Why Nonprofits Should Pursue Federal Contracts And Not Government Grants

Why Nonprofits Should Pursue Federal Contracts And Not Government Grants

Most nonprofit founders are a little surprised when I suggest they compete for federal contracts instead of looking for government grants. In this article, I will tell you why it may be better for your organization to turn to federal contracting opportunities as part of your funding strategy.

One of the huge advantages young nonprofit organizations have over young for-profits companies is the opportunity to select and assemble a board of directors.

The average struggling startup doesn’t have or need a board. This is one case where the stereotype may be true, in that the typical startup is owned by a tech person and sales guy, and hopefully it really is a sales guy, and not just a “visionary”.

Either way, startup founders often work double-duty as the company’s strategists, sales team, copywriters, and admin staff.

Nonprofits, on the other hand, often have boards made up of a diverse selection of talented people, many of whom are leaders in their own space.

This small difference can give nonprofits a distinct advantage when they enter the federal contracting space and have to compete against for-profit companies.

In fact, this distinction is one of the primary reasons I encourage nonprofit organizations to go after government contracts instead of just competing for government grants.

Federal Contracts Vs. Government Grants

Most founders are a little surprised when I suggest they compete for federal contracts instead of looking for government grants. The truth is federal contracting often provides a better opportunity for nonprofits to have the type of long-term income that can support consistent growth.

Let’s face it: If your nonprofit doesn’t have a large endowment sitting in an account somewhere drawing interest, your organization will have to raise funds to generate enough revenue just to cover the organization’s expenses.

The problem with fundraising is it’s unpredictable.

You don’t know from year to year how close you will get to raising your target amounts. To me, it makes sense for mission-focused nonprofits to offer a menu of products and services they can monetize to support their mission.

How To Determine If Your Nonprofit Is Eligible For Government Contracts

The easiest way to figure out if you’re eligible for a government contract is to do what for-profit companies do – find a federal Request for Proposal (RFP) for which your organization would be a good fit.

Many people have the misconception that the government only buys products. But the government buys services as well. So, you don’t have to make and sell widgets to compete for government contracts.

Your company can develop training programs for certain segments of the population. You may even be able to find RFPs that will keep your contracting activities within the scope of your organization’s mission.

Some government agencies get grants then use the proceeds to to contract with nonprofit organizations. The Department of Labor does it, as do Housing and Urban Development, the Environmental Protection Agency, and the National Institute of Health.

All four of these agencies contract with nonprofits. But these are not government grants. This money is set aside for nonprofit organizations who are willing to pursue federal contracting opportunities.

In addition to competing for federal contracts yourself, make it a point to also reach out to larger nonprofit entities like the Salvation Army and Catholic charities as they often have “subgrant” opportunities for nonprofits who are looking to partner with them and perform certain programs.

Larger organization secure government grants then look for smaller nonprofits to provide the services needed to fulfill grant requirements.

Don’t overlook federal contracting and sub-grant opportunities as part of your program income funding strategy.

Are You Really Ready To Do Business With The Government?

Are You Really Ready To Do Business With The Government?

So many business owners think winning a bid to fulfill a government contract is their golden ticket. They think it only takes one government contract to generate consistent revenue and scale their businesses.

The truth is if you’re considering entering the government vending arena, you have to be ready to “do business” with the government. Your business, and your reputation, depend on it.

Like getting into anything else too soon, trying to fulfill a government contract before your business has the capacity will cause you stress, cost you your reputation, and may even put you out of business.

So, before entering into the federal contracting arena, objectively gauge your capabilities and skills to make sure that they are fit to perform the responsibilities of a government contract.

How To Figure Out If Your Company Is Ready To Do Business With The Government

There are several methods you can use to determine if your company is ready to do business with the government. I’ve outline five of them right in this article.

#1 You Have A Good Track Record

Before awarding your company a federal contract, the government will want to see that your company is reputable, with a proven history of success in your market. That means having a reputation for excellence, and a performance guarantee. Be ready to present your credible references from both the public and the private sectors to demonstrate your viability and expertise.

#2 You Have The Capacity

Ask yourself: In its current state, can your company facilitate the demands of a government contract? Do you have the human resources to perform the tasks of your contract?

#3 You’re Financially Strong

When it comes to doing business with the government, there is a process for everything, including paying contractors. Your company should be able to shoulder the cost of completing projects ahead of government payments.

It may be several weeks after the completion of a milestone in your government contract before funds are authorized to be released. Can you still deliver the level of service needed to uphold your part of the deal while you await payment?

#4 You Deliver Quality Products And Services

As a government contractor, you should be prepared to provide innovative products and services that are of the highest quality.

#5 You Meet Eligibility Requirements

Once you have conducted your preliminary assessments, you can proceed to the eligibility requirements to register as a government contractor and participate in the government bidding process.

D-U-N-S number from Dun & Bradstreet. Get a D-U-N-S number. The D-U-N-S number is a unique nine-digit number specifically assigned to your business by Dun & Bradstreet. You can apply for a D-U-N-S number online for free.

Central Contractor Registration (CCR). Your business should also register with the CCR database. The CCR is the list of government contractors to which contracts can be awarded.

Online Representations and Certifications Application (ORCA). ORCA certifies the authenticity of any information you provide about your company and business activities. After getting your D-U-N-S number and CCR registration, you need to agree to ORCA’s solicitation clause.

NAICS code. Know your NAICS industry-code. NAICS is the North American Industry Classification System, standardized classification of businesses and economic sectors throughout North America.

Open Ratings, Inc. Past Performance Evaluation. Your business should have an analysis and survey assessment report from Open Ratings Inc., which gives proper ratings to businesses based on performance data.

How To Market Your Business To The Federal Government

How To Market Your Business To The Federal Government

Can you market your business to the Federal government with any real-world success?

Most businesses grow their customer base and increase their bottom line through marketing. They focus on putting their products and services in front of their target customer. They find ways to engage prospective customers and drive sales that create and maintain profitability.

But for whatever reason, too many companies make the transition to the federal contracting space and stop marketing. They think they no longer need to market their business, like the government will come to them.

Here’s the deal: You can’t assume that fulfilling the administrative requirements is enough to have success as a federal contractor. Just adding your business to the Central Contractor Registration (CCR) database or replying to Request for Proposals (RFPs) isn’t enough.

The truth is businesses seeking government contracts MUST market their services and build brand awareness just like they would in the private sector!

Companies need to map out business development activities as federal contractors just like they do with the B2B or B2C activities. That means facilitating relationships with agency procurement officers and making the rounds at various networking events.

Just how DOES one go about marketing their good and services to the federal government?

Just What Should You Be Marketing?

Start by marketing your most important asset – a stellar reputation. A successful track record of providing high quality, innovative products and services goes a long way toward ensuring your success as a government vendor.

Next, start the work of building relationships. Networking is a key component of creating awareness of your brand. Talk to people, forge relationships, and create partnerships and alliances that are mutually beneficial both for your business and your teaming partners.

In the private sector, relationships are invaluable. Well, it’s the same in the public sector. Knowing how to go about building those relationships is a skill every prospective government contractor should learn.

Know Your Client & Make Contact

Effective marketing in the public sector is about finding out precisely what your clients’ needs and wants are. To effectively market your business, you need to know your client. If you want to do business with a specific government agency, you should know how that agency functions, what it does, its mission, and whom it serves. That’s the kind of insight that will help you figure out how you can provide the most value.

And make no mistake: Rumors of $600 toilet seats aside, Federal agencies are looking for value – the best quality at the best (not the cheapest) price.

Federal agencies publish a list of the contracting opportunities available for small businesses. You can learn about upcoming opportunities through trade magazines, and by attending industry networking events and trade shows.

Once you have enough information, don’t be afraid to reach out to procurement officers directly or through an intermediary like the Small Business Administration. Make sure agencies know you exist, but don’t try to sell yourself before you established a good relationship.

Get Ahead Of The Procurement Cycle

Another strategy that will enable you to effectively market your business to the federal government is to get ahead of the procurement cycle. Make it a point to get to know procurement officers before they are looking to buy your product or service.

When you contact a government agency, your goal should be creating a dialogue with procurement officers so they know who you are long before they need your services. That way, by the time RFPs are released for the products and services you provide, you will already have the relationships in place with decision-makers who know you and are aware of your value offering.

Don’t think of new business as something that’s given, but rather as something that’s attracted.

Forge Partnerships

Sub-contracting is a good way to learn the federal contracting process. Vendors who win prime contracts valued over a certain threshold must provide a sub-contractor plan which involves the participation of a small business.

Large companies need small companies with whom they can partner to deliver on the terms of their federal contract. Your business can benefit by finding out which companies have been awarded federal contracts and seeing if there is a way for your company to serve as a provider for the prime contractor.

Check out SUB-net, a government service that matches prime contractors with sub-contractors.

Success in government contracting is not just about meeting the minimum requirements of a particular RFP. It also requires you to research and learn the ins and outs of the government procurement process. Whether in the private or the public sector, your ability to effectively market your business will play a crucial role in your ultimate success.

Can you market your business to the Federal government with any real-world success?

Most businesses grow their customer base and increase their bottom line through marketing. They focus on putting their products and services in front of their target customer. They find ways to engage prospective customers and drive sales that create and maintain profitability.

But for whatever reason, too many companies make the transition to the federal contracting space and stop marketing. They think they no longer need to market their business, like the government will come to them.

Here’s the deal: You can’t assume that fulfilling the administrative requirements is enough to have success as a federal contractor. Just adding your business to the Central Contractor Registration (CCR) database or replying to Request for Proposals (RFPs) isn’t enough.

The truth is businesses seeking government contracts MUST market their services and build brand awareness just like they would in the private sector!

Companies need to map out business development activities as federal contractors just like they do with the B2B or B2C activities. That means facilitating relationships with agency procurement officers and making the rounds at various networking events.

Just how DOES one go about marketing their good and services to the federal government?

Just What Should You Be Marketing?

Start by marketing your most important asset – a stellar reputation. A successful track record of providing high quality, innovative products and services goes a long way toward ensuring your success as a government vendor.

Next, start the work of building relationships. Networking is a key component of creating awareness of your brand. Talk to people, forge relationships, and create partnerships and alliances that are mutually beneficial both for your business and your teaming partners.

In the private sector, relationships are invaluable. Well, it’s the same in the public sector. Knowing how to go about building those relationships is a skill every prospective government contractor should learn.

Know Your Client & Make Contact

Effective marketing in the public sector is about finding out precisely what your clients’ needs and wants are. To effectively market your business, you need to know your client. If you want to do business with a specific government agency, you should know how that agency functions, what it does, its mission, and whom it serves. That’s the kind of insight that will help you figure out how you can provide the most value.

And make no mistake: Rumors of $600 toilet seats aside, Federal agencies are looking for value – the best quality at the best (not the cheapest) price.

Federal agencies publish a list of the contracting opportunities available for small businesses. You can learn about upcoming opportunities through trade magazines, and by attending industry networking events and trade shows.

Once you have enough information, don’t be afraid to reach out to procurement officers directly or through an intermediary like the Small Business Administration. Make sure agencies know you exist, but don’t try to sell yourself before you established a good relationship.

Get Ahead Of The Procurement Cycle

Another strategy that will enable you to effectively market your business to the federal government is to get ahead of the procurement cycle. Make it a point to get to know procurement officers before they are looking to buy your product or service.

When you contact a government agency, your goal should be creating a dialogue with procurement officers so they know who you are long before they need your services. That way, by the time RFPs are released for the products and services you provide, you will already have the relationships in place with decision-makers who know you and are aware of your value offering.

Don’t think of new business as something that’s given, but rather as something that’s attracted.

Forge Partnerships

Sub-contracting is a good way to learn the federal contracting process. Vendors who win prime contracts valued over a certain threshold must provide a sub-contractor plan which involves the participation of a small business.

Large companies need small companies with whom they can partner to deliver on the terms of their federal contract. Your business can benefit by finding out which companies have been awarded federal contracts and seeing if there is a way for your company to serve as a provider for the prime contractor.

Check out SUB-net, a government service that matches prime contractors with sub-contractors.

Success in government contracting is not just about meeting the minimum requirements of a particular RFP. It also requires you to research and learn the ins and outs of the government procurement process. Whether in the private or the public sector, your ability to effectively market your business will play a crucial role in your ultimate success.

Self-Dealing: The One Thing Inexperienced EDs Don’t Know Can Shut Down A New Nonprofit, And Ruin Their Reputation

Self-Dealing: The One Thing Inexperienced EDs Don’t Know Can Shut Down A New Nonprofit, And Ruin Their Reputation

It’s the unfortunate truth: Many of the people who say they want to start a nonprofit, or who do start a nonprofit and serve as Executive Director, have no idea how to actually run one.

And that can lead to legal and financial trouble for both the ED and the nonprofit, particularly in the areas of self-dealing and misappropriating funds.

Over the years, I have found there is no shortage of people who start nonprofits with the wrong motives. They start the organization with a mission, but not for the mission.

Meaning, their proposed cause is legitimate, but they have ulterior motives for investing the time and resources into building the nonprofit.

As a result, they don’t learn how to properly structure the organization. They don’t understand the laws governing nonprofits. They don’t know the difference between being a nonprofit and being tax-exempt.

Unfortunately, this mindset often leads one of three places: Either the organization will survive, but pay tens of thousands of dollars in donated money trying to course-correct later down the line, the organization will go out of business, or the government will get involved.

And that’s where things can get sticky.

Self-dealing isn’t always so blatant, but it’s always illegal.

The Slippery Slope That Is Self-Dealing

One of the trickiest spots for newly-crowned Executive Directors to navigate is managing their existing relationship and building new relationships, both personal and professional.

One such relationship is the one you (and the nonprofit) have with your other personal and professional activities.

If any part of your nonprofit’s actions is tied to another one of your businesses, it’s self-dealing. You, your friends, or family members cannot privately benefit from your mission-driven nonprofit.

Let me give you an example from my book, Grant-Worthy.

A client came to me for help starting a nonprofit that transitions renters into first-time homebuyers. It was a fantastic mission: Creating a path for working-class Americans to buy affordable homes in areas hit the hardest by the Great Recession.

She wanted me to help her find government and community grants that would allow her organization to refurbish blighted properties and get these homes back on the tax rolls and back in the market.

Had it worked, that nonprofit would have helped rebuild hundreds of neighborhoods, and started many young families on the road to homeownership.

There was just one problem.

The woman who had this great idea was a real estate agent. She planned to use her ongoing real estate business as a way to direct qualified homebuyers into the nonprofit program.

The real estate broker for whom she worked would facilitate the deals and pay her a commission on each house she sold.

On the nonprofit end, she would eventually earn a salary as a managing member of the nonprofit once the organization could afford it.

In this instance, the nonprofit business depended on the managing director’s for-profit business to survive. The for-profit business would have been directly impacted by the success of the nonprofit business. This method of running a nonprofit is both unethical and illegal.

Here is another example of self-dealing that’s not so blatant.

If you are a pastor of a church and your wife owns a floral shop, the church cannot buy its weekly floral arrangements from your wife’s shop. This violates private inurement laws that prohibit you or your immediate family members from benefitting privately from the nonprofit organization.

The Stiff Penalty For Self-Dealing

Nolo defines private inurement as a 501(c)(3) using a nonprofit’s money for private uses instead of the charitable cause for which it was intended. Board members as well as an organization’s managing members can find themselves in trouble for self-dealing or embezzlement even if they weren’t directly involved in the act.

Being found complicit can be as simple as not being as thorough with the accounting as a prosecutor or government agent thinks you should have been.

I’ve heard it said that embezzlement happens; it’s how your organization deals with the embezzlement that matters. At the end of the day, once the mis- dealings are discovered – and they usually are – the least you stand to lose is a little face by having to pay penalties.

Next, your nonprofit can lose its tax-exempt status, which will absolutely level the organization. But the greatest loss will be your reputation. That is something from which you and your organization may never recover.

How To Prepare Your Company For Minority Business Certification

How To Prepare Your Company For Minority Business Certification

The U.S. Small Business Administration lists 7 certifications available for eligible small businesses. These certifications provide small and micro enterprises access to government contracting opportunities set aside specifically for fulfillment by a business which qualifies under one or more of the following certifications:

  • Small business

  • Historically Underutilized Business Zone (HUBZone)

  • Woman-owned

  • Veteran & service-disabled veteran-owned

  • 8(a) business development

  • Alaskan-owned

  • Native American-owned

Looking to become a certified minority business?

Is Small Business Certification Even Necessary?

Is it really all that important for businesses to become certified through the SBA? The answer to that question depends on the needs and goals of the business itself. A company’s choice to pursue certification should be directed by its overall business goals.

For young businesses, I always recommend they operate for at least two years before applying for small business certification. However, the length of time a business has been open is far less important than the abilities, experience, and past performance of the principals and management team itself.

It is possible to get the two-year requirement waived if the business owners or managers are accomplished industry professionals. Consider, however, the ability of your team to fulfill the requirements of a government contract, particularly if your business is actively expanding and readjusting operations to accommodate new growth.

Streamlining The Certification Process

For many of the businesses on the verge of transitioning into the government contracting arena, the application and documentation process associated with minority certifications is intensive and can be intimidating. Getting through the process confidently requires lots of preparation.

Preparation and organization are keys to successfully completing the minority certification process, in part because there is so much documentation required.

If you plan to pursue certification, have all your corporate documents in one place and designate one person in the office to be the certification coordinator. Your certification coordinator will assume responsibility for compiling any and all the needed data.

Having one person own all certification-related tasks will help streamline the documentation process. Otherwise, you and your team risk wasting resources when you inevitably duplicate efforts. Once you compile all the documents you need, you can start to prepare your submission.

Tip

Most federal contracts have some level of minority participation included in the verbiage as part of its contract compliance.

So even if you are not planning to become a primary contractor with the federal government, your company can benefit from certification because it will enable you to participate as a sub-contractor.

Certifications are contract vehicles, a means by which to be eligible for sole source opportunities and subcontract opportunities, often without having to bid.

Any company seeking to do business with a government agency or large corporation as a prime or subcontractor should definitely consider certification. As well, most businesses types – no matter the sector – qualify for certification.

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