Dear Dr. Streamline,
I’m scratching my head over a most perplexing conversation I just had with a former grantee. She told me that her organization appreciated our past funding but had decided that they couldn’t afford to apply for our latest grant. How can that be? Our grant – if they received it – would be $2,500 that they don’t currently have.
Yours in consternation,
As a parent of school-aged children, I generally recommend a fine toothed comb and medicated shampoo for itchy scalps, but in your case, I think I have an even easier diagnosis. Your organization may be suffering from a case of Insufficient Net Grant.
Don’t let the fancy medical terminology intimidate you – the concept is simple. As grantmakers, we think we are giving grants, but what nonprofits receive from us are actually net grants. The net grant is what’s left over after subtracting the cost of applying for, monitoring, and reporting on a grant.
There is a time cost even for a fairly simple application. Think of it this way:
- Attending applicant information session – 2 hours
- Responding to your narrative application questions and developing a logic model – 6 hours
- Developing a budget in your preferred format – 2 hours
- Preparing for and hosting site visit – 3 hours x 4 staff = 12 hours
- Narrative and financial reporting – mid-year and final – 6 hours
In our hypothetical case here, the nonprofit is spending 28 total hours on your process. Let’s imagine that the cost of staff time at this organization works out – on average – to about $40/hour. Your process has cost the organization $1,120, so their net grant is now only $1,380.
The organization may feel that the maximum return of $1,380 simply doesn’t justify the time they will spend to apply – especially since they may not receive your grant at all.
“But wait!” you might be saying. “Our process can’t possibly take them that long! The application should only take them 30 minutes or so to complete.” And to that, Dr. Streamline replies: “How do you know?” In surveys of more than 17,000 grantees, the Center for Effective Philanthropy found that grantseekers spent an average of 24 hours applying for each grant and 15 hours reporting on each grant.
Bottom line: Know your net grant and keep it high! If you aren’t asking how long your process takes… you do not know how long it takes. And if you don’t know how long your process takes, you don’t know much money is spent before the grant arrives.