Funding Policy & Procedures for Nonprofit Organizations
Nonprofits pursue funding to meet a significant percentage of their annual expenses. Moreover, they translate these dollars into high impact programs and services that make a positive difference for the countless individuals they serve. Whether your organization is just starting out or has been around for many years, responsible fundraising requires setting a policy for how to value and conduct activities. This policy then becomes a guidepost for all funding efforts to follow.
While emphases may vary depending on the organization’s size and stage of development, there are key priorities for you to consider. The first is taking advantage of appropriate funding resources so that supporters’ dollars are directly aligned with your nonprofit’s mission and strategic objectives to the greatest extent possible. Funding policies should help to build solid, long-term philanthropic relationships through cultivation, formal funding acknowledgments, accountability reports and ongoing communication. They should also develop and strengthen partnerships with key stakeholders in pivotal areas. Moreover, funding policies should not simply emphasize financing of specific initiatives but promote sustained operational health of your organization. Finally, policies should encourage responsible management of funded initiatives in line with all legal and financial requirements.
The first funding procedure most nonprofits follow is researching prospects. This allows you to make sound decisions about whether, or how, to pursue leads. In the case of grants, 26 federal agencies sponsor more than 1,000 programs which award billions each year. The government offers online resources to research grants such as the Catalog of Federal Domestic Assistance and Grants.gov. There are also countless state-specific web research tools. Foundation and corporate grants can be identified through free websites like Foundation Directory Online, Internet subscription databases or printed funding bulletins. For all, it’s important to note eligibility requirements, funding amounts, deadlines, how applications will be reviewed and awarded, and what the funding agency expects of successful grantees.
The next procedure is developing a funding plan that includes all viable prospects from your research. Represent funding in streams such as federal, state and private grants; events; campaigns and individual gifts. For each category, list the specific name of the funding target along with the dollars you plan to request. Funding plans should also include the probability that you anticipate of securing each prospect; odds should be calculated against each dollar goal to arrive at a realistic projection. For example, if you plan to pursue a $100,000 grant from the Gold Leaf Foundation but your research reveals that new grantees tend to be funded at a 20 percent rate, then you would project $20,000 (or 20 percent of $100,000). Projections should always total to the amount of funding revenue dollars listed in your nonprofit’s organizational budget.
After following the above procedures, you are ready to make funding bids. Activities will vary in complexity so planning is essential. In the case of grants, a “task matrix” is helpful to outline responsibilities, deadlines and detailed submission requirements. After you have completed a funding bid, log its status. For grants, this might be ‘pending,’ ‘rejected’ or ‘accepted’ along with the final award amount. Develop a formal report that tracks the outcomes of your funding efforts in the aggregate, listing a running total of dollars received against the projections originally set in your funding plan. This information will enable you to arrive at a success rate – and to refine your funding policy and procedures in the future. Always formally acknowledge receipt of contributions and responsibly fulfill all promises.