This Calculator Knows What It Costs To Get Funded

Getting funded is supposed to be the means, not the mission. But for nonprofits and NGOs, the work of applying for money has quietly become work in its own right—hours of staff time diverted into proposals, reporting cycles that feel endless, and a competition model that rewards persistence as much as purpose.

Everyone knows the process is costly, but it’s hard to put a number on just how costly it can be. A new tool is trying to change that.

The Funding Footprint Calculator is a tool for grantmakers and those applying to grants to understand the collective cost of a given grant application. Developed by Shifting the Funding Paradigm, a collaborative working group at Catalyst Now, the tool computes a given application cycle's economic footprint, as well as a “Burn Index”, defined as the ratio of total applicant costs to total funds awarded. This offers a way to measure the collective cost that mission-driven organizations absorb just to reach the starting line.

The tool comes from a recognition that applying for money represents real economic activity – time, labor, and organizational capacity that comes out of the bottom line. In one example, a foundation's $3 million application may have cost $60 million to distribute. We spoke with Dr. Nadait Gebremedhen, who leads the work behind the Funding Footprint Calculator, to learn more.

How does the calculator work, exactly?

The tool is designed to measure the funding footprint, or total economic cost, of pursuing funding. It captures the collective resources applicants invest in applying for grants or other competitive funding opportunities. Our goal in developing it was to reveal the hidden cost of competition-based funding processes and support the creation of leaner, more efficient funding practices.

For any given grant opportunity, the calculator captures two things. First, it looks at two key variables – the number of applicants and the average cost per application – to estimate the Funding Footprint. Second, it computes the Burn Index, defined as the ratio of total applicant costs to total funds awarded.

Ideally, funders would already have data on the number of applicants and the average cost per application. Unfortunately, this is often not the case, especially for the cost per application. In those instances, the calculator can estimate it using the time required to complete the application and an average hourly wage.

What does a good result look like?

​​In general, the lower the Funding Footprint is, the better – it indicates a more efficient funding process, one where fewer resources are collectively spent on applications.

The Burn Index has three value categories:

• BI > 1 indicates that applicants collectively spend more on applying than the total funds awarded.
• BI = 1 means applicants collectively spend the same amount as the total funds awarded.
• BI < 1 means applicants collectively spend less on applications than the total amount awarded.

Ideally, the Burn Index should be as close to zero as possible, signaling that the funding process requires very little of our collective resources.”

What drove the creation of this tool?

We began this line of work after observing the significant resources organizations were dedicating to grant applications. We wanted to determine whether the social sector might be operating at a net loss when it comes to grant-based funding.

In other words: are organizations collectively spending more to pursue funding than the value of the funds they receive?

In one real example, applicants collectively spent an estimated $30 million to pursue a $3 million fund. When the number of applicants later doubled, the cost likely ballooned to $60 million – to distribute the same $3 million. That means for every $1 awarded, $10 to $20 may have been spent on applying.

Grant-based funding and other competition-based mechanisms are a major way resources are allocated in the social sector and across the broader economy. Any cost inefficiency comes at a steep price: every dollar spent on the funding process is a dollar not invested in innovation, solutions, or scaling impact.

Tracking these costs allows the sector to understand whether resources are being used efficiently. It provides the evidence needed to determine if value is being lost to overly complex processes and, if so, to design smarter, more resource-efficient funding mechanisms. Ultimately, the goal is to maximize the impact of every dollar, ensuring that more resources reach programs and initiatives that directly benefit communities.

What should a funder do if their Funding Footprint and Burn Index are high?

Funders have a few different levers to address this.

First, they can ensure only qualified candidates apply. This means clearly communicating eligibility criteria so organizations can quickly see if they qualify, and only suitable candidates submit full proposals. They can include preliminary questions to filter out ineligible applicants right from the start or use a tiered application process—starting with a short application like a Letter of Intent—and only invite qualified candidates to submit full proposals. They can also leverage technology to automatically check eligibility before submission.

Second, funders can reduce the cost of applying by simplifying forms and shortening applications, saving time and effort for everyone.

Finally, offering multiyear funding helps as well. It reduces the frequency of applications, lowering the overall resource burden on both funders and applicants.

Is inefficiency always bad?

Not necessarily. One could argue that a rigorous grant application process serves a purpose: it helps funders assess applicants thoroughly, allocate resources wisely, and ultimately maximize impact. Some level of effort is essential to screen for alignment, capacity, and quality, ensuring that funds go to projects most likely to succeed.

However, inefficiency becomes problematic when the costs of applying and managing funding outweigh the benefits, diverting resources from the programs and initiatives meant to create impact. The goal isn’t to eliminate all costs, but to strike the right balance – designing funding processes that are rigorous yet streamlined, minimizing wasted resources while maintaining accountability and quality.

We've heard that some organizations do experience breakthrough concepts, language, partnerships, or insights through applying - even on applications they don't win. But we've not heard anyone argue that those secondary benefits alone are worth this tremendous cost of the status quo to the sector.