Award Letters: More Important Than You Realize!

Congratulations, you’ve got the award! But wait, did you read the letter saying what the funds may be used for?  By thoroughly reading the award letter, you will learn the legal intent of the funders/donors, and therefore how you can use the funds. The award letter is actually part of an auditor’s trail of documents gathered annually when your nonprofit tax form 990 must be completed, or when an audit is done.

One grant writer wrote me asking, “Does the award letter trump what I wrote in the grant proposal about the use of the funds?” My answer is, “Yes, it does.” In this particular case the grant was written for a program expense, but the award letter said the funds were for the good work of the agency, without any restriction or designation. Therefore the award letter supersedes the proposal as the guiding document to follow.

Some award letters specify the date when the funder or donor expects a progress report back. Be sure to put that due-date on your calendar, and let the program staff know too so they can also plan accordingly.

Other award letters ask you to sign an enclosed agreement and return it to assure the grant-maker that you agree to the terms of the award. In that case, be sure to return the signed agreement the very next day, without delay. It would reflect poorly on your agency if a long time passed and the funder failed to receive the signed agreement. And be sure to use a tracking mechanism like certified mail, or priority mail with a return receipt, so that you have proof of compliance.

What if there was no award letter, just a check? This occurs more than you may think! In this case, I am of two minds: one mind, vigilant about securing more general operating support, thinks of the organization’s greatest need and wants to apply the funds to that need.  But my other mind says call the donor and ask for clarification. I trust you to choose which way works best for your agency.

I recommend that like most important papers you keep a hard copy of the award letter for at least seven years. Many nonprofits now save the letters as digital files so they have them for even longer.

Here at LAPA, we always note the receipt of the award letter on our excel spreadsheet called the Revenue Report, which tracks all submissions, transactions, rejections, and pending funders still being researched. Those spreadsheets become valuable over the years because we see at a glance the history of interactions with the funders. Of course, you can do the same tracking in most donor databases; be sure to use those tools, and don’t delay entering the data.

As a nonprofit executive director, I always kept a private file of the award letters because I was interested in who signed them. When I ran into that person at a conference, I would personally thank him or her. Also, that file represented our successes; on down days it would give me hope by showing me what we had done right to get as far as we did.

I’ll close by sharing with you a cherished resource, “Beyond The Award Letter,” by Jenifer Gager and Vicky Marchand of The Finance Project (2009).

You can find it free at this link. “Beyond the Award Letter” focuses exclusively on award documentation from private foundations and contracts with public agencies, and does not address individual donations or local fundraising efforts. What’s neat about it, though, is that it gives you practical ideas for managing issues that the award letter raises, like how the money will be spent, within what time period, what outcomes are expected, and how you are to report progress.

Do you have any funny (or tragic) stories about award letters? If so, please share them on our blog.

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