Assessing applicant risk is a critical step in the grantmaking process, and it helps funders make informed decisions about which organizations are most likely to use grant funds responsibly and achieve the desired outcomes. Funders typically use a combination of these factors and methods to evaluate applicant risk and determine the likelihood of success for a grant proposal.
Grant funders assess applicant risk to ensure that the funds they distribute will be used effectively and responsibly. This assessment helps funders make informed decisions about which applicants are most likely to achieve the desired outcomes and adhere to the terms and conditions of the grant. There are many ways for a grantor to assess applicant risk. Several common factors and methods used by grant funders include:
- Project feasibility. Funders evaluate the feasibility of the proposed project, including its goals, objectives, and planned activities. They may assess whether the project is well-designed, has clear deliverables, and aligns with the funder’s priorities.
- Organizational capacity. Funders assess the applicant’s organizational capacity to execute the proposed project successfully. This includes evaluating the experience and qualifications of the staff, leadership, and board members, as well as the organization’s track record in implementing similar projects.
- Financial stability. Funders may review an applicant’s financial statements, budget, and financial management practices to assess their financial stability. This includes evaluating the organization’s ability to manage grant funds, maintain financial solvency, and provide matching funds if required.
- Programmatic risk. Funders assess the potential risks associated with the project’s goals and activities. This could involve examining the likelihood of challenges, delays, or unforeseen obstacles that may impact project success.
- Impact and outcomes. Funders assess an applicant’s ability to achieve the intended project outcomes and demonstrate impact. They may look at the applicant’s performance history and the effectiveness of previous projects.
- Operational risks. Funders assess an applicant’s ability to manage operational risks that could affect the project. This may include reviewing the applicant’s risk management practices and strategies for addressing potential challenges.
- Governance and ethics. Funders look at the applicant’s governance structure and ethical standards to ensure that the organization operates with integrity, transparency, and ethical behavior.
- Sustainability. Funders assess an applicant’s plans for sustainability beyond the grant period, including strategies for long-term impact and financial stability.
- Past performance. Funders may consider an applicant’s past performance on similar grants, looking at whether they met objectives, managed funds effectively, and adhered to reporting requirements.
- Reputation. Funders may consider an applicant’s reputation and credibility within the community or field they serve. A positive track record and strong community relationships can enhance an applicant’s standing.
- Compliance and transparency. Funders evaluate an applicant’s commitment to transparency, accountability, and compliance with grant terms. This includes assessing the applicant’s track record in meeting reporting requirements, deadlines, and legal or regulatory obligations.
- Collaboration. Funders may evaluate the applicant’s ability to collaborate with other organizations or partners in the execution of the project. Effective partnerships can reduce risk and enhance project outcomes.
- Diversity, Equity, and Inclusion (DEI). Some funders prioritize DEI considerations in their assessment process, looking at whether the applicant’s project promotes diversity, equity, and inclusion in its approach and outcomes.
- Site visits and follow-up. Funders may conduct site visits, interviews, or reference checks to gain a more in-depth understanding of the applicant’s operations, capacity, and ability to mitigate risks.
Colhio Grant Consulting can help grantors identify potential risk areas and assess applicant risk. We can help grant applicants identify areas of internal risk to reduce the chance of an application rejection due to an unperceived risk. Contact us for more information on how we can help your organization with risk assessment.