What Funders Look at Before Awarding a Grant
Estimated reading time: 11 minute(s)
Every year, foundations and government agencies distribute billions of dollars in grants. Yet a staggering majority of applications are declined because applicants fail to understand what evaluators are truly looking for.
Whether you’re a first-time applicant or a seasoned development director, knowing how grant reviewers assess submissions can mean the difference between a funded project and a politely worded rejection.
1. Mission alignment
Before a funder reads a single word of your proposal narrative, they’ve already asked one question: does this organization’s work fit within our funding priorities? Mission alignment is the foundation every other criterion rests upon. Your job is to clearly demonstrate that your work is a natural extension of theirs.
| What funders are looking for on your Form 990 | |
|---|---|
| Organizational credibility | Part I: Activities & governance, revenue, expenses, and net assets |
| Mission and program impact | Part III: Program service accomplishments and description of activities |
| Governance and board quality | Part VI: Governance, management and disclosure |
| Executive compensation | Part VII: Officer and key employee pay |
| Budget transparency | Part IX: Functional expense breakdown — program vs. admin vs. fundraising |
| Financial health | Part X: Balance sheet — assets, liabilities, and net asset trends |
| Revenue diversification | Part VIII: Revenue sources — grants, earned income, contributions breakdown. |
2. Organizational credibility
Funders want confidence that you can do what you say you’ll do. That means demonstrating a history of delivering results, managing money responsibly, and building relationships in your community. A first time-organization can still make a strong case, but it requires an honest, evidence-based narrative about who is leading the work and why they’re qualified.
3. A clearly defined problem
Strong proposals show that the applicant deeply understands the problem they’re addressing. This means local data, community voices, and a nuanced picture of root causes. Funders have seen countless proposals that identify a need vaguely, then leap to a solution without explaining the connection. It is also important to specify whether the organization is asking for funds for general operations or for a specific program they want to run.
Your theory of change should be explicit: if we do X, then Y will happen, because of Z. That logical thread must run through every section of your proposal, from the statement of need to the evaluation plan.
| What Reviewers Are Checking Is the mission genuinely aligned with our funding priorities? Does the organization have a track record of delivering results? Is the problem well-evidenced, with local, specific data? Is the budget realistic, transparent, and cost-effective? How will impact be measured, and by whom? What happens when this grant ends — is there a sustainability plan? |
4. Measurable outcomes
There is constant confusion in grant writing between outputs and outcomes. Outputs are what you produce (workshops held, meals served, or people trained). Outcomes are what changes as a result (improved employment rates, reduced food insecurity, or increased skills retention). Funders want to know what will be different in the world because of this grant, and how you’ll know it worked.
5. Sustainability beyond the grant period
Most funders are not looking to be a permanent source of support. Your 990 Part VIII (the revenue breakdown) directly speaks to this concern. An organization that draws a large portion of revenue from a single foundation grant is a risk. One with a diversified mix of government contracts, individual donors, earned income, and multiple foundation grants signals resilience. Be specific in your proposal about how this grant fits into a broader, sustainable funding strategy, and let your 990 back it up.
The Bottom Line
Funders are looking for the same things a thoughtful investor looks for: a credible team, a real problem, a logical plan, and evidence that the money will be well spent. Your Form 990 is already making part of that argument on your behalf. Tax990 makes it easy to file accurately, on time, and with confidence — so the story your 990 tells is one that funders will want to act on.
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