The Economics of Grant Writing: What It Really Costs
Most organisations dramatically underestimate grant writing costs. Understanding true economics—including hidden expenses—is essential for ROI-positive fundraising strategy.
The Hidden Cost Structure
Grant applications consume far more resources than apparent at first glance:
| Cost Category | Typical Time | At £35/hr | Often Forgotten? |
|---|---|---|---|
| Funder research | 3-5 hours | £105-£175 | Often |
| Data gathering & evidence | 5-8 hours | £175-£280 | Often |
| Budget development | 3-6 hours | £105-£210 | Sometimes |
| Application writing | 8-15 hours | £280-£525 | Rarely |
| Internal reviews & edits | 2-4 hours | £70-£140 | Often |
| Submission & admin | 1-2 hours | £35-£70 | Sometimes |
| Follow-up & clarifications | 1-3 hours | £35-£105 | Often |
| Total per application | 23-43 hours | £805-£1,505 |
Reality Check:
Most organisations estimate "8-10 hours" per application. True cost is typically 23-43 hours when all activities properly accounted for.
Cost by Grant Size
Application complexity (and therefore cost) scales with grant size:
| Grant Size | Typical Application Cost | Cost as % of Grant |
|---|---|---|
| £1K-£5K | £175-£350 | 7-35% |
| £5K-£25K | £400-£750 | 3-8% |
| £25K-£100K | £800-£1,500 | 1.5-3% |
| £100K+ | £1,500-£3,000 | 0.8-1.5% |
Strategic Implication:
Micro-grants (under £5K) rarely make financial sense unless application is extremely simple (under 2 hours). Focus effort on £25K+ opportunities where cost-to-grant ratio is sustainable.
Success Rate Economics
Your true cost per £ raised depends heavily on success rate:
| Success Rate | Applications for £100K | Total Cost @ £1K/app | Cost Per £ Raised |
|---|---|---|---|
| 10% | ~10 applications | £10,000 | £0.10 |
| 25% | ~4 applications | £4,000 | £0.04 |
| 40% | ~2.5 applications | £2,500 | £0.025 |
| 60% | ~1.7 applications | £1,700 | £0.017 |
Key insight: Improving success rate from 25% to 40% cuts fundraising costs nearly in half. This is why strategic targeting and professional writing matter financially—not just for success, but for efficiency.
DIY vs Professional Grant Writer Economics
DIY Internal Staff
Cost per application: £805-£1,505 (staff time @ £35/hr)
Pros:
- • Deep organizational knowledge
- • Available for follow-up
- • Builds internal capacity
Cons:
- • Takes 40-50 hours for inexperienced writers
- • Success rate typically 15-25%
- • Diverts staff from delivery work
Professional Grant Writer
Cost per application: £1,200-£3,500 depending on grant size
Pros:
- • Success rate typically 45-65%
- • Faster turnaround (15-25 hours)
- • Professional presentation
- • Funder relationship expertise
Cons:
- • Upfront cash outlay
- • Requires briefing time
- • May need review/editing
Break-Even Analysis
When does professional writer make financial sense?
Example Scenario: Pursuing £100K Grant
DIY Approach:
- • Cost per application: £1,200
- • Success rate: 20%
- • Expected applications needed: 5
- • Total cost to win: £6,000
- • Cost per £ raised: £0.06
Professional Writer:
- • Cost per application: £2,500
- • Success rate: 50%
- • Expected applications needed: 2
- • Total cost to win: £5,000
- • Cost per £ raised: £0.05
Professional writer saves £1,000 AND frees 90+ hours of staff time for delivery work.
Opportunity Cost Calculation
The most overlooked cost: What else could your staff do with that time?
Real Example: Youth Charity CEO
Spent 120 hours over 3 months on grant applications (35 hours/application, 25% success rate)
Alternative uses for 120 hours:
- • Deliver 240 additional mentoring sessions (£24K earned income at £100/session)
- • Build corporate partnership generating £40K/year recurring
- • Develop new programme with 50 additional beneficiaries
- • Secure major donor relationship worth £25K annually
ROI Benchmarks by Fundraising Method
| Method | Typical ROI | Cost Per £ |
|---|---|---|
| Major Donor Cultivation | 6:1 to 10:1 | £0.10-£0.17 |
| Corporate Partnerships | 5:1 to 8:1 | £0.13-£0.20 |
| Grant Funding (well-executed) | 15:1 to 25:1 | £0.04-£0.07 |
| Grant Funding (poor execution) | 5:1 to 10:1 | £0.10-£0.20 |
| Direct Mail | 3:1 to 5:1 | £0.20-£0.33 |
| Fundraising Events | 2:1 to 4:1 | £0.25-£0.50 |
Key insight: Well-executed grant fundraising offers best ROI of any fundraising method. But "poor execution" (low success rates, inefficient processes) makes it mediocre.
When Grant Writing Doesn't Make Financial Sense
- ❌ Pursuing grants under £5K unless application takes under 2 hours
- ❌ Applying to 20+ funders annually with sub-20% success rate
- ❌ Senior staff (£50-£80/hr) spending 40+ hours per application for £25K grants
- ❌ Organizations with strong earned income potential (£100/hr+) diverting capacity to grant writing
- ❌ Rewriting applications from scratch each time instead of building systems
Maximizing Grant Writing ROI
1. Improve Success Rates
Moving from 20% to 40% success rate cuts costs in half. Invest in strategic targeting, professional support, evidence building.
2. Build Reusable Assets
Case study bank, answer library, budget templates. First application is expensive; tenth is 60% faster.
3. Target Larger Grants
£100K grant takes 1.5x the time of £25K grant, not 4x. Cost-to-raise ratio improves with grant size.
4. Right-Size Staff Involvement
Junior staff research, mid-level write, senior review. Don't pay CEO rate (£80/hr) for data gathering work (£25/hr value).
Conclusion
Grant writing can deliver exceptional ROI (15-25:1) or mediocre returns (5-10:1). Difference is systematic approach: strategic targeting, efficiency systems, appropriate resourcing, and honest cost tracking.
TL;DR: Grant Writing Economics
- ✓ True cost per application: £805-£1,505 (not £350 many assume)
- ✓ Well-executed grant fundraising: 15-25:1 ROI (best of any method)
- ✓ Poor execution: 5-10:1 ROI (mediocre, not worth the effort)
- ✓ Professional writers often cost-effective for grants £50K+
- ✓ Improving success rate from 20% to 40% cuts costs in half
- ✓ Micro-grants (under £5K) rarely worth it unless very simple
- ✓ Opportunity cost matters: what else could staff accomplish?
Improve Your Grant Writing ROI
Crafty reduces application time by 60% while improving success rates through AI-powered funder matching and evidence-based writing—dramatically improving your cost-per-pound-raised.
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