One of my favorite clients is a for-profit entrepreneur turned non-profit founder. He has extensive start-up experience- in the for-profit space. It took a while to help him understand that the non-profit world is very different in many ways.
The biggest learning curve for him was structuring a budget. Non-profit budgets must be more specific about how funds are spent. Separate fund categories must be created for each program and purpose.
Financial statements in a corporation are strictly for tracking profit and loss. Non-profit financial statements tell a story of how the programs work and how funding dollars support the mission.
The accounting standards for non-profits are different- they must differentiate and track specific funds.
Grant Writing Tip of the Day
When interviewing for a grant writing position, ask questions to ensure the non-profit is a good fit for you. The interview goes both ways.
Grant funders want to make sure their funding dollars go to an organization that is financially healthy and sustainable.
They will request financial documents, but they sometimes ask this question:
“What percentage of your budget goes to Programs, Fundraising, and Administrative Costs?”
Grant funders have a general guideline that they want at least 70% of the budget on programs, 15% or less on fundraising, and 20% or less on administrative costs.
I write an annual grant for a community foundation that will not accept applications from organizations with more than 18% in admin costs. This is extreme, but not unheard of.
When you begin working for a non-profit, review their budget. If they don’t fall into these guidelines, help them understand why it is important to get there.
Until next time,
Write Epic Grants
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