For-Profits Need Grant Awards Too!
When conducting an Internet search for grant writers, it is likely that the results would show a lot of them (the Grant Professionals Association website claims 1,800 members internationally). If you clicked on any of the search result links, you would likely find the following terms in the consultant’s About Me section:
- “Helping non-profits that provide education programs”
- “Serving non-profit organizations that help AIDS patients”
- “A track record of $10 million raised for violence prevention initiatives”
While non-profit organizations support a variety of extremely worthwhile and socially impactful causes, they are not the only grant funding recipients. For-profit enterprises such as social entrepreneurs, wineries and rural food initiatives, manufacturers, and large OEM’s ( Original Equipment Manufacturers) are eligible to receive grant funding either for stand alone projects or as part of incentive packages for relocation or significant expansion.
Where do for-profit organizations find funding?
The following are the most common sources of grant funding for companies that generate a profit. While it is not an all-inclusive list, it does provide the largest sources of funds available to for-profit companies.
- Federal Government - The US government regularly funds programs to promote technology transfer and commercialization efforts at for-profit companies. The Small Business Innovation Research (SBIR) and the Small Business Technology Transfer (STTR) programs are two examples of the federal government’s funding support for manufacturers.
- State Economic Development Authorities or Departments - These can be found by conducting an Internet search for your state’s economic development department. A list of grant programs can usually be found on their website.
- Local Governments - Some local governments issue grants to companies based on job creation or local economic impact.
- United States Department of Agriculture (USDA) – The USDA provides funding for many rural commercial and business initiatives.
- Utilities - Utility companies can often offset the cost of implementing energy savings equipment for their business customers.
What types of projects do for-profit funders find attractive?
Typically, for-profit funding programs focus on the following areas:
- Energy savings
- Recycling programs
- Training programs
- Equipment purchases that lead to a specific outcome consistent with the program’s goals (job creation, entry into a new market)
- Commercialization of new or advanced technologies
- Business development activities for tourism or agriculture-related ventures
What specific program outcomes are for-profit funders looking for?
For a project to be appealing to funders, for-profit applications typically must show economic impact, new market development, training impact, energy savings, and/or job creation.
Many for-profit organizations, including manufacturers and social entrepreneurs, don’t recognize the opportunity to increase their capacity to serve provided by grant funding. You owe it to your for-profit clients to be better informed about the programs available and knowledgeable about how to apply for the funds; and, if you aren’t the right person to write the grant, you should refer them to consultants that specialize in this form of grant writing.
To help illustrate the process, consider the following example of a for-profit company looking for help and finding it in the form of grant funding. Note that names have been changed to protect the innocent.
There once was a business owner named Kate. Kate’s company, Parts R Us, made fabricated metal parts for the automotive industry.
One day, Kate was sitting at her desk with her head in her hands, shaking her head in frustration. You see, Kate had met with her leadership team for their yearly Strategic Planning retreat. The retreat was particularly productive that year, with many new ideas generated, including:
- A $50,000 investment in a new filtration system to recycle used hydraulic oil. This equipment would allow machine oil to be reused instead of throwing it away.
- A $400,000 investment in a new roll-forming process that would allow Parts R Us to manufacture a product for the renewable energy market. This market expansion would lead to a 20% increase in sales revenue and 10 additional jobs at the facility.
- A training program was proposed by the Human Resource Manager to help train new employees; enhance the skills of current employees; and help those with the potential for promotion gain the skills to meet the needs of higher-level jobs. The estimated cost of the training program was $40,000.
- A consultant conducted a facility-wide energy assessment six months prior. The results indicated that the company could reduce their $20,000 monthly utility bills by 10% by putting monitoring equipment on their machines. The Plant Manager estimated the budget for the monitors and installation at $150,000.
Kate was frustrated because these investments, which were not in the current year’s budget, did not meet the return on investment required for approval of capital projects. And, the training program provided benefits to the employees, but $40,000 seemed pretty steep. It looked like Kate was going to have to delay the investments and wait until sales improved on current products to allow the money to be put in the budget. She again shook her head, realizing that could be two to three years down the road.
These projects all sounded so worthwhile. Kate took her responsibility as a business owner very seriously. She recognized the potential through implementation of these projects to deliver even more customers their high quality products. She could be a better employer to her valued employees and a better corporate citizen in the community. Her heart ached.
Ready to give up, Kate read on the internet about a grant writer who specialized in helping for-profit companies find and apply for grants that could help them offset the cost of investment. Kate’s eyes lit up! If Parts R Us could get grant funding for the projects outlined in the strategic planning session, their capital investment would be reduced and the return on investment may meet the targets required to approve the capital purchase. Additionally, the training funds would help justify the cost of the training program to her Board of Directors.
Kate called the grant writer. She contracted with her to find incentive programs to offset the projects’ cost and complete funding applications.
The applications were approved and the return-on-investment targets were met based on the reduced financial investment. Kate’s employment grew by 20%, energy bills were reduced, the new product line was launched, employees were trained to do their jobs more productively, and profits increased. Kate and her company were able to contribute more to the community, the employees, and the local economy.
Do you have clients in Kate’s situation? Have you turned them away thinking that there were no programs that fit their needs? While this may be a rather dramatic example of for-profit grant writing, it illustrates a very real situation. If Kate wouldn’t have known about the grant writer that specialized in for-profit grants, she may have forgone the investments entirely. Many company leaders are in Kate’s situation - contemplating projects and thinking that there is no source of financial help for them simply because they generate a bottom line profit.
To help you work with clients like Parts R Us, I have compiled the following list of best practices:
Advise your clients to dust off and update their strategic and business plans
If they don’t have one, they should put one together because funders are looking for an alignment between a project and the organization’s overall goals and direction. An updated strategic plan and business plan with objectives that are being executed will also help clients identify projects for funding.
Advise clients to be realistic about the funder’s expectations
Grant funding is not “free money”. While it is true that recipients don’t have to repay grant awards like a loan (unless said recipient doesn’t meet the terms of the grant agreement), for-profit funders will have reporting and project tracking expectations just as their non-profit counterparts do. Your client’s employees will have to invest resources to address these administrative requirements. Make sure they clearly understand the reporting requirements and expected time commitment up front. Again, there are for-profit grant writers with extensive experience in reporting that can assist them if needed.
Advise clients not to commit to anything unless they can deliver
As in non-profit grant writing, it is critical that for-profit applicants do what they say they will do. This is no different than the expectations of non-profit grant recipients, but it is worthy of additional emphasis when talking to for-profit clients. If they say they are going to hire ten people in the grant application, they need to hire ten or more. They need to understand that if they hire fewer, they are in violation of the grant agreement and will likely forfeit at least part of the money awarded.
Many grant programs for for-profit companies are managed by government entities. Funders typically need at least 3-6 months to get applications approved, grant agreements drafted, and funds released before a project can start. For-profit grant writers should advise clients to start looking for funding at least six months in advance of a project’s start date to allow time for this to occur.
I believe that it is your duty as a grant writer to educate for-profit clients using the information above. Then either help them yourself or refer them to someone who can.
If you don’t have the interest in or the expertise to assist them, either conduct an Internet search or contact a grant writing trade association such as the Grant Professionals Association for a list of qualified professionals ready to find the right resources for your client. With their assistance, your clients will increase their return-on-investment; avoid unnecessary capital expenditures; increase revenue and profitability; and expand their capacity to serve their customers and stakeholders. And, you will have helped them do so!