I am often surprised by grant writers who do not realize they need to thoroughly understand nonprofit financials.
The past 9 of 10 grants I wrote require some form of financial documentation. Usually, they need to see a recent year’s audit, current year’s budget, past year’s financial statements, or a combination of all.
Ideally, a grant writer would already have these documents in a shared drive or somewhere easily accessible and ready to submit.
But do you know what you are submitting? And do you understand how financial documents can tank an otherwise perfect grant?
When nonprofits apply for grants, we are essentially asking an equity investor to take part ownership of the work we do. We are assuring them that their investment is sound because each dollar has impact.
We can express this in our narratives, but the financial documents must match our story.
If you don’t have experience with financial documents, sit down with your organization’s accounting person and ask them to go through them with you. If something doesn’t make sense or match your grant requst, be sure to ask questions until you understand.
Now that you understand, take advantage of that section, “Additional information.” If something about the financials needs to be explained, do it here. If there isn’t a space to explain, add an explanation to the financial document itself. Call it “Budget Narrative” or something like that.
Here are a few examples of explanations I have offered to ensure the financial statements didn’t disqualify us from being awarded the grant:
- My client was in the middle of a capital campaign, and it looked like we were flush with cash. I explained that capital campaign money was restricted and could not be used for programs.
- My client ended the year over budget and in a deficit. That doesn’t look good. But I explained that we weathered a Category 4 hurricane, and an unforeseen amount of funds was directed toward recovery. I explained that we were awaiting FEMA money and United Way money and promised donations that would put us back on track. That explanation was sufficient, and we were awarded the grant.
- One of my smaller clients rented a small office space but was in dire need of building a facility. We received a very large grant earmarked for this purpose. The money sat there for three years until the rest was raised. I explained the restriction on these funds in my budget narrative so it would make sense to grant funders.
There are countless reasons why your financial documents may look questionable, but there is often a reasonable explanation. Don’t be afraid to offer the explanation to keep your application in the running.
Until next time,
Write Epic Grants
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