What Foundations Want in Nonprofit Grant Applications

We surveyed foundations and charitable trusts around the country to learn what they look for in organizations they are considering funding. This study reveals the answers to common questions regarding funder reporting requirements and trends.

Our
Approach

We surveyed a group of representatives from various foundations and charitable trusts, who we are calling funders, from around North America. The purpose of conducting the survey was to discover how funders decide on providing funding to nonprofit organizations.

When drafting the survey, we utilized previous market research as the base for questions. It was important to know whether past studies and trends were still relevant in 2017, and how they have changed. We crafted the survey questions to pinpoint the exact criteria foundations use to determine where funding dollars go. It’s important to note the distinction of “foundation funding”.

Grantspace.org defines a foundation as: “A foundation is a non-governmental entity that is established as a nonprofit corporation or a charitable trust, with a principal purpose of making grants to unrelated organizations, institutions, or individuals for scientific, educational, cultural, religious, or other charitable purposes. This broad definition encompasses two foundation types: private foundations and grant-making public charities.”

Foundations historically provide the largest amount of funds outside of governments. This study solely focused on foundations and charitable trusts.

The survey covered three elements:

1

Current, past, and future demands for reporting.

2

Preferences for information, format, and channels of displaying reports.

3

Key areas nonprofits report on to present to foundations.

All responses were voluntary, confidential, and analyzed as a group.

Top 3 Most Important Consideration Items for Funding

The graph to the right illustrates what funders identify as their three most important considerations for funding. Impact (98%), mission (49%), and legal nonprofit status (37%) were the most common responses.

98%
Impact
49%
Mission
37%
Legal Nonprofit Status
33%
Organization Leaders
29%
Past History
27%
Financials
6%
Single Cause
6%
Many Causes
2%
Consumer Reports
14%
Others (Timing, Sustainability, Stability, Capacity)
67%
Outcomes
16%
Consistency to Mission
6%
Detailed Data
4%
Outputs
2%
Financials
2%
Community
2%
Other

Best Indicator when Evaluating an Organization’s Impact

Knowing that 98% of funders identify “impact” as one of their top three considerations when funding organizations is highly valuable. Understanding how your organization can demonstrate its impact is the next step. For 67% of funders, outcomes are the best indicator of an organization’s impact followed by consistency to mission (16%).

Other answers: “Fidelity of implementation - Did they do what they said they were going to do? Example: if X organization did a training for teachers, did the teachers take up the new lessons appropriately?”

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Top 3 Things Funders Look for in Reporting

Knowing that impact, mission, and legal nonprofit status are of utmost importance to funders, the next question is how to demonstrate those and other important factors. Funders are seeking program outcomes (88%) and impact stories (41%) in effective impact reporting. The least sought after elements were donation usage (16%), past performance (16%), and mission (14%).

88%
Outcomes
41%
Impact Stories
33%
Budgets
33%
Program Outputs
31%
Objectives
27%
Programs
16%
Donation Usage
16%
Past Performance
14%
Mission
2%
Others

Preferred Reporting Formats

Funders are notably looking for impact stories from the organizations they support (60%). Other reporting formats though are quite fractured with physical paper reports being preferred by 20%, graphs by 12%, and spreadsheets by 8%.

60%
Impact Stories
20%
Paper
12%
Graphs
8%
Spreadsheets

Changes in Reporting Requirements

If it seems like reporting requirements from funders have increased in the past 5 years, it isn’t your imagination; 57% of funders say they have. Looking forward, the expected trajectory is that these requirements will continue to be in place and even increase. Only 4% of funders believe their reporting requirements will decrease in the next 5 years.

Changes in the Past 5 Years
  • 57% Increase
  • 31% Stay the Same
  • 12% Decrease
Changes in the Next 5 Years
  • 57% Increase
  • 39% Stay the Same
  • 4% Decrease

How do you Determine
the Effectiveness
of an Organization?

Finally, funders told us in their own words what they are looking for from organizations. The following word cloud demonstrates that “outcomes” was the most frequently used word in their responses demonstrating consistency with the data in Figure 2.

These are specific, yet anonymous quotations from our survey of funders.

We look at what the organization or program intends to achieve and whether or not they do. If they fall short of their objectives, we won’t rule them out. We look at the data, analyze the factors that contributed to the results, and determine any changes that can be made. We will work with the organization during this review process and support a revised plan.
We look at outcomes, impact as well as what they learned/insights gained. Sometimes a project that fails is a success. We don’t consider failure to be bad.
We think that reports are the best way to determine if the organization is effective in its sector, if they achieve their short-term goals, in the financial and beneficiaries, we believe that an organization that can do great things and move forward.

Software from Social Solutions can help you measure your progress against your objectives, measure your impact, and keep track of your outcomes.

Executive Summary

Impact, Impact, Impact

Funders identified impact as one of their top three most important considerations for funding.

Impact is Demonstrated through Outcomes 
and Stories

Funders clearly value impact above all else, with an overwhelming 98% of funders responding that impact is a top funding consideration. When looking at nonprofits’ reports, 88% of funders want to see program outcomes data and 81% of funders say impact stories are desirable.

Reporting Requirements will Continue to Increase

Reporting requirements will continue to increase. In the past 5 years, 57% of funders say their reporting requirements have increased. Looking ahead to the next 5 years, most funders expect reporting requirements to stay about the same or increase more. Only 4% expect reporting requirements to decrease.

Did you know?

Apricot’s reporting platform allows you to create and share reports securely within the system. Reporting happens in real time so that you can monitor results and be responsive when it matters.

Did you know?

With Apricot, your data is right at your fingertips in a cloud-based solution that gives your organization freedom from paper files, spreadsheets, local hardware, and monthly maintenance downtimes.

Did you know?

Apricot is hosted on a best-in-class Amazon Web Services (AWS) environment so your data is secure, backed up, and compliant. User-based permissions and audit trails further enable secure access to data.

Did you know?

Apricot allows you to easily track volunteers as well as clients. Utilize guest user modules and webforms to further engage your constituents.

Did you know?

Track, report, and assess your organization’s mission! Apricot allows you to track clients, volunteers, services, and more.