How Much Is That Grant Really Worth?

This post originally appeared on the TechSoup blog. We thought our library audience would appreciate grantseeking and funding advice from Dahna Goldstein, the director of philanthropy solutions at Altum. 

young woman making a contemplative face sitting in front of math calculations on a chalkboard

Not all grants are created equal, and some aren't even worth pursuing. One way to decide which grants to pursue is with a net grant calculation. You can then make the case to your executive director for why a particular grant is not worth chasing.

The net grant calculation helps discern the net monetary value a grant will provide to your organization.

Fundamentally, it is:

Grant Amount - Total Grant Cost = Net Grant

The total grant cost is not the cost to actually run the program you're trying to get funded. You'll need that information, too, and it informs the decision-making process, but it's not part of the net grant calculation.

The total grant cost is the total cost to find, apply for, get, report on, and otherwise manage the grant. Here are the basic elements:

Total Grant Cost = (Hours Spent Researching Opportunity + Hours Spent Writing Letter of Intent (if there is one) + Hours Spent Writing Application + Hours Spent Communicating with Funder + Hours Spent Writing Reports + Hours Spent on Any Other Miscellaneous Grant-Related Activities) * The Hourly Salary of the Person Doing the Work

The most accurate version of this calculation will take into account the different hourly salaries for each person working on a particular part of the grant. If you don't want to get into that level of detail, you can ballpark it or use industry averages.

The components of the cost will vary per organization and per grant. How complex is the application? Does your organization have multiple approval stages? Do several people read and edit every grant application? Does the funder do a site visit? How many staff members are involved in that process and how much time does it take? There are a bunch of other potential variables, so your mileage may vary.

But at a basic level, and to make this more concrete with a simple example, let's assume there's only one person involved in the grant process. Also assume that person's salary is $60,000/year, or $30/hour (assuming 2 weeks vacation).

Let's then say that this particular grant requires the following number of hours from start to finish:

  • Researching and finding opportunity: 8 hours
  • Writing LOI: 8 hours
  • Writing proposal: 27 hours
  • Communicating with funder: 8 hours
  • Writing reports (interim and final): 20 hours
  • Other miscellaneous time spent: 10 hours

(These numbers are estimates, some drawn from data in Drowning in Paperwork.)

Total hours spent: 81

Hourly rate: $30

Total cost grant cost: $2,430

Let's say you're applying for a $50,000 grant. In the best-case scenario, the net grant value is:

Grant Amount - Total Grant Cost = Net Grant

So:

$50,000 - $2,430 = $47,570

Not bad. But if you're applying for a $10,000 grant:

$10,000 - $2,430 = $7,570

The most money you will then be able to spend on the program you're trying to fund is $7,570. Is that enough? Is that all restricted or unrestricted funding? Will it cover any overhead?

Now, how can you use this in your day-to-day grantseeking activities?

  1. Take this framework as a starting point. Put in the steps (anything that involves someone's time) that are relevant to your organization. Get as close as you reasonably can to hourly wage information for the people involved.
  2. Estimate the number of hours that will be involved in each grant you're thinking about pursuing.
  3. If nothing else, prioritize those with the highest net value.
  4. Think about opportunity cost. If you're considering pursuing two grants, do you have the bandwidth to pursue both? If not, which has a higher net value? If you're looking at a whole portfolio of grants, what grants are you not pursuing (or what other fundraising or related activities are you not pursuing) that might yield positive results for your organization?
  5. Use the data produced from your calculations to help make the case to your boss or your board as to why you should or should not be pursuing or spending time on particular opportunities.

For a more nuanced version of this calculation that uses an expected grant amount, see the bottom of this post. And please share your thoughts about how this works for your organization.

Image: XiXinXing / Shutterstock

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