Net Grant

Printer-friendly versionSend to friend

At a forum hosted by Tactical Philanthropy Advisors last night, I learned a new term, courtesy of Bill Somerville, author of Grassroots Philanthropy and President of Philanthropic Ventures Foundation.  Net Grant is the amount of grant money left over after an organization has deducted all the costs associated with applying for the grant and servicing the grant -- including those expenses often characterized as program costs, such as tracking outcomes and writing reports.

For example, suppose an organization decides to apply for a $5,000 grant.

Subtract out the staff/management time discussing whether to apply for the grant, the cost of the fund development officer's time in researching grant guidelines, writing the grant and corresponding with the foundation Program Officer.  Then deduct all the time that the organization spends in tracking outcomes and writing and editing grant reports.  I have seen cases where it's not unrealistic that this could consume up to 40 hours of staff time. 

Assuming that the average employee at the organization earns (with fringe) about $30/hour.

The net grant - $3,800 is what is actually gets spent on the program.  About a quarter of the grant goes to true overhead.

It's a somewhat crude, but useful tool in assessing whether or not to work with a particular funder.  If a grantmaker has a reputation for onerous paperwork, reporting, etc., the organization may be better off looking elsewhere for funding.