Grantmaking 101: What you need to know to run a successful, impactful grant program


 

What is a grant?

Companies of all sizes are embracing the mantra of “do well by doing good” by implementing corporate social responsibility (CSR) programs, especially since they have realized the many benefits of CSR. In fact, corporations gave $18.55 billion to charities in 2016, which is a 3.5% increase from 2015.

One way companies engage in CSR is through grantmaking. Corporate grants are financial donations businesses give to an applicant to achieve specific social, environmental, or economic outcomes. Corporations and foundations typically offer grants to local nonprofit organizations, but foundations may decide to fund academic institutions, individuals, or even small businesses. Nonprofit organizations prefer grants because, unlike loans, grant funds do not incur interest and are not paid back to the grantmaking organization.

 

 

What are the key steps in the grantmaking process?

The grantmaking lifecycle occurs in three stages: Pre-Award, Award, and Post-Award. The term award is used because companies and foundations select recipients through a competitive process. Grantmaking presents a certain level of risk, so applications help the grantmaker identify recipients that 1) will effectively and efficiently use their funds and 2) achieve objectives that align with the company or foundation’s strategic priorities.

Two parties are involved in grantmaking: the grantmaker (the company or foundation) and the applicant (the nonprofit organization), who eventually becomes the recipient. Below are the basic steps in the grant lifecycle.

  1. Plan & Announce an Opportunity: The grantmaker identifies an opportunity to donate funds to a nonprofit through a grant. The team creates guidelines such as eligibility criteria, geographic or program area priorities, project budget and timeline. Additionally, it is helpful to include criteria for how applications will be evaluated. The team also decides if applications will be open to the public (the opportunity will be released as a Request for Proposals), or if the team will reach out to a select group of nonprofit organizations.
  2. Write & Submit an Application: The grant writing team of a nonprofit ensures that its application has a unique idea to address the grantmaker’s opportunity and includes a letter of interest, goals and objectives, methodology, project evaluation metrics, a budget (including cost-sharing opportunities), and any other requirements. Once the application has been internally reviewed, the nonprofit submits the application.
  3. Evaluate Submissions: The grantmaking team gathers all applications, preferably through grant management software. The team members take turns evaluating the proposals based on the previously decided criteria. A meeting is then convened to discuss the submissions and select an applicant.
  4. Select & Notify Recipient: Once the grantmaking team selects a recipient, the nonprofit organization is formally notified in writing.
  5. Commence Work: After a suggested kick-off and planning meeting between the grantmaking organization and the recipient (and a contract is signed), grant funds are disbursed and the nonprofit begins work.
  6. Support Work: As mentioned in the agreed upon contract, the grantmaking organization provides support such as on-time disbursement of money and, potentially, logistical or networking support.
  7. Report on Progress: The recipient will submit reports at agreed upon intervals on the project activities. The recipient will provide updates on progress towards achieving goals, highlight any successes, and note any barriers that require assistance from the grantmaking organization.
  8. Closeout: When the project finishes, both the recipient and grantmaking organization work together to successfully closeout the activities. In closeout discussions, the grantmaking team may identify a new opportunity and the grantmaking cycle continues.

 

 

How do companies benefit from grant programs?

Statistics increasingly show how companies benefit from being socially responsible. Specifically, grants help businesses:

  • Train the future workforce: Companies provide grants to nonprofits focused on education and training. For example, the JetBlue Foundation supports aviation-related programs. Of course, not all of the beneficiaries of the foundation will become JetBlue employees, but through its nonprofit, the company ensures that there will be a highly skilled workforce for the aviation industry as a whole. 
  • Improve the local environment: Through grants, companies can improve what Michael Porter and Mark Kramer call their competitive context, or, the local areas in which the companies operate. The Target Foundation offers several of such grants to nonprofits in its hometown area of Minneapolis/St. Paul to 1) increase access to arts and cultural events and 2) provide food and shelter to at-risk families. CSR efforts such as Target’s improve the quality of life for people in local communities, which helps create better economic opportunities for both the company and communities.
  • Increase demand: Grants allow companies to support local nonprofits and cost-effectively create markets for products. When the Safeco Insurance Fund in Washington began their program, grants were disbursed to organizations focused on improving public safety or increasing access to affordable housing. The positive improvements in four test markets increased insurance sales, sometimes up to 40%. The fund has now expanded to focus on education for underserved youth, safety for homeless families and individuals, and assistance for people with disabilities.

 

 

How does grant management software make this process more efficient?

Technology has undoubtedly improved the efficiency and reach of grants and other CSR programs. Technology, such as DonationXchange’s grant management software, offers a turn-key solution so companies can easily oversee grant activities. Grant management software will help:

  • Streamline the application process: Paper-based applications are an administrative nightmare for both applicants and grantmakers. Using a web-based platform means everyone has a one-stop-shop to work on, submit, and evaluate applications. A screening quiz for potential applicants can also be included, saving time for all parties.
  • Support commitments to sustainability: Going green with a paperless system reinforces the company’s CSR and sustainable commitments.
  • Improve productivity and lower costs: Now that grantmakers and recipients have access to information online, less time can be spent handling administrative matters and more time can be spent on technical work for the grant. Think of the time and cost savings grant management software can do for a company.
  • Measure key metrics: W. Edwards Deming certainly was right when he said, “In God we trust, all others must bring data.” Data is critical to understanding how to efficiently run a grantmaking program. With easily accessible reports, grant managers can address matters such as overall grant performance and bottlenecks in the application process. DonationXchange takes this a step further by offering a new type of reporting called Return on Giving, which provides an overall picture of impact.

 

 

 

If your company would like to benefit from a successful and efficient grant program, DonationXchange is here to help. Learn more about our dynamic CSR and philanthropy platform.

 

 





 
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