An introduction to grant finance: Three key things to know
Grant funding is a very broad topic. Just attempting to read through the websites and guidance documents of some grant funding sites can be enough to send someone into a document-induced coma. This article doesn?t attempt to introduce the complete topic of grant finance: no single article can achieve that. But here are three key things you should know about grant finance before you go any further. (1)?Grants are usually match funded When people think of grants, they usually picture a nice lump sum arriving in their account, which they can then spend as they please. Some grants, like the Prince?s Trust, do in fact function like that, but they are few and far between. The vast majority of the grant funding available out there comes in the form of match funding. How does that work? Basically, you only get a percentage of your expenses funded, and usually that?s done in arrears. What that means is that first you spend the money, and then, after submitting receipts, invoices, pay slips and so on, you get a percentage of those refunded by the funding body. For example, if you have a 60 per cent match funding grant and you submit ?10,000 of expenses for a particular period, you?d get ?6,000 back ? but first you need to have been in a position to spend that ?10,000 in the first place. If you only had ?4,000 to begin with, that won?t be possible. So the first important insights about grant funding are that:
Except in some very rare exceptions, grant funding cannot be your primary source of funding
You need to have more than just the matching part of the funding to be able to spend the full grant amount efficiently
(2) Winning a grant and accessing the funding is complex and time-consuming The second big misconception people have about grant funding is that it is a straightforward process where you just state what you need, why you need it, and when you need it, and the grant body figures it out and sends you the money. In practice, almost every funding opportunity available out there is competitive, and involves a time-consuming process to both apply and obtain the grant if it has been won. At GrantTree, we often get people coming to us the week before a Smart Grants deadline, in a panic, asking if we can fix up their application before the deadline. These are enterprising, smart, determined people who thought they could do it themselves (and probably could, if they’d given themselves the time). They ask us to take over the application, to fix it a the last minute, offer to pay a decent fee for the work which they now realise is a lot more involved than they imagined. Unfortunately, by that time, it?s too late. As a rule of thumb, a good application will take about a week of effort. That?s not a week spent thinking about something else, working yourself into a panic on the last day, and trying to prepare something quickly at the last minute. That?s a week of spending most of your time living and breathing the application, to really figure out how to pitch your project so that it wins when compared to the many other applications an assessing body is going to receive. And once you?ve won, it seems like the process should be easy, and again, in some cases it is. But EU funding, for example, comes with a very heavy administrative burden attached ? so much so that some of the larger projects frequently allocate a full-time salary for someone to manage the interaction between the project and the EU. Even Smart Grants, while significantly less burdensome, can be quite time-consuming if you don?t connect well with the monitoring officer that InnovateUK assign to you. For example, InnovateUK require you to submit a cash flow plan for the whole project at the beginning, and any deviations that aren’t approved by the monitoring officer can result in the funding being either delayed or cut off entirely. It’s also worth pointing out that in our experience, monitoring officers tend to have very good attention to detail: changes and deviations will be noticed. (3)?Goals will rarely align 100 per cent Most grant schemes tend to be fairly narrowly themed. The funding body wants to fund something very specific, and looks for people who are developing things in that region, and effectively uses the funding to try and influence what direction the new developments are going to follow. Even the broader schemes, like Smart Grants, generally have some very specific requirements in terms of the kinds of projects or technology that they want to fund, like wanting to fund ?step change? types of technology in a few fields and with very explicit environmental, social and economic benefits. If you just set out to pitch your project or company without any thought to what the funding body is actually looking for, chances are you?ll lose to someone who?s spent the time to understand the requirements better. Typically, pitching a project for a grant scheme involves a fair bit of adjustment of the project, at the very least in the way it is presented, but often also in the way that it is conceived. This is not necessarily a bad thing. Often, the additional requirements of the funding body force the applicant to think through some aspects of the project that they had previously neglected (like route to market or exploitation approaches), and to define them in a more tangible way. Other times, we have seen applicants explicitly seek out partners for a project they were doing alone, and directly benefit from the relationships thus created.
This is just scratching the surface of grant funding. There are many, many other insights that one can only gather through experience. We?ve collected many more on our page about Smart Grants, and will be publishing more both on this site and on our own site.
Daniel Tenner is a serial entrepreneur and, most recently, the founder of GrantTree ? a business established chiefly to assist others with funding requirements. From both tax schemes like R&D tax credits to UK government schemes such as InnovateUK?s Smart Grants, and EU schemes like Horizon 2020.
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