What If We Can’t Use the Grant as Planned?

It’s not likely, but it happens, that a nonprofit wins a grant from a foundation only to discover that the money can’t be used as proposed. Maybe so much time has elapsed between the proposal and the award that the original problem no longer exists. Maybe there are no applicants for the scholarships that have been funded. Maybe community leaders have found another way to deliver services. Perhaps it will take longer than expected to complete the project.

Foundations that make grants don’t want the money back. They have a payout requirement to meet each year—five percent of their total endowment. When they make a grant, they “credit” that amount against their payout and report it to the IRS. Returns? No, thanks.

There are usually terms and conditions that accompany a restricted grant—the work to be done, the time it will take to do it, the ways the money is to be spent. Nonprofits requesting funding for a specific program spell out these matters in the proposal and agree to them when they accept the grant. However, most nonprofit programs deal with people, and people might not always do as predicted.

It’s worth considering what to do if things aren’t going exactly as planned. The Andrew W. Mellon Foundation, e.g., is candid about twists and turns: “The Foundation recognizes that project circumstances may change over the life of a grant, suggesting a need to modify a grant timeframe or other terms.” Mellon, Carnegie and many other foundations will entertain requests for modification, in writing and in advance. With few exceptions, the foundation staff will review your modification and exercise its judgement about whether or not to allow it.

Reporting problems with a grant is not an admission of failure. It’s an opportunity to learn alongside your funder to help everyone understand what might have changed or shifted. The foundation wants its grants to make an impact and the nonprofit is the engine to make it happen. You might be doing an important service to the funder by sharing the changes “on the ground.”

Asking for a midcourse correction is yet another reason to make and maintain a communications channel with the foundation. The odds are far better if you don’t catch the funder off-guard. 

Thomas Boyd is Chief Editorial Consultant for The Grantsmanship Center
and an independent consultant to nonprofit organizations.

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