February 2009
Is a Federal Grant The Right Choice for Your Nonprofit Organization?
Competitive federal grant opportunities can be tempting, especially if you have not obtained a federal grant in the past and do not know all that is involved with managing one.
After all, they are often quite generous in size, and look so juicy hanging on that federal tree, just waiting to be picked. But before you attempt to pluck that federal fruit, consider a few pros and cons to make sure a federal grant is right for your nonprofit organization.
As a friend has said of federal grants in the past, "they are expensive money".
First, a few of the positives of federal funds:
- They are often large chunks of cash which can see your project off to a good start
- Federal funds can be distributed over more than one year
Now, let's consider some of the drawbacks of applying for federal funds, which can make them "expensive money". These considerations don't mean that federal funds shouldn’t be considered. But they do mean that you should seriously weigh these factors prior to applying for federal funds.
Imagine that you have just received your first federal grant. You feel fabulous and your organization is $300,000 wealthier than it was the day before. You are tempted to sit back and relax after all of your hard work, imagining all of the good works your organization can now perform. What is wrong with this picture?
Don't forget to read the small print! True, all of the print on an RFP (Request for Proposal) is small, but don't overlook the part of a federal RFP that may have mentioned that this particular grant required matching funds. Some - not all - federal grants require matching funds (see related story). They may require the applicant to put up funds of their own as a condition of applying for federal funds in the first place. Maybe a 1:1 match, which means that for every $100,000 you apply for you need to have $100,000 of your own (from somewhere other than a federal agency) that you can match with those funds.
There are other significant responsibilities inherent in managing major and even smaller federal grants. The administrative work to maintain the necessary accounting and reporting systems can be substantial. Government regulations resemble a minefield of legal requirements to which your agency must adhere. For example, failing to recover just 10% of the indirect costs allowed from a $300,000 grant could cost your organization $30,000.
There will be required quarterly reports, an evaluation at the end of the grant cycle, and other requirements in between. The federal government agency has the option to make a full on-site audit visit as well, which would require significant preparation on the part of your organization in order to be successful. For a small organization, without a position already geared specifically to just this type of work, these types of requirements can be onerous.
Organizations which do not consider these factors may obtain federal funds and not use the funds once they receive them due to the complication of managing the funds. Or they soil their reputation as an agency due to improper reporting requirements or fail to fulfill post-award evaluation requirements once they receive the funds. Each of these consequences is something you want to avoid, as they can hinder your organization’s chances of obtaining federal funds in the future.
Federal funds can prove to be a very valuable contribution to your program if all of the above factors are taken into consideration and are prepared for adequately. But they should realistically be considered funds that must be managed – not “free funds” -- which will take time, personnel and often the addition of funds from your own organization's resources.
The Funding Exchange can help you prepare to manage federal funds. Whether you need training in federal grants management, creating a balanced long-term funding plan for your organization, or editing or mentoring to assist you to meet federal reporting requirement, The Funding Exchange can tailor a program to economically meet your needs. For more information, contact us at (907) 451-0885 or e-mail sharon@funding-exchange.org.
New Federal Grants of Interest
Indian Education – Professional Development Grants
http://edocket.access.gpo.gov/2009/pdf/E9-1263.pdf
Sexual Assault Services Program
http://www.ovw.usdoj.gov/docs/fy-2009-concept-papers.pdf
Literature Fellowships – Creative Writing
http://www.arts.gov/grants/apply/Lit/index.html
Demonstration Grants for Indian Children
http://edocket.access.gpo.gov/2009/pdf/E9-1102.pdf
Assistance to Firefighters Grant Program
http://www.firegrantsupport.com/
State Implementation Grants for Integrated Community Systems
https://grants.hrsa.gov/webExternal/SFO.asp?ID=1FCEC3EF-1879-40EA-B569-1E06C9D2EF62
State Early Childhood Comprehensive Systems Program
https://grants.hrsa.gov/webExternal/SFO.asp?ID=C659EDD3-65E1-4E3C-B2B1-D8C404E8651D
Grants to Reduce Domestic Violence, Dating Violence, Sexual Assault, and Stalking on Campus Program
http://www.ovw.usdoj.gov/docs/fy09-campus-solicitation.pdf
Comprehensive Approaches to Sex Offender Management Program
http://www.ojp.usdoj.gov/smart/funding/fy09casom.pdf
Indian Alcohol and Substance Abuse Program
http://www.ojp.usdoj.gov/BJA/grant/09IASAPsol.pdf
Alaska Native Education
http://edocket.access.gpo.gov/2009/pdf/E9-1527.pdf
Tribal Justice Capacity Building Training and Technical Assistance Program
http://www.ojp.usdoj.gov/BJA/grant/09TribalTTAsol.pdf
Preservation Assistance Grants for Smaller Institutions
http://www.neh.gov/grants/guidelines/pag.html
