There are so many different buzzwords in the world that grant writers and nonprofit professionals live in. For the most part, you know what all the words mean generally at least. Every once in a while though, you’re asked by a potential client or an in-law at Christmas or a well-meaning friend about a particular buzzword that you don’t quite know how to articulate.
In this blog post, we’re here to tackle one of those questions we know that people are asking. What is the difference between grant writing and fundraising? At first read, it seems like a silly question to ask, a no-brainer, if you will. The two concepts are sort of the same and ultimately result in more money for your organization, right? Upon deeper thought, it’s a bit more challenging to decipher their differences (because they are different).
We’ll dive in where we always need to begin: the definitions.
What is grant writing?
According to the Association of Fundraising Professionals, a grant is “a financial donation given to support a person, organization, project, or program.” Essentially, a grant is a gift of money awarded to an entity so that the entity can achieve a specific goal or purpose. Typically, a grant is awarded to an organization from a foundation, corporation, or governmental agency.
Thus, grant writing is the act of preparing an application to receive funding for a project or organization that does not need to be paid back. Monies received from a grant are called grant funding.
Successful grant writing ultimately accomplishes funding for your organization whether it be for a specific project, program, or general operating purpose. Because grants are often awarded for specific projects, the received funds are "restricted funds" and they must be used exactly as the funder specifies.
Who is eligible to write grants
Depending on the grant eligibility requirements, many different types of organizations are eligible to write and apply for grant funding including:
- public charitable status as designated in an IRS Determination letter
- an unincorporated community group with a fiscal sponsor
- tribal organization (and sometimes housing authorities)
- faith-based organizations (sometimes must be providing social services to the broader community)
- local government
As far as who actually does the grant writing, all different kinds of folks write grants! Check out this video if you think grant writing might be for you. The common thread that most grant writers share is that we all care. Grant writing can be tough work, but we stick with it because the work positively impacts the organization and communities we care so deeply about.
What grant writing includes
At the most basic level, grant writing includes preparing and submitting a proposal narrative or application to a grant making agency. Obviously a lot more work, energy, and skill is necessary to develop a successful grant proposal. Grant writing often necessitates first creating a funding strategy or a roadmap to help strategically determine which grants to go after and when (this is the strategy we teach in our course!). Once this funding strategy has been established, organizations may choose to hire a grant writer to help with project management and writing.
For many nonprofit organizations, relationship building is key to their grant writing success. They work to build relationships with funders throughout the year before and after applying for grant funding with that particular agency.
Applicants must complete all requirements in the notice of funding opportunity (NOFA) or the funding guidelines. Depending upon the grant, organizations may need to find partners to join them in their planned efforts. Almost all proposals require applicants to create a budget specific to the proposal narrative (like for a particular project), write a narrative or application, and include various attachments. The individual or team responsible for preparing the grant must research and have both excellent technical writing and storytelling skills.
Finally, after submission a grant reviewer will review the application. You’ll then receive a response from the funder: it’s either a yes, a no, or a yes, but not as much money as you requested. An applicant can sometimes negotiate the terms of the awarded funding in certain circumstances. If your organization is awarded funding it is likely that you’ll need to complete various reporting measures to meet the requirements set in place by the funder.
It’s worth noting that grant writing differs from grant to grant. For example, pursuing a $1,000 grant from Wright County Charitable Foundation in Wright County, Iowa (population: 13,229) is going to look a lot different than applying for $100,000 in research funding from the National Institutes of Health. This is why we stress closely analyzing the NOFA.
What grant writing does not include
It’s pretty safe to say that grant writing often does not include sitting down with individual donors and requesting a specific amount of money or planning events (virtual or otherwise).
Also, you’d be wise to not solely rely on grant funding for a major portion of your organization budget. We recommend that grant funding should make up roughly 10-20% of your total organization budget depending on your organization type. We love grants and want to empower you to go after grants that you have a high likelihood of winning, but the bottom line is that grants are not guaranteed. Furthermore, they often need to be reapplied for every fiscal year. Grant funding can be an incredible strategic type of funding, but you simply cannot rely on them to get your organization out of the red. Grant funding should be the icing on the cake, not the cake. Ideally, grant funding compliments your already existing development strategy and efforts.
How to learn grant writing
You’re in the right place! We invite you to learn our tried and true grant writing methods by checking out our course, Grant Writing: From Start to Funded. If you want to just get a taste before diving into the course, you can also listen to the audiobook our founder, Meredith Noble, wrote. Check out How to Write a Grant: Become a Grant Writing Unicorn here. Feel free to listen to the audiobook for free or order a physical copy.
Now, for the other important definition: fundraising.
What is fundraising?
Fundraising is generally defined (via Business Dictionary) as the process of soliciting financial support. Central to the idea of fundraising is the collection of cash donations. Donations can be collected immediately or over a period of months or years, as is the case for long-term pledges for capital campaigns.
Fundraising is an essential way for most nonprofits to bring in revenue for their organization’s mission. Monies raised through general fundraising activities are often referred to as "unrestricted funds" and can be used for any of your organization's expenses, such as staff salaries or rent. Donors can also require that their money be used in a specific way in which case the organization would honor donor intent.
This definition is already much broader than the definition of grant writing. As such, fundraising is about so much more than just asking for money. In fact, many people might argue that fundraising and giving aren’t about money at all.
Who is eligible to fundraise
Most traditionally, nonprofits are the most common group to fundraise. However, other groups like those adorable Girl Scouts selling their highly addictive cookies (our greatest weakness 😋) and people raising funds for mission trips are eligible for fundraising too.
You don’t necessarily need to meet many requirements to fundraise. The one thing you do need is to establish trust with your donors. Trust looks different when soliciting donations from your uncle than when an organization solicits donations from community members. Trust for that organization might include having a 501(c)(3) designation and publishing an annual report.
What fundraising includes
At its foundation, fundraising consists of ways for charitable organizations to build relationships, bring in foundation support, and attract new donors. There are many key pieces in the fundraising process including finding prospects, marketing automation, consistent branding, donor retention, giving days (like Giving Tuesday), and event planning.
However, as we’ve already touched on, fundraising isn’t so much about just asking for money as it is about inviting others who have a passion for what you do to come alongside you in your mission. Fundraising is about finding or attracting similar like-minded people who are interested and dedicated to the work you’re already doing. Once you find them, you can do that work together which is the beauty of fundraising.
With this in mind, fundraising is best carried out by first creating a fundraising or development strategy for when, where, and how to meet your organization's yearly budget. There are hundreds of ways to fundraise including mailing newsletters, appeal letters, monthly emails, hosting events (car washes, galas, bake sales, virtual silent auctions), crowdfunding, social media, and calling or meeting with donors on a regular basis. Another key type of fundraising is, of course, grant writing.
A common thread throughout all types of fundraising is relationship building. Cultivating relationships with folks your organization wants to partner with helps not only in attracting donors, but in donor retention and donor engagement.
What fundraising does not include
Fundraising can include grant writing and all the things necessary for crafting successful grant proposals, but it does not, on its own, mandate hours poured into developing a well-oiled 30 page narrative.
How to fundraise?
This is the million dollar question that everyone is asking. The practice of fundraising has a surprising amount of theory and strategy behind it. There are theories behind writing appeal letters such as always including a P.S., properly folding the letter so when donors open it they see text v. white space, and including a pre-paid return envelope with donor ease in mind. It only gets more technical and advanced from here (and that example was just for a quarterly appeal letter!).
You can learn more about fundraising best practices and theories, we recommend:
- Impact Institute (Sign up for their email list! Their emails are short, sweet, and a good kick in the pants!)
- Nonprofit Leadership Lab
- Mary Valloni (for direct education, encouragement, and empowerment through Mary’s program)
- Chronicle of Philanthropy (for big picture nonprofit happenings)
So, what is the difference between grant writing and fundraising?
With both fundraising and the grant writing, you need to do research, pursue leads, prepare talking points, evaluate opportunities, and cultivate relationships. The essence of both practices are the same. What is different is focus and context.
Specifically, grant writing is a way to raise funds so it does technically fall under the fundraising umbrella. However, fundraising more so refers to generating cash donations by either cultivating individual donors, holding fundraising events, or an ongoing appeal for donations.
Conversely, when you submit a proposal to a grantmaker, it is almost like a pitch of sorts. This is similar to how you might make a pitch to an individual donor, but the relationship between you and the funder is more formalized and less personal. When pursuing grant funding, you’re submitting a proposal to an entity that exists for the very purpose of giving money to organizations.
Moreover, the funder’s past giving history is often made accessible to the public. In contrast, with individual donors, you may be soliciting funds from individuals whose financial circumstances, family situation, and philanthropic interests are largely unknown to you. This is why relationship building is emphasized so greatly in fundraising. Building a relationship with donors or potential donors allows you access to necessary information you need to develop an appropriate ask.
Simply put, fundraising is how you raise money for your organization. Grant writing is one type of fundraising activity. Grant writing includes asking foundations or government entities for support while other fundraising activities might target individuals and businesses.
How grant writing and fundraising compliment one another
As with all fundraising, a primary focus of grant writing is telling your organization's story and asking someone to support your work. However, most foundations want to see that your organization has a track record of success, including money raised, before they invest in your program. You need to have a strong base of support from donors before you apply for grants. In short, the better your organization is at fundraising the better it will be at successfully applying for a grant.
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