A recent PSGA email post raised a question about the expectations for ROI, return on investment, for grantwriters.

As a funder I think about this issue several times a year. I often read proposal letters requesting support for the initial cost of hiring a grantwriter.  Often the request is broader than just hiring someone to write grants; many organizations need to address a range of fund raising activities.

One observation I would make is that if a person is solely writing grants, then I would expect fairly high ROI. Some responses to the original post suggested that a $50,000/year grantwriter might be expected to raise $500,000 to $1 million in grants, a 10:1 or 20:1 ROI based on salary alone.

To a funder the 10:1 or 20:1 figure is not as critical as the broader picture. Say an organization asks for a grant to help support hiring a grantwriter at $50,000/year. Whether a foundation is being asked to fund 100% of that amount or to be a partner with other funders in meeting that cost, the funder should ask one critical question: Is it likely that the organization can win $500,000 to $1 million in grants on a regular basis?

If the answer is yes, then hiring a grantwriter might make sense. If the answer is no, then the organization has to look at its resource development model and figure out what skills it really needs for resource development.

I say hiring a grantwriter might make sense because organizations need to look at what that person will really do. For example, an organization that generally receives around 20 grants a year averaging $50,000 each needs someone who solely writes grants. Another organization that raises that $1 million from three major government grants might need a person with different skills. The major workload may not be writing the grants, which in fact could be contracted out. The major skills that this group may need are the ability to meet the governments financial and program reporting standards.

All organizations should take a hard look at what they are asking "grantwriters" to do. If a good share of the grantwriters time is dedicated to duties other than researching funding sources and writing grant appeals to those funding sources, the organization should allocate those efforts to other budget categories. Further, it should document those expectations in job descriptions and organization charts. Only then, when you have the true grantwriting cost, can you compare ROI.

One reason I'm harping on this is an article in the current Stanford Social Innovation Review titled The Nonprofit Starvation Cycle. One key point of the article is that nonprofits fail to accurately report costs such as the cost of grant administration.

The article points out a number of reasons this occurs; ultimately resulting what seems to be an unbreakable cycle. And while funders need to participate in breaking this cycle, all nonprofits need to make an effort to educate their boards of directors about infrastructure costs.

That education begins with turning questions such as "What is the expected ROI for a grantwriter?" into a teachable moment.