No Need to Accept Every Not-for-Profit Grant

Fundraising is a large part of your not-for-profit’s activities, but that doesn’t necessarily mean you have to apply and accept every grant your organization receives. Why? Find out from Audit Director, Nicole Riley, CPA, CFE, in this episode of PKF Texas – The Entrepreneur’s Playbook®.

Jen: This is the PKF Texas – Entrepreneur’s Playbook®. I’m Jen Lemanski, and I’m back once again with Nicole Riley, an Audit Director and one of the Approachable Advisors™ on our not-for-profit team. Nicole, welcome back to the Playbook.

Nicole: Thanks.

Should You Accept?

Jen: So, one of the ways not-for-profits get funding is through grants and things like that. Should a not-for-profit take every single grant that they can take advantage of?

Nicole: Actually, honestly, no. And I know that’s really hard to swallow for a lot of organizations because you want to take everything you can, you want to use all the money that you can, but there can really be unintended consequences if an organization takes a grant that’s really not a good fit for them.

Is it a Good Fit?

Jen: Unintended consequences. What do you mean by that? How could that affect them?

Nicole: Well, first you got to look at is the grant going to support a program that you already have? Because if it does, that’s step one imperfect.

But if it’s going to cause you to go outside your mission potentially, start a new program, there’s a lot of other things that go into that because what about hiring? How are you going to fund it after this year-one of this grant? Do you need new space? And are you really losing opportunities of other areas by taking on this grant that’s just really maybe not a good fit for your programs and what you already have going? And maybe it’s not even part of your strategic mission and where you want to go.

Other Considerations

Jen: So, are there any other aspects about grants that not-for-profits may need to pay attention to?

Nicole: Well, the other piece of “is it a good fit for you” is thinking about the administrative burden that a grant can cause. Because grants, the grantor wants to know how you spent the money.

Jen: Very specific things.

Nicole: You gotta report back. But there could be additional audit requirements, so your audit fees, or if you didn’t have an audit previously, those could be costs. There could be additional time and energy of reporting or maybe your software doesn’t even track what you need it to track. And then you have to buy software.

So, all of those could be additional costs that the grant might not cover, and then you might be taking funds from your other programs away. So, it’s just a lot of things you have to consider and maybe it’s still a good fit after all and after considering all those facts. But it’s really a process to make sure that you thought through those things before you sign on to taking on that new funding source.

Jen: Yeah. You’re really going in with your eyes wide open to all the different possibilities.

Nicole: Right.

Jen: Perfect. Well, we’ll get you back to talk a little bit more about some more not-for-profit topics. Sound good?

Nicole: Sounds great.

Jen: For more information about this and other topics, visit PKFTexas.com/Insights. This has been another thought leader production brought to you by PKF Texas – The Entrepreneur’s Playbook®. Tune in next week for another chapter.