Have you ever attempted to apply for a grant and then backed out or abandoned the application? It’s probably a safe bet to assume that it was a financial statement request that caused you to discontinue the process.
It’s not just having access to financial information, but accurate statements with the documentation to back them up. The grant writing process requires specific skills and a lot of financial details. Before you get started choosing which grants you should consider applying for, here are a few of the statements you will probably need:
Income Statement: This financial statement tracks your profit and loss, or income and expenses for your organization. A funding organization will want to know that you have a reliable way to record funds that come in and the ways you are spending. In addition, there are a couple of details they will want to see:
· Comparability: If you have had a year or two within the past five that saw a decrease in income or you had outsized expenses, be ready to show the factors that were involved. A funding organization needs to see evidence that you’re watching trends and calculating their impact on your business or non-profit.
· Matching: This demonstrates that the funding you receive from a grant would be tracked accurately with expenses coming from designated funds. Any grant funding should have its own, separate account.
Cash Flow: This financial statement shows your actual funds moving in and out of your organization. It demonstrates your ability to meet your immediate financial obligations.
The funding organization may not ask for your statement of cash flow, but your leadership should have a good idea how this statement will be affected by a grant. It will help you with planning additional staff or resources that will be necessary, should you secure the grant.
Balance Sheet: Now we have arrived at the financial statement that most likely tanked your last grant application. Your balance sheet records all assets and liabilities, providing you with a figure known as working capital. It allows you to calculate how many working days your business could fund.
This equips you to tell a funding organization, “Our non-profit has 46 days of operation in a reserve fund. See our Balance Sheet for more information.”
Even so…Grant applications require a deep dive, and if you aren’t accustomed to working with them, the process can become time-consuming and frustrating.
At The Power CFO, we not only specialize in accounting and CFO work, like preparing financial statements, but we also specialize in grant writing. In other words, if you’re interested in a grant, we can help you apply for the right ones with the right financial statements. Contact us to learn more.
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