While its easy to be lured in by the potential of funding, some grants may come with a kick in the tail in the form of increased admin costs, an unreasonable drain on resources and an unwelcome broadening of the organisations focus.
Before committing to what may be a lengthy application process, organisations need to think critically about whether a grant is the right fit.
A lot of organisations in the not-for-profit sector have to diversify in order to survive, but how far away from your core purpose do you really go? says Dee McGrath, who as the CEO makes the difficult decision for CarersACT as to which areas of funding they pursue.
When grant opportunities come up the first question we always ask is whether its a strategic fit?
The second question is whether the organisation has the capability, competencies and skills to deliver the service or whether they can be easily brought to the table through a partner.
Another important, and often overlooked question is the resources required relative to the funding amount on offer.
I've looked at a number of opportunities for grants where they all effectively fit, and we have the capabilities and the skills, but the number of outputs relative to the amount of funding, and the terms of the funding, meant I have made a business decision to not apply for the grant, says McGrath.
"It was destined to fail because there was not enough resources or it was too short a contract."
In other cases grants may be viewed as part of a strategic growth strategy, a stepping-stone to where you want to be five years down the track.
"What I have learned after seven years with CarersACT is that you are better off with a bigger grant than a whole series of smaller ones as it is an administrative burden," she added.
McGrath says the consolidation of 18 Commonwealth grant programs down to seven under one department the Department of Social Services - may help streamline the grant process for NFPs.
A bigger impact for her organisation will come from the transition to a more commercial, user-pays system under the National Disability Insurance Scheme.
"The difference is when you get block funding, you get your money upfront and then you spend it, whereas in the NDIS you have to deliver the service first, then invoice the NDIA (the agency) for the service delivered so there will be cash flow issues for NFPs with very little working capital it is going to be a major challenge."
In other words...
- Some grants won't be right for your oganisation.
- Ask: does the grant fit the organisation's strategy and is there capacity to manage it?
- One large grant may be more effective than a series of smaller ones.
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