Government funding :Overcoming too little and too late
By Sidni Shorter In Fundraising Posted November 18, 2013 0 Comments

Government funding: Overcoming too little and too late

According to the Nonprofit Finance Fund’s 2012 Survey Results, more than 75 percent of nonprofits depend on federal or state funds. Yet, these contracts often fail to cover the full cost of the program but also over half these contracts are paid behind schedule. If the majority of nonprofits depend on resources that are too little and too late, there are several strategies you should put to work in your organization.

While rural nonprofits are particularly affected by these sobering funding statistics, my team at Execute Now! has actually observed this problem across the board with virtually all organizations that tap state government resources. If you plan to make federal or state funding part of your funding mix, we’d like to offer the following strategies:

1. Accumulate. Build up adequate reserves before entering a reimbursable contract with state government agencies. A six-month cushion is optimal and gives you some necessary breathing room for late reimbursements.

2. Evaluate. Make sure all your costs are covered in the contract you aim to secure, including line items such as paid overtime and paid time off. Account for indirect costs associated with the funded program as well as shared resources.

3. Anticipate. There’s a great deal of documentation required before funds are released for reimbursement. Before entering the process, gather information on all the administrative requirements needed to apply for and report on your government grants. In addition, you should be prepared to communicate frequently regarding payment status. Be sure you have adequate staff time to meet these demands.

4. Diversify. Closely monitor your revenue mix. Be sure your organization doesn’t receive more than 30 percent of its total revenue from the government. Adjust your programming so you have parity with the level of reliable funding. Explore social enterprise opportunities as well.

Watch for my next post when I’ll talk more about the “diversify” strategy as it relates to assessing your current revenue model. David La Piana and his coauthors explain the importance of “reliability of revenue” among other assets in their new book The Nonprofit Business Plan: The Leader’s Guide to Creating a Successful Business Model. I’ll be weighing in on their checklist for evaluating the economic logic behind a winning nonprofit business model. By Erica McGeachy Crenshaw, President/CEO of Execute Now!, Inc.

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