Of the various methods a nonprofit group can get funding, grants usually seem to be the holy grail. Fill out a fast software and increase! No-strings-attached cash in your account and you’re off to vary the world.

If solely it had been that straightforward.

There’s much more to grant funding than “free cash.” Earlier than you begin making use of for grants, it is advisable 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 revenue stream however figuring out the various kinds of grants obtainable for nonprofit organizations will aid you select those that take advantage of sense for the assets you may have obtainable.

Understanding Grants for Nonprofit Organizations

Based on the Giving USA report from the Lilly Household Faculty 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 are usually not with out their challenges. Nonprofit organizations ought to embody grants as a part of their funding combine, however it is advisable to be intentional concerning the ones you apply for.

As a result of grants don’t have to be repaid, many new nonprofit organizations begin there to fund their fledgling applications. However it may be onerous to seek out grants that can assist in that means. Sometimes, grantmakers need to scale present applications or help a longtime group launch a brand new program. Grants that assist with direct working prices, similar to your hire funds or workers salaries, are more durable to seek out. That’s why grants must be one piece of your funding pie, which additionally consists of direct donations and charges for applications or providers.

One more reason to be intentional concerning the grants you strive for is as a result of most grants require important workers assets to use for and handle. If that is your first time making use of for a nonprofit grant, anticipate to spend up to 50 hours gathering data for and submitting a basis grant software. Authorities grants are sometimes extra complicated and may take for much longer. Should you plan to make grants a big revenue stream, you could think about constructing a relationship with a grant author or two to take the onus off your workers.

Whereas there are rising actions like Trust-Based Philanthropy that encourage much less onerous purposes and reporting, most grants do have important reporting necessities all through the award interval and as soon as the grant cycle ends. Grantors wish to see how their funds had been used and whether or not you had been in a position to make progress within the impression areas of the grant.

Sorts 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 may 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 possibly can seek for grants by key phrase, by the kind of group that’s eligible for the grant, the company in command of the grant, or the grant class. There are a ton of assets that will help you perceive the method and easy methods to use the workspace whereas making use of.

Chances are you’ll discover native pass-through grants on grants.gov, the place federal cash is offered to the state or county authorities to resolve easy methods to finest use the funds to attain the outcomes they’re searching for. However usually, data on state or native authorities grants takes a bit of 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 possibly can subscribe to (like this one in D.C.). You can even name the workplace of your elected official for extra data.

As with most government-related matters, you’ll encounter many abbreviations whereas making use of for and managing a authorities grant. Earlier than you leap into the method, familiarize your self with the common terms, similar to 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 seek out via grants.gov, authorities grants are typically extremely aggressive. You’ll be going up in opposition to organizations which have extra expertise with a majority of these nonprofit grants. Which means you’ll have to 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 tracking your grant spending, particularly in the event you earn greater than $750,000 in federal funding and require a Single Audit. The advantage of authorities grants is that they’re pretty standardized. After you get your first one, you possibly can replicate your processes for the following one.

Are authorities grants good for my nonprofit?

Government grants may very well be good to your group in case your group is organized, and you’ve got sturdy processes for reporting and grant writing. It’s additionally useful when you’ve got a community of contractors to ensure you keep away from any potential conflicts of curiosity if it is advisable to outsource any a part of the work based mostly on the necessities of the grant. And naturally, authorities grants may very well 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 degree can shift grant priorities, shifting or erasing funding from established applications. As recent events have shown, this could even occur mid-grant cycle. Whereas federal funding is usually a reliable supply of revenue for nonprofits that win them, learn your discover of award fastidiously and ensure your inside controls are in place to keep up strict compliance. Additionally, federal funding ought to at all times be a part of a various mixture of income sources.

Federated Fund Grants

You might be seemingly aware of 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 Way, UNCF, and the Combined Federal Campaign. These organizations gained reputation by working with native companies to allow worker giving.

Whereas nonetheless sturdy in lots of communities, Federated Fund organizations are being changed by Corporate Social Giving programs at bigger organizations, the place these firms and workers have higher 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 corporation that distributes the funds for them.

Are Federated Fund grants troublesome to acquire and handle?

Should you match the profile the Federated Fund is searching for and get accepted into their portfolio, the group will do most of your advertising and fundraising for you. However moving into the portfolio may be difficult.

Your group should match the profile and necessities of the fund. The United Manner, for instance, requires important recordkeeping so you possibly can present impression. That sometimes requires you to know precisely who engages along with your providers, which may be onerous for organizations that work with individuals who would like to stay nameless for privateness causes. You often should have a monitor file of serving the neighborhood, so these grants are usually not good for brand new or extremely area of interest nonprofits that don’t have a broad viewers.

Is such a grant good for my nonprofit?

Working with a Federated Fund may very well be nice to your group if you’re a longtime nonprofit and match the standards of the fund. Additionally, you will want the assets and platforms for the required reporting. Remember the fact that, whereas the group will assist increase your profile in your neighborhood, you could not get the precise donor data. These particulars will seemingly stick with the bigger group.

Grantmaking Foundations

Based on Candid, there are more than 125,000 grantmaking foundations within the U.S., together with personal foundations, grantmaking nonprofits, company foundations, and neighborhood 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 thousands and thousands and can be found to new nonprofits and people which can be extra established. You usually tend to discover grants that cowl working and infrastructure wants in addition to to develop particular applications. Funding selections are often made by a board of administrators on the basis or a panel of community members, based mostly on the inspiration’s focus space.

Listed below are a couple of sorts of grantmaking foundations it’s best to remember:

• Company: These are the charitable arms of enormous firms. These foundations can align with particular causes or impression areas, such because the Land O’ Lakes Foundation, which focuses on starvation, native communities, and schooling. The Coca-Cola Foundation, however, takes a broader strategy, seeking to make a distinction on the planet. For essentially the most success, give attention to applications from companies in your area people or that instantly aligns along with your impression space. Some companies, like Walmart, provide grants to organizations the place their workers volunteer.
• Neighborhood: People, organizations, and companies will usually pool their assets to create a basis particular to a geographic space. These neighborhood foundations work to handle points that have an effect on the individuals who dwell in that space, so be sure that your group meets the geographic standards.
• Impartial, Non-public, and Household Foundations: Usually funded by an endowment from a person, household foundations are run by that particular person or somebody within the household, such because the Bill and Melinda Gates Foundation. The person or the relations have a big say within the funding and path of the inspiration. Impartial foundations are nonetheless funded by a person or household, however the selections and path are set by a management group and board with much less oversight from the household, such because the Walton Family Foundation.

Whereas there may be a number of alternative for funding with grantmaking foundations, you’ll need to perform a little work. Many smaller foundations don’t have web sites, and lots of the bigger foundations don’t take unsolicited purposes.

There are a number of databases that will help you discover foundations, similar to Candid, GrantWatch, and Community Foundation Locator, however you may have essentially the most likelihood for achievement when you’ve got 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 impression space. Search for organizations that target the problems your nonprofit is making an attempt to handle, similar to meals insecurity or pre-kindergarten schooling.

Are grants from foundations troublesome to acquire and handle?

For big company or household basis grants, the competitors might be fierce. It by no means hurts to use when you’ve got the time and assets, and you’re a sturdy match for what they’re searching for. However your finest possibilities for funding might be from foundations that know your group, your management, and your work.

The appliance course of might be completely different for many foundations. Some may have a couple of questions and little in the best way of reporting necessities. Some might be rather more in-depth and require on-site visits. However as soon as you identify a optimistic relationship with a basis, it may possibly present continued assets to your group over the long run.

Is such a grant good for my nonprofit?

Use grantadvisor.org or different assets to see critiques for various foundations. This may aid you decide if the method is definitely worth the effort and time to your nonprofit group. Additionally, learn the eligibility necessities for the grant fastidiously and ensure you match what they’re searching for.

What to Search for When Researching Grants for Nonprofits

Earlier than you spend hours chasing grant purposes that aren’t a superb match, ensure you perceive the assets you may have and the traits that make your group stand out.

Be practical about what your group has time for. Know what assets you possibly can dedicate to discovering grants and submitting purposes. Can your management group spend weeks placing collectively a single grant software? Do you may have the reporting capabilities to satisfy the necessities of the grant? Be cautious of purposes which can be a dozen pages and require a number of reporting in the event you don’t have workers to collect that data.

When you may have an thought of the kind of grant you’re searching for, begin particular. Search for organizations that present grants to your neighborhood (e.g., Chicago or West Texas) or your particular impression space, similar to neighborhood 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 lower. 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 diverse revenue mix. A various income combine might embody main items or recurring donors, occasions, or earned revenue, like program charges or rental revenue. DAFs and Giving Circles, that are rising choices for particular person donors, must also be in your monetary radar. Your mission is simply too vital to place all of your focus into one funding basket.

Correct Grant Reporting with Fund Accounting Software program

When you may have a mission, you discover a approach to fund it. However managing your accounting in spreadsheets can solely get you thus far. Function-built fund accounting software program makes it straightforward 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’re able to take your nonprofit to the following degree, discover a cloud-based fund accounting platform that was constructed for organizations that want to trace funder intent. Learn the way Blackbaud Financial Edge NXT® may help you effectively handle the grants you obtain.