Grant Readiness: What a Nonprofit or Public Agency Should Have in Place Before the First Application

The short answer. Before pursuing grants in earnest, an organization should confirm four things: that its legal and tax status is current and documented, that its registrations with the relevant funding systems are active, that its financial records and policies would satisfy a funder’s review, and that it has a library of standard application materials ready to adapt. For public agencies, a fifth item applies: the governing body’s authorization to apply for and accept funds, and a plan for any required match.

Legal status and good standing

For a nonprofit, the starting point is the IRS determination letter confirming tax-exempt status, which nearly every funder will request. The organization should also be in good standing with its state of incorporation and current on its annual Form 990, which funders routinely review. An organization whose exemption was automatically revoked for failing to file for three consecutive years cannot receive most grants until it is reinstated.

Roughly forty states require charities to register before soliciting contributions from their residents, and some treat grant applications as solicitations. An organization applying to funders in several states should confirm its registration obligations in each.

For a public agency, legal authority is usually not in question, but eligibility is. Many programs are open only to certain types of government: counties but not cities, or general-purpose governments but not special districts. Confirm eligibility in the program’s own terms before investing in an application.

Registrations

Federal applications require an active registration in SAM.gov, which assigns the Unique Entity Identifier, and a Grants.gov account with the appropriate roles (2 CFR Part 25). SAM registration must be renewed every year, and a lapse can prevent an application from being submitted or an award from being made. Allow several weeks for a new registration or a renewal that requires corrections.

States and many counties maintain their own vendor or grantee registration systems, and some require prequalification before an organization may apply. Foundations increasingly rely on Candid’s nonprofit profiles for basic organizational information, and a complete, current profile makes the organization easier to find and easier to vet.

Financial capacity

Funders want evidence that the organization can account for their money. At a minimum, that means financial statements prepared on a regular schedule, a chart of accounts that can track revenue and expenses by funding source, and a board or governing body that reviews financial reports.

Many funders ask for audited financial statements, and state law or the funder’s own policy may require an audit or review above a revenue threshold. An organization that expends $1,000,000 or more in federal awards in a year, including federal funds received through a state or county, must obtain a Single Audit (2 CFR 200.501).

Written policies matter as well. A funder’s risk review will ask about financial management, procurement, conflict of interest, travel, and document retention. The Form 990 itself asks whether the organization has conflict of interest, whistleblower, and document retention policies. These do not need to be elaborate, but they need to exist, be approved, and be followed.

The application library

Most applications ask for the same core information in different formats. An organization that maintains a current library of standard materials can respond to an opportunity in days rather than weeks. The library should include the mission and a short history; descriptions of each program with current numbers served and outcomes; a board list with affiliations; biographies of key staff; the current organizational budget and most recent financial statements; the IRS determination letter and most recent Form 990; letters of support from partners, refreshed annually; and a logic model or theory of change for each major program.

Keep the library in one shared location, assign someone to update it each quarter, and date every document.

For public agencies: authorization and match

Most cities, counties, special districts, and school districts require approval from the governing body to apply for grants above a set amount, to accept an award, or both. The approval is often a resolution, and many funders require a copy with the application. Because council and board calendars are set weeks in advance, the approval schedule frequently becomes the controlling deadline. A standing resolution or an administrative policy that delegates authority for routine applications can shorten the timeline considerably.

Many government programs also require matching funds or cost share. The match must be identified in the application, budgeted in the agency’s own appropriations, and documented during the award. Identify the source of match before deciding to apply.

Deciding what to pursue

Readiness also means knowing what not to apply for. A realistic pipeline matches opportunities to the organization’s programs, its capacity to manage the award, and its tolerance for reporting and reimbursement requirements. A smaller award that the organization can administer well is worth more than a larger one that strains its finance office and jeopardizes the next application.

References: 2 CFR Part 25 (Unique Entity Identifier and System for Award Management); 2 CFR 200.501 (audit requirements); 26 U.S.C. 6033(j) (automatic revocation of exemption for failure to file); IRS Form 990, Part VI (governance, management, and disclosure).

This article is general information about grant readiness. It is not legal or accounting advice.