In this article, we’ll begin with a brief discussion of why grants are important. Then, we will conclude with how much of your funding budget should be in grants.

Not long ago, I assumed that everyone in the nonprofit sector or who works with public organizations, churches, charities or any tax-exempt agency knows the value and importance of grants and grant research. My assumption might just be wrong.

Recently, I interviewed grant expert Linda Butler from Butler Consulting in the Miami Valley of Ohio. Linda has a unique take on why grants are important – not because of her background in grant writing, but because of her experience with other forms of funding.

Here is an excerpt of our conversation:

Phil: “Since our focus today is on Grant Seeking, or Grant Search, why is it important to know how to search for grants in today’s world for non-profits?

Linda: Well, I think more than ever, it’s important for any kind of an organization. We (Butler Consulting) work with not only non-profit organizations but we also (with the economy and the stimulus money) are starting to work with for-profit organizations and, of course, with public institutions also. I think it’s really important to be able to diversify your funding sources and know that the whole pie of money that supports an organization especially nonprofits and public organizations. That funding pie includes grants, which should really be as a rule about 10-15% of your overall budget.

Another reason why I think it’s important to be able to do Grant Seeking is that it’s important to screen out some of those scams out there that say there’s free grant money for individuals. Some of the folks really are not grant professionals and perhaps not even legit companies.

There is very little money out there for individuals. There certainly are scholarships that sort of thing but as far as the grants that we’re talking about today, we’re talking primarily about grants that support nonprofits and public institutions.

I think it’s important to distinguish the difference.

Phil: When you say that grants should make up 10-15% of the overall budget, could you give us an idea about how you see the rest of it like. If 10-15% is grants, what would be the rest of the 85%?

Linda: It’s not just myself, Phil, but you’ll find I’m a member of the Association of Fundraising Professionals and read a lot of information like “The Chronicle of Philanthropy.” I think that most fundraisers would agree with me that the secret 70-80% is individuals.

A lot of nonprofit and public organizations aren’t tapping into individuals as far as supporting their organization. Individuals of course include:

1) Individual gifts,

2) Major gifts,

3) Campaigns,

4) Special events, and

5) Lots of different ways to raise money from individuals.

10-15% is with Grants.

The other piece of the pie has to do with…

1) Planned giving which of course can be from individuals, and

2) Corporations.

The whole piece of the pie is primarily individuals (about 70-80%) along with grants, bequests, planned giving, and corporations (about 20-30%).