue the program, while waiting to be paid which may take a few months. Additionally, some federal grant programs require that nonprofits have cash on hand to complete the project. Federal grant applications may require an applicant to provide a recent bank statement as proof of cash reserves or a Board resolution committing funds to the project.
Does Your Nonprofit have time to complete and manage the project?
Federal grants require significant time and effort during the application. Multiple people on your team will need to provide documents and information. There are systems to register for, like grants.gov and the System of Award Management (SAM). Federal grants may take 100 hours or more to complete. If a grant is awarded you may have to complete quartely performance and budget reports, and have meetings with you program officer. Your nonprofit can expect to spend 5-10 hours per month on grant management.
Are Federal Grants right for Me and my Nonprofit?
If your organization is seeking funding for a new or innovative program; you need a large sum of money to complete the project; you are established and experienced; and you have the financial and human resources to complete the application process and manage the award, federal grants may be proper for you. If you are not quite there yet, create a 2-year plan to build capacity. In the meantime, explore local and state grants which may be a good solution to your organization's funding needs