Determining if an LOI is Best for Your Organization

Written by Reina Gallion

Last published at: September 23rd, 2019

The LOI stage in a process should be utilized to screen applicants so you can more easily make a decision early on regarding those who aren’t likely to make the cut, or to funnel applicants to a different funding opportunity where they may be a better fit for their project/program.  Using systems of discernment helps to ensure that only grantseekers with the best chance of receiving funding submit the full set of requirements.  In the end, you're saving the applicant and your organizations time, money and frustration.  If you have a high volume of applicants, think of all the organizations who never see a dime after all their hard work going through the full proposal steps.  Wouldn’t it be great to cut some of them loose before they invest so much effort?

 Letters of inquiry/interest/intent are only effective if they:

  • Are built to be shorter than your full proposal/application. A streamlined and fairly brief application form should indicate that an LOI may not be necessary.
  • Do a good job of asking essential questions of the applicant in a way that can help you screen out the good from the not-so-good applicants.
  • Don’t add additional time and administrative work to your staff’s workload. Is the LOI going to be easy to manage?

Before building an LOI, take a close look at all of the questions you ask on your full application and consider splitting them into a few categories:

  • Deal Breaker Questions: If certain things make an organization decisively qualified or unqualified to be considered, you’ll want to know them right away. For example, if you only fund in a specific county, then applicants from other places need not apply at all. These basic parameters should be described clearly in your guidelines upfront, or in an eligibility quiz, but you may include them on your LOI as well.
  • Essential Questions: Chances are, proposal reviewers hone in on a few pieces of influential information to inform decisions.  For example, you’d probably reject a proposal that wasn’t a good fit with your organization’s mission, or that didn’t demonstrate a strong understanding of the problem it addresses. If a question generates essential Go/No-Go information, it should be part of your LOI.
  • Nice to Know Questions:  There may be other information that you look at to discern between the good and the great prospect, to validate your decision, to help you think through risk, or to raise red-flags to discuss with an otherwise promising applicant. These questions don’t need to be part of an LOI – they should be part of the full application. This might include questions about staff capacity, timeline, evidence of prior impact, partnerships, or sustainability.  Note:  Yes, one funder’s “essential” may be another funder’s “nice to know.” What’s important is that you discern between the information that always tips the balance for you and the information that helps you make finer distinctions between potentially strong applicants.
  • Need for the File Questions: Some information you may never use to make decisions, but need to have on file anyway. This information can be collected during the full application process or even later – once you’ve decided to make a grant.

Some funders have voiced that introducing an LOI will invite a deluge of random and ill-fitting proposals. Most nonprofits don’t apply willy-nilly for grants that they are entirely unqualified to receive, however, to discourage an unreasonably high increase in volume be sure that you have very clear guidelines or establish an eligibility quiz to filter out some of the least promising requests before they even submit an LOI.

And keep in mind that once you start using an LOI you’ll want to collect some data to track how the LOI is working for you and your applicants!  Consider collecting data to answer these questions:

  • How long does the LOI take an applicant to complete?
  • How long does it take us to review an LOI?
  • How many LOIs did we receive in each round of grantmaking?
  • How many applicants advanced to the “full application” stage?
  • How many full applicants were funded?
  • What was the experience (internally and externally) of the new process?

This content is brought to you courtesy of Dr. Streamline.  Click on the following link for a library of other great grantmaking tips and tricks from the Peak Grantmaking blog category titled "Ask Dr. Streamline":