No matter what size nonprofit I consult with, no one ever seems to have enough fundraising staff to pursue all of the opportunities that are out there. From email campaigns to fundraising events, from grant opportunities to individual major gifts to monthly memberships, from legacy giving to endowment building, there are so many ways to raise money and diversify funding streams, and there never seem to be enough time and resources to fully pursue even the priorities, much less all of the opportunities. There’s a solution I suggest again and again, one that can bring in funds with less effort and fewer stewardship and reporting burdens: subcontracting. I think it’s the great unsung solution, but it requires some planning and organizational commitment to make it really work.
What is Subcontracting?
Subcontracting mainly refers to foundation grants and to government grants and contracts — if you can write a proposal for it, there might be a role for subcontracting. The organization that is submitting the proposal is the primary applicant. That primary applicant might propose that another organization carry out a portion of the project; that other organization would be the subcontractor. The main applicant — if it is awarded a grant — would get the lion’s share of the grant funds, and they would use some of those funds to pay the subcontractor to carry out a specific piece of the work.
An oversimplified example: let’s say Organization A is applying for a contract from the city to implement a job training program. Organization A applies for funding to recruit participants, run the job training program, and place trainees in jobs. The city requires that anyone organization that receives a contract also provides mental health counseling to anyone who is enrolled in the program. Organization A doesn’t specialize in mental health counseling and doesn’t already have people on staff to do that. Organization A lists Organization B in the proposal as a subcontractor that will provide mental health counseling. When Organization A receives a grant of $1 million to run the whole program, they end up providing Organization B with $50,000 to carry out the mental health counseling portion of the project.
I find that many organizations are resistant to serving as subcontractors because they want to receive the $1 million, not just $50,000. But, the truth is, many of those Organization Bs wouldn’t have gotten the $1 million anyway. I think we can all agree that $50,000 is better than $0. That’s one of many reasons that subcontracting makes strategic sense.
Why Agree to Serve as a Subcontractor?
Subcontracting can be a great choice if the following circumstances apply to your organization:
You probably wouldn’t get the “big grant” anyway. This might be because your organization does not specialize in the primary work covered by the grant. Or your organization is too small to justify receiving a grant that would, for example, double your current organizational budget. Or you don’t have a track record with grants of this size. Or you don’t have an extensive track record of working with the target population. Or there are other organizations in your community who are well known and more likely to get the grant. Or other organizations provide stronger programming (e.g. job training) than does your organization. Ride those organizations’ coattails as a subcontractor! You’ll bring in money, and you will raise your organization’s profile for future grant opportunities.
The grant application is way too cumbersome. Based on the size of your fundraising team, other organizational priorities happening this month, required materials that you have to submit with the grant application, or any other number of factors, it just might not be realistic for you to fill out that grant application right now. If you serve as a subcontractor, you will still have to write some portions of the narrative, submit some background materials, etc., but it will be nowhere near the dozens and dozens of hours that it may take to complete and submit the full application.
The reporting requirements are way too cumbersome. Getting the grant/contract is only half the battle. Some grants/contracts (especially from city and state governments) require EXTENSIVE reporting: highly-detailed financial reports, participant demographics and data, enrollment and attendance data, testing outcomes, outside audits, etc. Subcontractors typically do not have to supply, compile, and/or report as much data. Most of that burden sits with the primary applicant/grantee.
You don’t qualify to be the primary applicant. Upon close reading, you might find that your organization doesn’t meet the requirements for primary applicants. These requirements could range from the size of your organizational budget to the demographic/ethnic makeup of your staff and board to the number of years you’ve been in operation… the options are endless. Subcontractors typically don’t have the same kinds of requirements as primary applicants.
How Do You Become a Subcontractor?
To secure a position as a subcontractor in a grant application, a lot of it comes down to networking. Develop strong relationships with other organizations in your community, and make sure they understand what you can bring to the table when they are pursuing grant opportunities. Here are a few tips to get you there:
Attend community meetings and events where you can network with other organizations, even if those organizations are working in different fields. If you are serving the same target populations or geographic communities, there could be opportunities for you to work together.
When new grant opportunities are announced, attend “bidders conferences” or Q&A sessions for potential applicants. If those event happen online, there usually is a “chat” function where you can communicate with other potential applicants and let them know who you are. I recently had a client who announced who they are and what they can offer in the chat of an online bidder’s conference, and three different organizations later reached out to them and asked if they could include my client as subcontractors in their applications.
Create a one-pager that describes what your organization does and how it can amplify the impacts of other organizations’ work. Write from the mindset of: What can we do that other organizations can’t do? What is our unique value-add?
Ask your current donors (e.g. foundation officers) if they know of other organizations with whom you should network for this purpose.
Before You Say “Yes”
Before you agree to serve as a subcontractor on another organization’s grant:
- Make sure you know what you’re getting into! Can you actually carry out the portion of the proposed project? Is this the type of work that your organization already is doing, and can do well?
- Ask to see the full proposal before it is submitted. You have the right to see what you are signing on to.
- Create a clear Memorandum of Understanding that outlines what will happen if the primary applicant receives a grant: What will you do, what will they do, how/when will payments work, what will be your reporting requirements, what is the timeline for implementation, etc. Ask what will happen if the primary applicant receives a grant but then discovers they cannot carry out the project.
- If you don’t already know the primary applicant well, do your due diligence. Ask around. Check out their publicly available financial records. Make a site visit. Don’t get into bed with anyone if you barely know them.
The Bottom Line
Subcontracting can bring grant funds into your organization that you likely would not have received on your own. Those funds will have way fewer strings attached, and it will take much less effort for you to secure the grant (than if you were the primary applicant). Subcontracting also is a way to elevate your organization’s profile among funders and/or government entities, which may increase the chances of your organization getting a grant or contract on its own in the future. The primary applicant wins (because they can submit a stronger application) and your organization wins!
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