When it comes time for nonprofit organizations to put together their budgets for their upcoming fiscal years, grant professionals usually hear this question:
“How much grant funding can we expect this year?”
If you know your typical win percentage, you could use that for a quick and easy estimate.
But that number does not tell the whole story.
So how do we create a more useful picture?
One approach is probability-weighted forecasting, which Allison Welch explains in detail in her article, “How to Forecast Grant Revenue”.
The method is simple:
- List your grant prospects.
- Estimate the likelihood that each one will be funded.
- Multiply that percentage by the requested amount.
- Add the weighted amounts together.
For example, a $50,000 request with a 40% likelihood of success contributes $20,000 to the forecast.
That does not mean you expect to receive exactly $20,000 from that funder.
You will either receive the award or you will not.
The weighted amount is an estimate across the entire pipeline. Some opportunities will fall through, while others may succeed.
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But when you apply the method across a larger group of prospects, it gives you a more realistic projection than simply adding every request together, or counting only the grants you feel most confident about.
The percentages should be based on the organization’s actual circumstances, including:
Funder and program fit
Giving history
Existing relationships
Organizational track record
Current stage of the application
The organization’s capacity to carry out the work
This makes the forecast customized.
It considers not only the grant professional’s skills, but also the organization’s readiness, reputation, infrastructure, and funding landscape.
That is why a customized forecast can be a better indicator of effectiveness than win percentage alone.
A strong grant professional does not promise that every opportunity will be funded.
They build a researched pipeline, assign realistic probabilities, and help the organization understand what it can reasonably expect to raise in a given year.
Grant forecasting is not about predicting the future perfectly.
It is about turning a list of possibilities into a number the organization can use for planning.
Until next time,
Write Epic Grants