Not All Money is Good Money:
How to Evaluate Funding Opportunities Wisely
In the nonprofit world, securing funding is a constant priority. With limited resources and ever-growing needs, the temptation to chase every grant or donation can be overwhelming. But here’s a truth every nonprofit leader must embrace: not all money is "good money."
The Hidden Costs of Funding
While grants and donations fuel our work, they can also come with hidden costs that outweigh their benefits. What happens when funding that looks promising on the surface stretches your mission too thin? Or when excessive reporting requirements drain time and resources that could be better spent serving your community? And let’s not forget the times when the costs of managing a grant exceed the amount awarded!
Before jumping into a funding opportunity, it’s crucial to ask tough but necessary questions:
Does this funding align with our mission and values?
Accepting funding that doesn’t align with your core mission can lead to mission drift, confusing stakeholders and diluting your impact.Is it feasible?
Some grants require extensive programs or partnerships that your organization may not have the capacity to execute effectively.Can we meet the requirements without compromising our work?
Funding often comes with strings attached. If compliance and reporting demands outweigh the actual impact of the grant, it might not be worth it.Will this funding drive sustainable growth—or create more challenges?
One-time grants without long-term sustainability plans can leave organizations scrambling to replace funds when the grant cycle ends.
When to Walk Away
If any of these questions raise red flags, it might be a strategic decision to skip the proposal—or even decline the funding. Saying no to money that doesn’t serve your mission or sustainability isn’t a loss; it’s a sign of strong leadership. By being intentional about the funding you pursue, you ensure that every dollar contributes to meaningful impact rather than unnecessary strain.
Making Smarter Funding Decisions
To make the best funding decisions, consider these strategies:
Develop a funding criteria checklist to quickly evaluate new opportunities.
Engage your board and leadership team in discussions about mission alignment and feasibility.
Explore unrestricted funding sources that provide flexibility and reduce administrative burdens.
Invest in relationship-building with funders who align with your vision and offer strategic support beyond just dollars.
Final Thoughts
At the end of the day, every funding decision should strengthen your nonprofit’s ability to create lasting change. By taking a thoughtful approach to evaluating opportunities, you ensure that your organization remains focused, sustainable, and impactful.
Stay committed to your mission, trust your instincts, and remember: the right funding is the one that truly empowers your work, not just the one that looks good on paper.
