If the proposal does fit your guidelines but falls short of a grant award, consider sending a form letter stating that you were not able to fund at this time. If the proposal interested you, you might welcome the grantseeker to submit a proposal in the future. Include a copy of grant guidelines with the letter. Also consider providing a contact person and contact information, to give applicants the option of calling to learn more about the declined proposal.
If you are not interested in future applications, do not encourage the grantseeker with language that opens the door to further correspondence. Although this is common sense, many funders do keep the door open, because it is so difficult to say “no.”