How To Find Grants To Pay Your Nonprofit Employees
Anyone who runs a nonprofit knows that securing a steady stream of income to cover operational costs — including paying employees — is imperative to keeping your mission alive. Fortunately, you do not have to rely entirely on fundraising to do so. Another potential source of income exists, in the form of private and government grants.
In this guide, we will share all of the information you need to know about grants, including how they work, how to find them, and how to apply for them. There is no doubt that the supplementary aid they provide can take your nonprofit to new heights!
- Paying Your Nonprofit Employees
- What Is a Grant?
- Finding the Right Grant
- Grant Writing Tips
- Final Thoughts
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Paying Your Nonprofit Employees
A common misconception about nonprofits is that they are loosely confederated groups of do-gooders that work for free. This is a myth, even for a small nonprofit. Most organizations need paid staff to stay up and running. There are several reasons for this.
Why Should I Pay My Nonprofit Employees?
In order to bring in the best people to help forward your mission, you need to offer competitive salaries. Your nonprofit can always find passionate volunteers, but you need professionals to manage projects, track financials, and head human resources. In addition, having paid staff legitimizes your organization. Foundations are more likely to award their grants to nonprofits that have salaried employees. Finally, paying your workers will lead to less turnover. A loyal and satisfied team is more likely to stay with the organization and is less likely to burn out.
Salma is ready to get her employees paid!
How Do I Pay My Nonprofit Employees?
Paying your nonprofit employees follows pretty much the same process that paying the employees of a business does. You are required to at least offer either federal or state minimum wage (whichever is highest). You also have to pay qualified employees overtime if they work over 40 hours in a week.
Salaries for Nonprofit Employees
Professionals who are looking to enter the nonprofit sector may wonder, “How much do nonprofit employees make?” That is contingent upon several factors, including the responsibilities of the role in question, the pay scale honed by other organizations of similar size and locality, and the qualifications of the applicant. Many nonprofits will offer competitive salaries to recruit the best talent, and these salaries are often comparable to those in the business sector. Learn more about how to find the salaries of nonprofit employees here.
Because most nonprofits have tax-exempt status, you may wonder if employees of nonprofits pay taxes. The short answer is yes. Payroll taxes apply to nonprofits and their employees, just as they do to for-profit corporations. There are a couple differences in how these taxes are managed, however. Because nonprofit payroll can get involved and salaries need to be reported annually to the IRS, it is a good idea to have a payroll specialist or human resources professional on staff to manage this aspect of the organization.
Be careful when setting salary ranges for your employees. Both benefits and bonuses are counted as part of salaries. The IRS requires you to annually report the highest paid salaries in your organization, and it will scrutinize any numbers that look “off” — for example, numbers that are too high or too low in comparison to nonprofit salaries offered for similar positions within the same area. For more information on paying nonprofit employees, check out these articles:
Finding the revenue to pay your employees can be more of a challenge at a nonprofit than at a traditional business due to the sporadic nature of nonprofit income streams from members and donors. That is where grants come in.
What Is a Grant?
A grant funds a charitable mission or otherwise benefits the public good. The private foundation, corporation, or government body that is offering it makes it available to certain organizations — usually nonprofits, but occasionally local government agencies and small businesses. It is typically a gift that does not require repayment.
Pro Tip: There are no fees associated with applying for federal grants, such as national endowments. Other funding sources sometimes charge fees, although it is not common.
Finding the Right Grant
The downside of many grants is that they have restrictions on how they can be used. They are essentially gifts, and the organizations that offer them want them to benefit specific causes. An individual’s sense of social responsibility is not exactly triggered by something mundane, such as paying employees.
However, this does not mean that grants cannot be a funding source for employee salaries. Here are some ways you can find grants to pay your workers:
Highlight the importance of your employees’ work. An excellent way to convince supporters to release grant funding for salaries is to really play up how your employees are making a difference. We mentioned earlier that having paid employees legitimizes nonprofits, so use that angle. Brag about your directors. Talk about how their work benefits the organization. A strongly written proposal can often win the day.
Be transparent. Report all of your salaries annually to demonstrate transparency. Do not apologize for paying your staff, but make sure there is no intimation that you are hiding money. This can go a long way in convincing possible advocates to approve grants for your nonprofit.
Look for unrestricted grants. Most grants are programming grants, so they have to be used toward the nonprofit’s mission. But there are certain unrestricted grants that allow your organization to use the money how it chooses. There are fewer of these available, but they do exist.
Pro Tip: Many nonprofits hire a grant writer for their organization. This individual’s job is to research relevant funding opportunities and then draft the applications. Grants can be an enormous source of revenue, so having a full-time person whose priority is to find this funding source is a worthwhile investment.
Grant Writing Tips
Here are a few guidelines that will help you secure positive responses to your organization’s grant proposals.
Matt is using these tips to write a grant proposal right now!
Do your research. Before you apply, be sure that your nonprofit meets all of the eligibility requirements and that you will be able to use the grant to pay your employees. Otherwise, you may waste your time on a proposal that the recipient will never approve.
Meet the deadline. The grant requirements are cut and dried. If you send a grant application even a day past the due date, your nonprofit is not making the cut.
Have a plan. There is an art to writing a grant proposal. The individual you choose to perform this job needs to be a skillful writer. They are essentially marketing your organization and its mission to potential funders. Their writing should be clear, concise, and informative without boring the reader.
Provide the data. Your grant proposal should contain organized and accessible information regarding your nonprofit’s mission. While your writer will want to utilize convincing language that really “sells” your nonprofit, you will need to back it up with hard facts about the good that you are doing for the world. Some important information to include is:
Community wants and needs
Growth over the last year
Volunteer and donor engagement rates
Any requested financial information
When you are running a nonprofit, it is easy to get caught up in the inspiration and excitement of launching initiatives. But that does not mean that you can afford to ignore the practical aspects of working for your mission.
By diversifying your revenue streams, you can keep your organization’s budget in a healthy place to pay the best people. Utilize contributions from membership dues, fundraising donations, and private and government grants to keep operations running smoothly. By doing so, you can help your nonprofit organization thrive and share its mission with the world.
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💡What grants can I use to pay my nonprofit employees?
There are no grants that are specifically meant to pay your nonprofit’s employees. However, you can use unrestricted grants how you see fit, and operational grants support operations, which include paying salaries. Find out more.
🔑 Can nonprofits give bonuses to employees?
Your nonprofit can offer bonuses, but you have to count them as part of the salary total. Also make sure they are reasonable because the IRS will scrutinize them. Find out more.