Grants can be an important source of program and operating revenue for nonprofits. For many organizations, funding from private and family foundations, government funding agencies, and corporations represent some of their single largest funding sources. But using grants to fund your programming is not a passive form of fundraising—far from it.
If you’re new to grant seeking, there’s a lot to learn, so it helps to understand what funders expect of proposals beforehand. You’ll need to convince potential funders that your organization not only has a worthy programming idea but also that you’ve got the plans and resources in place to sustain that program over time.
This concept of grant sustainability can be especially challenging to discuss in a thorough, compelling way. Thankfully, understanding sustainability, infusing it into your grant writing process, and successfully executing your plans are learnable skills that any nonprofit can hone (especially with the help of grant seeking experts).
This quick guide will focus on the idea of grant sustainability, including its importance, the various revenue sources that may come into play, and how it fits into your broader strategic plans. Let’s dive in.
The Importance of Sustainability
As you apply for grants, funders will ask: “how do you plan to sustain the new program over time or ensure the long-term impact of funded projects after the grant funding ends?”
Think of it this way: Just like 501(c)(3) nonprofits, funders have to allocate their resources in the most effective ways possible to drive their own missions forward.
Funders look for proposals with promising potential returns on their investment. When a funder awards a grant to fund a new program, they are taking on some risk. They want to see the program and its impact sustained, but they must also trust that the organization has a sustainability strategy to keep the program going.
If the program dissolves because the organization fails to secure other funding, this is a loss for the organization, the program beneficiaries, and the funder. The funder missed an opportunity to maximize its own impact by choosing to invest in a program that was not sustainable. As a consequence, the funder might decide not to invest in this organization again.
There are multiple reasons why building a sustainability strategy for your grant-funded programs should be a high priority, namely:
- It helps your proposal be more compelling and more likely to be funded.
- It helps ensure that your funded programs truly benefit your mission and program recipients over the long run.
- It engenders trust with your funders because you show a commitment to secure their return on investment.
To explain your sustainability plans, you’ll need to detail all of the funding sources and revenue projections that will keep your nonprofit running and growing after the grant ends.
8 Revenue Sources for Program Sustainability
What are the different revenue sources that you might rely on and detail in your grant proposals to reassure funders of your plan’s sustainability? Here are 8 common examples:
The other grants that you’ve received or that are pending can help support your project over time. Because of restrictions on how you can use the grants received, it’s likely that not all of them will apply to specific projects.
However, keep in mind that even if other grants won’t directly fund the program in question, they can still boost your organization’s capacity in ways that will indirectly make it easier to fund and execute your plans. For example, maybe one of your additional grants has very specific conditions that prevent you from using the funds on a specific project. But because the grant is still filling a funding need, this means you can allocate more of your own resources toward the project.
Securing an initial grant for your program can be an effective springboard for obtaining additional funding from local, state, and federal agencies. Government grants are offered widely, meaning there is likely one that fits your organization’s size and funding needs. To research government grant opportunities, check out free online resources.
In your grant proposal, you can explain that you’ll actively pursue government funding opportunities to keep the program running over time. If possible, be specific about the funding programs or agencies that you’ll pursue.
Your nonprofit may generate revenue through:
- Charging service fees
- Delivering training or consulting services
- Selling products and merchandise
- Renting out your office space
While it’s a myth that nonprofits must break even rather than profit, your organization still has to invest any profits it makes back into your mission. These types of revenue streams, essentially any that you’d classify as unrelated business income, can go towards supporting your grant-funded project over time.
Social enterprise ventures.
Your organization may conduct business as an integral part of its mission. For instance, maybe your organization runs a shop or restaurant to provide jobs while earning revenue.
The income generated from your venture can be put towards sustaining your funded program over time.
These activities involve close partnerships with businesses to promote your cause and share the revenue generated through campaigns and sales. Grocery and restaurant fundraising programs are common examples.
For example, perhaps a local restaurant partners with your nonprofit for a percentage night. Your organization earns a percentage of each sale, and the restaurant benefits from increased foot traffic from your supporters who want to enjoy a meal while supporting your program.
If your organization already conducts these activities or plans to launch new partnerships in the future, they can be used to help sustain your programming.
Extend your partnerships with local companies by organizing CSR initiatives that benefit your nonprofit, such as matching gift drives or volunteer grants.
Matching gifts can double the contributions donors make to your organization at no additional expense to them. To capitalize on these opportunities as much as possible, make sure you’re using tools that make it simple for donors to submit matching gift requests. Ideally, the platform should integrate with your donation form and the company’s CSR software provider to enable auto-submission of the match requests.
Funders expect to see that your organization has the support of the community. Use real data on your annual fundraising and major gifts to describe how revenue from individual donations will grow and be put towards supporting the program over time. Use your past data and projections to set and explain a specific fundraising goal that you’ll pursue.
Explain any budget earmarks that your organization has already made or will make specifically for funding the project. For instance, you may allocate a certain percentage of your annual fund after a set period of time in which you use the grant funding to launch the program and ramp up fundraising capacity.
A Note on Big-Picture Planning
As you consider grant sustainability and the various revenue sources that can keep your programs running beyond the initial period of grant funding, it’s important to remember that your nonprofit should always have a big-picture funding plan outside of the grant seeking process.
In other words, you need more than just a list of revenue sources cobbled together for the sake of a grant proposal. You need a complete strategic plan in place that covers the bigger picture of how diverse revenue streams are allocated to support your operations, fund programs, and cover overhead expenses.
The ultimate responsibility of formulating and keeping up with a big-picture strategic funding plan falls to your organization’s leadership, development, and finance teams. Other staff may then be involved in developing new revenue streams over time, like donor-advised fund awards, corporate sponsorships, and shop for a cause co-ventures.
If your organization doesn’t have a comprehensive funding plan in place (or hasn’t recently revisited or updated your plan), filling this gap should be a top priority for the coming year.
Then, with your funding plan as the central source of truth, you’ll be able to reference it when applying for grants to quickly see how and where you’ll find sustainable funding for the new project you propose. A central plan also makes it easy to describe a “step-down” process to the funder. In a “step-down” process, you rely on decreasing percentages of grant funding for the program as you ramp up funding from other sources, like the ones listed above.
These benefits to sustainability and “step down” planning are very helpful for the broader grant management process. Funders need to be assured of your organization’s ability to execute and report on how the funds are being used, and solid funding details and projections will help make your case.
An organized sustainability plan (contextualized within your broader funding strategy and fleshed out with “step-down” details) can make a compelling case that your organization will be an effective steward of grant funding.
These financial details are certainly a bit drier than the exciting program plans you’ll outline in your grant proposals. However, they’re arguably just as important for showing that your nonprofit is both worthy of a funder’s support and will be able to truly use a grant to drive long-term impact.
About the Author
Sarah Dave, Managing Director at Grants Plus
Sarah Dave, Managing Director at Grants Plus
Sarah Dave is a Managing Director at Grants Plus, a national leader in grant seeking consulting. Grants Plus has secured $250 million in grant funding for nonprofit organizations around the country since 2007. In her role as Managing Director, Sarah equips the Grants Plus team to support clients and the broader philanthropic community. She has extensive experience in nonprofit management, donor strategy building, special events, direct marketing, and information management.