The spring grant cycle is opening. Like athletes in the starting block, nonprofits are all out there seeking that one magical grant that will sustain or even rescue their organizations. Can your organization win the race? More to the point, are you even competitive?
Charitable institutions form to address a problem and that problem, or rather the solution to it, defines their mission. Remedying lack of access to food, shelter, housing, education, safety, and healthcare are all worthy goals, and they usually have access to some sort of non-governmental funding. Unfortunately, there are far more organizations needing money than there are grantors to supply it. Some get the financial backing they need and a great many more do not. Ever wonder why your proposal was turned down?
I asked grantors just that question. The following is a typical reply to an informal survey I sent out in 2011 to 24 foundations requesting information on why they might deny funding to smaller charities, which I defined as NPO's with from $25K to $1M in annual revenue.
"Thank you for contacting us. Our four (4) main reasons for denying a request are:
1. Poor or no financial reporting and/or financial controls.
2. Lack of effective organizational or management structure.
3. Insufficient ability to provide meaningful results, or no proof of impact.
4. Not sufficiently related to our mission.
We require evidence that there is an effective management team in place, and that the organization is run in a professional manner. Since we require a minimum $50K in revenue and a determination letter, this means that we are normally dealing with organizations that have been in existence for 4 years and up. Size doesn't seem to necessarily dictate a well-run organization. We have denied nonprofits with over a million dollars in revenue, simply because they had poor or unprofessional business practices. This seems to go hand-in-hand with relatively poor program design, lackluster or undocumented results and poor fiscal management."
Twenty-one out of the original 24 foundations contacted replied to the survey. They ranged from foundations with less than fifty thousand dollars in annual grants to four that awarded more than five million dollars annually. The number one complaint was that the applicants were not "professionally managed". I didn't get a single reply that indicated the mission was unworthy or unrealistic.
The argument that charities can't or won't adopt for-profit business management practices will probably rage on for as long as there are nonprofit organizations. For some reason, there seems to be a misconception about what constitutes running a nonprofit like a business, and whether that is a good or bad thing. Many nonprofits are very angry that "it's all about the money, not the mission".
In what way does being accountable for the way in which someone else's money is used conflict with mission accomplishment? Is it fear of being judged, a fear of being held accountable for the funds, or a resistance to oversight, i.e. a loss of control? Why do boards adamantly declare that they don't need anything from the for-profit world and then ask for funding that was probably at least originally based in that same for-profit world? What standards would they like to have applied to receive funds?
There is a finite amount of money available for the support of all the charities in the world. It seems somewhat reasonable that the grantors would want to see that money used to provide maximum results for each of the dollars they provide. The methodology for determining that effectiveness isn't a for-profit or a nonprofit method. It is just a method. X dollars provides Y result, or it doesn't. Proving and accomplishing that maximum effectiveness requires the same management procedures that turning a profit in a company does. The procedures are simply tools used to arrive at your desired result.
If your goal is mission accomplishment, wouldn't it make sense to put yourself in the best position to achieve that goal? Running your nonprofit in a business-like manner isn't about becoming an unfeeling and uncaring robot. It's about putting yourself in a position to win the backing you need to accomplish the mission you love.