Of the numerous methods a nonprofit group can get funding, grants usually appear to be the holy grail. Fill out a fast software and increase! No-strings-attached cash in your account and you’re off to alter the world.
If solely it have been that simple.
There’s much more to grant funding than “free cash.” Earlier than you begin making use of for grants, you have to perceive the place the funding is coming from and the expectations from that group.
Grant funding must be part of your 501(c)(3)’s earnings stream however figuring out the various kinds of grants accessible for nonprofit organizations will assist you to select those that take advantage of sense for the assets you might have accessible.
Understanding Grants for Nonprofit Organizations
Based on the Giving USA report from the Lilly Household College of Philanthropy, personal and company foundations gave over $140 billion in grants in 2023. Based on information from Candid, which checked out type 990s from greater than 100,000 nonprofits, the federal government offered greater than $300 billion in grants in 2023. So, it’s no shock that grant funding is in style amongst nonprofits. However grants will not be with out their challenges. Nonprofit organizations ought to embody grants as a part of their funding combine, however you have to be intentional concerning the ones you apply for.
As a result of grants don’t must be repaid, many new nonprofit organizations begin there to fund their fledgling packages. However it may be laborious to search out grants that may assist in that means. Sometimes, grantmakers need to scale present packages or help a longtime group launch a brand new program. Grants that assist with direct working prices, reminiscent of your hire funds or workers salaries, are tougher to search out. That’s why grants must be one piece of your funding pie, which additionally consists of direct donations and charges for packages or companies.
One more reason to be intentional concerning the grants you attempt for is as a result of most grants require vital workers assets to use for and handle. If that is your first time making use of for a nonprofit grant, anticipate to spend as much as 50 hours gathering info for and submitting a basis grant software. Authorities grants are sometimes extra advanced and might take for much longer. In case you plan to make grants a major earnings stream, chances are you’ll contemplate constructing a relationship with a grant author or two to take the onus off your workers.
Whereas there are rising actions like Belief-Based mostly Philanthropy that encourage much less onerous purposes and reporting, most grants do have vital reporting necessities all through the award interval and as soon as the grant cycle ends. Grantors wish to see how their funds have been used and whether or not you have been in a position to make progress within the influence areas of the grant.
Varieties of Nonprofit Grants
There are a number of sorts of organizations that present grant funding, and every one has their very own necessities for purposes and reporting. However there could be a spot for a number of of them in your stability sheet.
Authorities Grants (Federal, State, Native)
These grants are funded by completely different departments inside the authorities, such because the Nationwide Institute of Well being and the Division of Transportation. The primary cease for presidency grants is www.Grants.gov. There are different repositories, however that is the first supply. Right here you’ll be able to seek for grants by key phrase, by the kind of group that’s eligible for the grant, the company in control of the grant, or the grant class. There are a ton of assets that can assist you perceive the method and use the workspace whereas making use of.
It’s possible you’ll discover native pass-through grants on grants.gov, the place federal cash is offered to the state or county authorities to resolve finest use the funds to attain the outcomes they’re on the lookout for. However typically, info on state or native authorities grants takes slightly extra work. Begin in your state or municipality’s web site and search for a grant portal (like this one in Virginia) or alerts you’ll be able to subscribe to (like this one in D.C.). You can even name the workplace of your elected official for extra info.
As with most government-related matters, you’ll encounter many abbreviations whereas making use of for and managing a authorities grant. Earlier than you bounce into the method, familiarize your self with the frequent phrases, reminiscent of UEI (Distinctive Entity Quantity) and FOA (Funding Alternative Announcement).
Are authorities grants troublesome to acquire and handle?
As a result of they’re simpler to search out by grants.gov, authorities grants are typically extremely aggressive. You’ll be going up towards organizations which have extra expertise with these kinds of nonprofit grants. Meaning you’ll must be extremely organized and ensure you observe all the necessities and meet all of the deadlines if you wish to have a shot.
The businesses that award the grants usually have detailed reporting necessities. You’ll want a longtime system for monitoring your grant spending, particularly should you earn greater than $750,000 in federal funding and require a Single Audit. The good thing about authorities grants is that they’re pretty standardized. After you get your first one, you’ll be able to replicate your processes for the following one.
Are authorities grants good for my nonprofit?
Authorities grants could possibly be good on your group in case your staff is organized, and you’ve got robust processes for reporting and grant writing. It’s additionally useful in case you have a community of contractors to ensure you keep away from any potential conflicts of curiosity if you have to outsource any a part of the work based mostly on the necessities of the grant. And naturally, authorities grants could possibly be good if you’re planning to get multiple. There’s an excessive amount of work concerned to cease after your first one.
Coverage adjustments that occur on the federal or state stage can shift grant priorities, transferring or erasing funding from established packages. As current occasions have proven, this may even occur mid-grant cycle. Whereas federal funding is usually a reliable supply of earnings for nonprofits that win them, learn your discover of award rigorously and ensure your inside controls are in place to keep up strict compliance. Additionally, federal funding ought to all the time be a part of a various mixture of income sources.
Federated Fund Grants
You might be probably accustomed to Federated Funds, although possibly not by that title. Federated Funds are native organizations that create a portfolio of charities and funnel donations to that portfolio. Among the huge names on this house embody the United Manner, UNCF, and the Mixed Federal Marketing campaign. These organizations gained recognition by working with native companies to allow worker giving.
Whereas nonetheless robust in lots of communities, Federated Fund organizations are being changed by Company Social Giving packages at bigger organizations, the place these firms and workers have larger say in the place the cash goes. Youthful donors additionally need extra management over their giving and wish to tie their giving to their values, as a substitute of sending their cash to a company that distributes the funds for them.
Are Federated Fund grants troublesome to acquire and handle?
In case you match the profile the Federated Fund is on the lookout for and get accepted into their portfolio, the group will do most of your advertising and fundraising for you. However stepping into the portfolio might be difficult.
Your group should match the profile and necessities of the fund. The United Manner, for instance, requires vital recordkeeping so you’ll be able to present influence. That sometimes requires you to know precisely who engages along with your companies, which could be laborious for organizations that work with individuals who would like to stay nameless for privateness causes. You often will need to have a monitor report of serving the group, so these grants will not be good for brand new or extremely area of interest nonprofits that don’t have a broad viewers.
Is one of these grant good for my nonprofit?
Working with a Federated Fund could possibly be nice on your group if you’re a longtime nonprofit and match the factors of the fund. Additionally, you will want the assets and platforms for the required reporting. Take into account that, whereas the group will assist elevate your profile in your group, chances are you’ll not get the precise donor info. These particulars will probably stick with the bigger group.
Grantmaking Foundations
Based on Candid, there are greater than 125,000 grantmaking foundations within the U.S., together with personal foundations, grantmaking nonprofits, company foundations, and group foundations.
Of the various kinds of grants for nonprofit organizations, grantmaking foundations have essentially the most selection. Grants can vary from a couple of hundred {dollars} to hundreds of thousands and can be found to new nonprofits and people which might be extra established. You usually tend to discover grants that cowl working and infrastructure wants in addition to to develop particular packages. Funding selections are often made by a board of administrators on the basis or a panel of group members, based mostly on the inspiration’s focus space.
Listed here are a couple of sorts of grantmaking foundations you must remember:
- Company: These are the charitable arms of huge firms. These foundations can align with particular causes or influence areas, such because the Land O’ Lakes Basis, which focuses on starvation, native communities, and training. The Coca-Cola Basis, however, takes a broader method, seeking to make a distinction on the planet. For essentially the most success, give attention to packages from companies in your area people or that immediately aligns along with your influence space. Some companies, like Walmart, supply grants to organizations the place their workers volunteer.
- Group: People, organizations, and companies will usually pool their assets to create a basis particular to a geographic space. These group foundations work to deal with points that have an effect on the individuals who stay in that space, so be certain that your group meets the geographic standards.
- Impartial, Non-public, and Household Foundations: Typically funded by an endowment from a person, household foundations are run by that particular person or somebody within the household, such because the Invoice and Melinda Gates Basis. The person or the relations have a major say within the funding and route of the inspiration. Impartial foundations are nonetheless funded by a person or household, however the selections and route are set by a management staff and board with much less oversight from the household, such because the Walton Household Basis.
Whereas there’s numerous alternative for funding with grantmaking foundations, you will want to do some work. Many smaller foundations don’t have web sites, and most of the bigger foundations don’t take unsolicited purposes.
There are a number of databases that can assist you discover foundations, reminiscent of Candid, GrantWatch, and Group Basis Locator, however you might have essentially the most probability for achievement in case you have one thing in frequent with the inspiration. Begin regionally along with your search. Search for charitable arms of bigger companies in your space, together with banks and main employers. You can even seek for grants particular to your influence space. Search for organizations that target the problems your nonprofit is making an attempt to deal with, reminiscent of meals insecurity or pre-kindergarten training.
Are grants from foundations troublesome to acquire and handle?
For big company or household basis grants, the competitors will likely be fierce. It by no means hurts to use in case you have the time and assets, and you’re a robust match for what they’re on the lookout for. However your finest possibilities for funding will likely be from foundations that know your group, your management, and your work.
The applying course of will likely be completely different for many foundations. Some may have a couple of questions and little in the best way of reporting necessities. Some will likely be way more in-depth and require on-site visits. However as soon as you identify a optimistic relationship with a basis, it could possibly present continued assets on your group over the long run.
Is one of these grant good for my nonprofit?
Use grantadvisor.org or different assets to see evaluations for various foundations. This can assist you to decide if the method is well worth the effort and time on your nonprofit group. Additionally, learn the eligibility necessities for the grant rigorously and ensure you match what they’re on the lookout for.
What to Search for When Researching Grants for Nonprofits
Earlier than you spend hours chasing grant purposes that aren’t a great match, ensure you perceive the assets you might have and the traits that make your group stand out.
Be real looking about what your group has time for. Know what assets you’ll be able to dedicate to discovering grants and submitting purposes. Can your management staff spend weeks placing collectively a single grant software? Do you might have the reporting capabilities to fulfill the necessities of the grant? Be cautious of purposes which might be a dozen pages and require numerous reporting should you don’t have workers to assemble that info.
When you might have an concept of the kind of grant you’re on the lookout for, begin particular. Search for organizations that present grants on your group (e.g., Chicago or West Texas) or your particular influence space, reminiscent of group well being or literacy.
The Significance of Diversification in Nonprofit Funding Sources
Nonprofits are specialists at stretching {dollars}, however the {dollars} should be there to stretch. Grants get reduce. Funding priorities change. New funding alternatives come up.
Grant funding—whether or not from federal businesses, personal and company foundations, or grantmaking organizations—must be part of a numerous income combine. A various income combine might embody main presents or recurring donors, occasions, or earned earnings, like program charges or rental earnings. DAFs and Giving Circles, that are rising choices for particular person donors, must also be in your monetary radar. Your mission is simply too necessary to place all of your focus into one funding basket.
Correct Grant Reporting with Fund Accounting Software program
When you might have a mission, you discover a technique to fund it. However managing your accounting in spreadsheets can solely get you to date. Objective-built fund accounting software program makes it simple to see what’s working along with your funds and what’s not. As your nonprofit group begins to win extra grant funding, the reporting necessities will shortly develop into greater than your spreadsheets can deal with.
When you find yourself able to take your nonprofit to the following stage, discover a cloud-based fund accounting platform that was constructed for organizations that want to trace funder intent. Find out how Blackbaud Monetary Edge NXT® will help you effectively handle the grants you obtain.
