The True Cost of Grants
Grantcycle
Grant management and reporting platform for grant funders and recipients in the public, private, and nonprofit sectors
Grants are an invaluable source of funding. Unlike an investment or a loan, grants are non-dilutive and don’t have to be repaid. That said, grants are laden with hidden costs, and if you don’t understand where the costs can creep in, you can end up actually losing money on a grant. In this article, we explore the true cost of grants throughout each stage of the grant cycle.
Finding Grant Opportunities
The first step of the grant cycle is sourcing grant opportunities. Type “grant database” into Google, and you will find literally hundreds of websites that list grant opportunities; some are paid, some are free, some are industry-specific, and some are industry-agnostic, but there is no single source of all grant opportunities anywhere on the internet. This means that grantseekers have to manually search through millions of grant opportunities offered by 900 federal grant programs, 86,203 foundations, 50 states, 35,879 municipalities, and hundreds of businesses, universities, and religious institutions in order to find the handful for which they qualify*. Making matters worse is the fact that most databases have limited searching and filtering capabilities, which means that many organizations will spend 20 minutes reading through a grant only to discover on page 10 that they don’t actually qualify. Given all this hassle, it’s no wonder that, according to Submittable, finding a qualifying grant opportunity can take up to three days.
Average cost of finding a single funding opportunity: $648*
Writing Grant Applications
Next comes the actual grant writing. According to instrumentl, this process can take “30-50 hours [for] a foundation grant, 60-80 hours for a state grant, and at least 120 hours [for] more complex federal grants" and can cost between $20/hr and $150/hr depending on the level of experience of the grant writer. This is by far the most expensive part of the grant cycle, so before deciding to write a grant application, it's imperative to do a simple cost-benefit analysis to determine whether a particular grant is even worth applying for. For example, a highly experienced grant writer might charge $100/hr to write a federal grant, which means your organization would be out $12,000 whether you win the grant or not.
Average cost of writing a single grant application: $600 - $18,000
Post-Award Grant Management
After a grant is awarded, the bulk of the work begins. Your organization has to manage the finances, budget, tasks, deliverables, documents, associated programs, and outcome metrics. If your organization is like most nonprofits, you do most of this work with spreadsheets or with a combination of disparate software tools, which costs an average of 20% of the grant funding. If you're looking to save money, dedicated grant management software can help streamline and automate your grant management workflow, reducing the portion of your grants spent on management; that said, the cost of your grant management software should be factored into the cost of your grants.
Average cost of managing a single award: (total award amount x 20%) OR (grant management software subscription / # of grants)
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Preparing a Grant Report
To write a grant report, your organization has to combine financial data from your accounting software with outcome metrics from your program staff and distill this information into a narrative about what your organization accomplished with the funding; if you're tracking this information manually or with segregated software platforms, this process can be extremely time-consuming. Reporting requirements vary from funder to funder, but the frequency is usually monthly, quarterly, or one-time. Most organizations don’t specifically track reporting time, but anecdotal evidence from Atlas users suggests a range of one day for a monthly report (12 days total for all the monthly reports in a one-year grant) up to three days for a one-time report.
Average cost of preparing reports for a single grant: $648 - $2,592.
The True Cost of Grant Management
The true cost of grant management can vary based on multiple factors, including the size of the grant, the funder, the grant management requirements, and the reporting frequency, so let's look at a specific scenario:
Nonprofit, Inc., a medium-sized organization, is looking for $100,000 to fund the expansion of an after-school youth development program. Finding a grant and preparing the application will cost Nonprofit, Inc., $12,648 regardless of whether the grant is awarded. When the grant is awarded, Nonprofit, Inc., has to manage the budget, tasks, documents, associated programming, and outcomes in a spreadsheet since it doesn't have grant management software, all of which costs $20,000. The grant requires monthly reporting, for a total of $2,592. All in all, this grant will cost Nonprofit, Inc., $35,240.
Final Thoughts
In this article, we've explored the costs associated with each stage of the grant cycle. As a nonprofit organization leader, it is important for you to assess your organization's grant preparedness before incurring any grant-related expenses so you can make an informed decision about whether to pursue grant funding and can set your organization up for successful grant management.
Explore how Atlas can help your organization streamline and automate the grant cycle.