Indirect Costs in grant applications

I was recently invited to be a guest on Nonprofit Everything, a podcast co-hosted by the amazing and wonderful experts from the Alliance for Nevada Nonprofits - Andy Schuricht and Stacey Wedding. We discussed a listener question they recently received on the topic of indirect costs in grant applications. The podcast is available here, but below I’ve summarized some of the thoughts I shared with Stacey on this topic.

“What type of buzz words or language can you include in a grant to cover General & Administrative costs, or is it best to just include a line item in the budget? Is 10% G&A a reasonable request for coverage per grant?”

  • General & Administrative Costs, General Operating Costs, Indirect Costs, Overhead, and Operating Costs are all interchangeable terms in the grant world that essentially mean the same thing, which is your organization’s costs of doing business. These are the items that cannot be directly attributed to the project or program for which you are requesting funding, but are necessary for the organization to operate. The types of items that can be included in this category include things such as: facility rent, utilities, general office supplies, salaries for executives, accounting and legal expenses, insurance, and human resources and payroll costs, among other costs that are specific to your organization.

  • The language you use in your proposal narrative and/or your budget narrative should reflect the specific expenses your organization has that are included in your overhead calculation. Your fiscal manager should be able to help you identify what those costs are. They do vary among different organizations, so it can be helpful for funders to understand exactly what categories of expenses are included in your indirect. Use general terms when describing this in your grant proposal or budget narrative—“Human Resources/payroll expense” is an example of a good descriptor.

  • The indirect rate that is reasonable to request is one of two things:

    • The maximum allowed by the funder—if the funder allows for 20% indirect, you should include the full amount allowable. This is because indirects are unrestricted dollars, meaning the organization can invest them where they are most needed. As this type of funding is the most difficult to raise in the grant world, it is best to maximize this wherever allowable.

    • The maximum your organization already operates with. To calculate this figure, refer to your organization’s audited financial statements. Add your Management & General Expenses total to your Fundraising total, then divide by your total expenses. This should be converted into a percentage. That’s your organization’s overhead rate. If you’re required by the funder to request no more than the maximum you are currently spending on your overhead, use this number. If your overhead rate exceeds the amount allowable by the funder, you will need to follow the funder’s maximum allowable guidelines, rather than your organization’s effective rate.

  •  The indirect cost line should be included in your line-item budget and budget narrative, but should be a distinct line item on it’s own. Ideally, a full program budget includes columns for both revenue and expenses and line items for salaries, benefits, program costs (whatever those may be), subtotaled, then a line showing the indirect percentage and the dollar amount, followed by a sum total at the end.

  • Remember that the indirect calculation is included in the maximum request amount. For instance, if a funder is offering a $100,000 grant, and indirects are allowed up to 20%, you may allocate $80,000 to direct program expenses and $20,000 to indirect costs. You may not tack on an additional $20,000 to a $100,000 request.

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Grant Writing Busy Seasons & Self Care

I’m right in the middle of my busy grantwriting season (yes, I understand the irony of posting to the blog for the first time in six months while I’m drowning in work!) and this round, in my 10th or so year of full-time grantwriting, I have been paying attention to some specifics that help and hinder my writing and productivity at times like these. So, in no particular order:

  • Don’t attempt to multitask. We believe we’re great multitaskers, that we can capably switch between multiple things and get our work done faster, more efficiently, or more completely. Unfortunately, this is complete nonsense. Multitasking is Not A Thing. For many years I fully believed I was the best multitasker ever, but recently I’ve been consciously paying attention to how multitasking goes for me, and the more I try to do it, the more frazzled I get, the more items I miss, and the worse my overall product is.

  • Make Lists. I do very well when I make COPIOUS lists. I tend to make a paper To Do list at the beginning of each workday, actively use them (adding things, crossing off) and often in the busiest times I’ll remake them at the end of the day as well. This helps me to ensure I don’t forget things, and gives me relief from the nagging sense that I have to do something—if it’s on my list, I’ll get to it. I tend to place items on my list by priority, and I don’t worry about including things that are short term vs. long term—it all goes in the same place so it’s not in the back of my mind bugging me.

  • Enforce strict work/life boundaries. I don’t have my cell phone number on my email signature, and I don’t give it to my project staff unless absolutely necessary. Some of that is a holdover from my social work training where it’s critical that clients only have professional access to their clinicians/therapists, but some of it is just plain old good elf-care. I answer emails during business hours only as a personal general rule (unless it is a truly urgent situation). It’s incredibly easy for the lines to blur during peak grant activity periods, and I find that nobody else is going to identify that line for me, I have to do it for myself, and I have to rigorously enforce it for myself.

  • Find your personal self-care go-to’s, and practice them regularly. For me, I tend to read a lot more during my busy seasons (something about reading books is a great antidote to the cognitive work of writing a whole lot), currently I’m reading Brene Brown’s I Thought It Was Just Me (But It Isn’t), Catherine Price’s How To Break Up With Your Phone, Samantha Irby’s Meaty, Jen Sincero’s You Are A Badass, and Ray Dalio’s Principles. I listen to podcasts (Forever 35, You Made It Wierd, My Brother My Brother And Me, A Single Serving Podcast, and Love Letters are in my current heavy rotation). I train at my gym at least 4 times a week, as I’ve written about before, weightlifting is my favorite thing. I try to get out into nature as often as possible—having a dog that needs twice daily walks is wonderful, as is getting out for weekend hikes and camping trips. Do the things that help you relax, re-center, and recharge.

  • Lean on your supports. My friends are great sounding boards for me during the particularly busy times when I need to vent about work. I also serve as their support and listening ear whenever they need that from me. While it’s tempting, I try to avoid gossipy discussions with my colleagues.

  • Say no to the things you can’t reasonably accomplish. This applies to work as well as outside commitments during busy times. I only have so much bandwidth, it serves nobody if I fail to recognize where the reasonable limits are on my time and my resources.

These are just a few of the most important things for me during my busy times. For many years, I’d put my head down and slog through these times without paying much attention to how my thinking, behaviors, and actions were serving me or not—stress is great at forcing us to hyper-focus and ignore the big picture. I have found over the last couple of years that drawing back my energy, paying conscious attention to the things that are working as well as the things that are creating more issues has helped me to construct my work time and my personal time in a productive way during the periods of high activity and high demand. Best of luck to you if you’re in the middle of the busy season, too! We can get through it, and remember that it won’t last forever!

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Getting Started as a Grant Professional

If I've learned anything from my decade in the grants & fundraising world, it's that experience is the best teacher. My first job out of graduate school was as a Grant Writer, and the day I started in my role two things happened: My new supervisor (the agency's Director of Development) told me that my first assignment would be to complete and mail out two LOI's to foundations during that week, and also...she was putting in her two week's notice that day. My shock was likely palpable, and it was pretty evenly split at hearing both of these things. I had no idea what an LOI was, so I fervently googled around until I learned it was a Letter of Inquiry/Letter of Interest, and found a few articles and templates that at least set me on the path to completing my first task. My searches for "what to do when your boss quits on your first day" led to far less concrete guidance. 

I now have thousands of LOI's, proposals, rejections, grant reviews, hours of mentoring, and years of teaching grant writing skills under my belt as a development professional; and am often asked how to get started in this field. There are a few pieces of advice I give, as well as interesting (hopefully useful) things I've learned through my experience: 

  • You can read all the books, listen to the podcasts, take courses, go to workshops, and take part in a whole host of other learning activities to understand how to do this work (my list of recommended resources can be found here), but nothing is as valuable as getting in there and trying it for yourself. Throughout my career, I've rarely known exactly what I was getting into with specific funding agencies, applications, etc., but I've found that diving in and just doing it has led to a greater confidence in simply figuring it out, along with valuable development as a fundraising professional, and deeper knowledge of the nuances of this work. 
  • There's no magic formula. Anyone who tells you there is--is lying (and is probably trying to rip you off as well). Even when you're doing a great job--clear, concise, brief, powerful storytelling combined with rich, impactful data--your work is only 50% of the equation when funders are looking for a match. Speaking of which...
  • Rejection is a huge part of this work. The MAJORITY of grant proposals written are not funded, and cultivating a successful partnership with funders takes a significant investment of time and effort. As a development professional, you must learn to understand this, and take rejection as an opportunity to glean valuable information, as well as deepen your organization's relationship with a funder. 
  • Cultivation is also a huge part of this work. Identifying a match between your organization and potential funders is critical. Developing a relationship over time that is mutually beneficial is critical. Funding is not a one-way relationship, and the sooner you understand that as a development professional, the sooner you'll see success. Stewarding funders is vitally important. Growing a relationship with supporters over time is the lifeblood of most organizations, as it leads to stable funding (of course, this is relative in the nonprofit world!) and hopefully, increased giving. 
  • Gratitude is the single most important quality to possess and to put forward in your relationships with supporters. Say thank you, sincerely, as often as you can.
  • This work is not rocket science. It is not nearly as difficult to do successfully as people believe it is--grant writing is seriously not that hard! Follow instructions. Put yourself in the shoes of your potential funders as much as possible, everything you do should be to make their lives easier. Make their jobs less work, and you'll see greater success. 
  • Asking questions, not knowing everything, needing time and information to put things together...all of this is okay, and moreover, makes you a better development professional.  Be curious, ask for information, clarify when you don't know the answers. This applies both to relationships with funders as well as those within your organization. 
  • Nonprofit sustainability is a myth. Vu Le of Nonprofit AF has written eloquently and extensively on this topic, so I'll just link some of his amazing posts on the subject here, here, here, and here
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Grant Professionals are matchmakers

Grant professionals occupy an interesting place in the nonprofit ecosystem. In an ideal world, the grant professional in any organization is responsible for the full spectrum of activities involved in a complete grant lifecycle, which range from deeply understanding the work and programs of the organization; identifying and researching prospective funding sources; developing relationships with funders; preparing, submitting and monitoring grant proposals; managing compliance for existing grants; maintaining grant records; collaborating with colleagues on organization and program development, fundraising, and other institution-wide activities; and much more.

 The grant professional in any organization should be a go-between, understanding their own organization and translating its’ needs to match those of prospective funding sources, ensuring that the mission, vision, and goals of the funder are met through investments of general and program support of their organization. The grant professional needs to thoroughly understand their organization’s mission and programs, opportunities for expansion and innovation, plus the ‘wish list’ of needs for future program and organizational development. Likewise, the grant professional needs to research, understand, and filter potential funding prospects with a similar focus. Grant professionals are constantly seeking the perfect match between their organizations and the current and prospective funders that are eager to effect change in the world through their investments.

Grant matchmaking requires several things to be most effective: the time and ability to thoroughly research prospective funders, commitment to extensively understanding your organization’s services and programs, the ability to effectively communicate internally with colleagues from various disciplines to obtain the information you need, the ability to communicate externally with current & prospective funders to tell effective stories and convey critical information, the discipline to synthesize a large volume of information, the ability to manage confidential information with discretion, a high level of sophistication in communication (in all forms), willingness and ability to build relationships with funders over time, and the skills of strategic planning, critical analysis, tactful communication, and high-volume multitasking.

Grant writing and management is a skilled, professional craft. An ability to write well is a prerequisite for becoming a grant professional, but it is only one component of the role. All of the areas of responsibility for grants professionals require a commitment of time and significant expertise to be done well. A specialized, skilled grants professional is a vitally important team member, one that many organizations mistakenly conflate with general resource development work or one of many duties assigned to an ED, top leader, or volunteer. Grants work is time- and effort-intensive, and producing high-quality, competitive grant applications and growing relationships with grant funders demands investment by organizations.

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On being a Social Worker

Upon completing my Bachelor’s degree (many moons ago) I got my first “real” job as the Early Childhood Parenting Coordinator for a School Readiness Program in Irvine, CA. The position was funded in part by California’s tobacco tax settlement funding, and in part by the U.S. Department of Education’s Safe Schools-Healthy Students grant program. This role was my first introduction to working in grant-funded programs, which sparked my 14+ year career in grants with nonprofits & public K-12 and higher education systems.

In that position, my programmatic work spanned a wide range of direct support services including counseling and providing case management to parents, families, and young children, teaching parenting classes, developing and delivering professional development for educators, evaluating and tracking my program outcomes, and a range of other services. My undergraduate degree in Cognitive Sciences (psychology) was helpful in theory, but in practice my academic background offered me little practical knowledge in my direct service role. A colleague observed my passion for both working directly with clients as well as managing the program and encouraged me to apply to graduate school in Social Work. It was something I barely even needed to consider before deciding that would be the best choice for me to further my education and my career. I was accepted to USC (a top 10 School of Social Work!) and completed my Masters in Social Work with a concentration in Industrial/Organizational Social Work (then called Social Work in the Workplace).

After finishing my Master’s, I got a job as a Grant Writer for a nonprofit social services agency in Orange County, where I discovered that my passion for serving people directly and my aptitude for thinking, planning, and communicating strategically fit perfectly with my training as a Social Worker to work as a grants professional. I have now been working in the grants space full-time for about a decade, as a grant writer, program manager, organizational leader, university instructor, consultant, and professional association leader. I believe wholeheartedly that my Social Work training and direct service background have helped me immensely during my career. As a result of my experience, I am able to fully understand the implications of grant program development on the implementation side, and I understand the intersection of organizational mission, strategic planning, board cultivation, and fund development with program services and client relationships. The broad skills development and background I’ve gained from my Social Work training in community and organizational needs assessments, asset mapping and development, program lifecycle development, and analysis has assisted me innumerable times over my career. I also firmly believe that the combination of my training, my personality, and my skills & aptitudes has helped me throughout my career to see and understand all sides of organizational development and management, program services and implementation, and funder relationship development. I am deeply proud to be a Social Worker, and I am so grateful that the field allows for the best expression of my unique abilities, talents, skills and experience. Social Workers rule!

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