What do you think about our analogy that: A new nonprofit organization needs to build its “credit score” for grant seeking to show they are not a risky investment as a potential grantee, just as a young adult needs to build their credit score to they are not a risk investment for thinks like a car or home loan.

We often receive inquiries from organizations who are about to apply for their 501(c)3 status with the IRS or have just recently been awarded their nonprofit status. These organizations have the best of intentions and have the enthusiasm and passion to make a significant difference.

However, these new organizations typically do not yet have a track record of financials, funding relationships, and programming success to stand behind their proposed ideas in a grant application. Rather, their proposed ideas are standing on their enthusiasm and passion. This can feel like a risky investment for grant makers with an greater risk in terms of impact created than making grants to more established grant seeking organizations.

While there are grant makers that are specifically willing to support newer organizations and take a risk on a new organization that does not have the street credibility or “credit score” that an established organization has, there are more foundations that instead are concerned over the true likelihood of success for organizations that are new.

So what can a new nonprofit organization do to build your “credit score” or your “street credibility” with grant makers if you are a new grant seeking organization so that you don’t seem like a risky investment?

3 Ways to Build Your “Credit Score” for Grant Seeking

1 – Fiscal Sponsors – Even though the organization may technically be an eligible grantee, you may be more competitive if you have a fiscal sponsor for the short-term. Seek a fiscal sponsor to work with for the first few years while you establish your credibility related documents – your annual financials, your annual reports, your evaluation results from initial programs and projects.  GrantSpace.org has some excellent articles on fiscal sponsorship that you should give a read.

2 – Focus on Basic Elements of Grant Readiness  – Our *free* GRASP Tool that measures grant readiness has a 5 – 10 minute questionnaire. The questions asked rely on basic elements of grant readiness being in place. If you receive a score of less than 50, you should focus your efforts on strengthening your organization before you begin to seek grants.’

3 – Build Relationships Locally – Conduct your research so that you know what grant makers *in your own community* where you *propose to do the work* may have relationship connections to you or other board members. Initial grants to new organizations often start as a conversation and involve an individual’s knowledge of the organization or trust in the founder of the organization. Relationships will always be a key element of your grant seeking efforts, so best to get into the habit of following this best practice early. In fact, those efforts are a key part of the 3 R’s of Grant Seeking (Research, Relationships and wRiting).

What other steps do you think that you can take (or if you are another consultant or grant professional do you think organizations can take) to build their “credit score” and build their “street credibility” so that they are considered a lower risk grantee?