Most nonprofit businesses consider grants as their holy grail. Organizations that are new to the business industry may sometimes exaggerate their view on the extension grants. The business owners may have several beliefs about grants, for instance, grants will help them attain their expenses for the next month, help them start the business momentum or grants will secure them from shutting down. For a nonprofit business, grants can be a source of stress and frustration. Below are some drawbacks of depending on grants for your nonprofit business to sustain. These disadvantages, if not known, may lead to the falling of projects that run for grants.
- Grants have too many attached strings
Some nonprofit businesses are misinterpreting, in that once they get grant funding, they can use it on anything they would want. This is far from reality. A drawback of a grant is that it aims at focusing on a narrow level of business. Most government funding considers lending out funds if the nonprofit corporation matches its values, beliefs, and opinions. The grants come with several conditions and terms that are to be spent on a particular problem or a specific project in the business and not concerning the nonprofit business delight as a whole. Foundations offering grants go the extra mile to ensure concession by asking about the project’s progress. With good progress in your project, the grant foundation can track and extend funds for your business.
- Grants will not help you kick off your project
Commonly, many foundations, whether private agencies or government, will offer funds to nonprofits already established. At times, the funders may involve their own money and fund the nonprofit business as capital as they depend on the private benefactor to return their money. Other times, a bank may accept a nonprofit request for a loan. However, such an agreement will come with a guarantee or collateral of paying back. Therefore, the bank’s expectation to the nonprofit business is to have an outstanding sustainability plan for their business. In case you are planning to start up a project, seeking grants is not recommended.
- Grants do take a long time for approval
One thing to know and understand is that grants are not got fast. When applying for grants, a lot of reporting and labor is involved. Though funds got from private companies are slightly complex compared to the government grants, both the funders need resources, energy, and time to put forward an application. To build an application that can get approval of winning a grant might take a long time for it to be accepted. It will also ensure that the nonprofit will benefit from the funds given. The funding organization in this process gets writers with experience in grant writing to help in the ongoing process.
- Requirements for grants are complicated
Complicating grant necessities are the common complaints of nonprofit businesses. The funders ask for too much and have strict time for submission of the applications. Often, developing this grant application from the beginning may turn out to be very challenging. Grants, especially those calling for federal funds, need comprehensive testing of a proposal that includes data submission and tracking. A lot of human resources and paperwork involvement are in this process. Federal grants are from a taxpayer. Thus, ensuring the money is in good use is a necessity. The funders expect the grant to be accurate, complete, and submission made on time.
- The terms of the grant are short
Grants are a soft alternative for raising funds since they cannot be relied on for a long time. It may not be possible to acquire another grant from the same agency or funders once more if the one previously given is burning out on the nonprofit business. Also, it is good that as a nonprofit business, you have sustainable income sources and that you will not depend on grant money. Grants have appealing benefits that call onto many people, such as you do not payback. A good portfolio for fund generation should have variations of donations and charitable giving that are renewable. The lowest percentage of your source of income should be concerning your grants.