Types of Grant for Nonprofits

For most nonprofits, securing grants is the lifeline that fuels every impactful project.

Grants not only provide the necessary funding, but also help build organizational capacity, enhance community impact, and foster long-term sustainability.

For instance, data from the Foundation Center and Candid shows that U.S. foundations distributed over $55 billion in grants in 2020 alone.

This staggering figure highlights the immense opportunity available if you know how to tap into these funds effectively.

Grants can come from various sources, each with unique characteristics and requirements.

Understanding these differences is crucial because it allows you to craft a grant proposal that speaks directly to funders’ priorities and demonstrates your project’s potential for measurable impact.

The Diverse Landscape of Grant Funding

Before diving into the types of grants, it’s important to get a clear picture of the grant funding landscape.

Here are some key points to consider:

a) Competitive Environment: Many organizations are competing for limited resources. Your proposal needs to stand out by using clear, persuasive language and solid data.

b) Detailed Application Process: Grant proposals typically require a detailed narrative, a well-structured budget, and clear impact measurement methods.

c) Multiple Funding Sources: Grants come from government agencies, private foundations, corporations, and other sources. Each type of funder has its own mission, priorities, and application process.

Types of Grants for Nonprofits

Let’s break down the different types of grants available, so you can choose the right ones to support your nonprofit’s mission.

1. Government Grants: Government grants are a primary source of funding for many nonprofits. They are generally divided into federal, state, and local grants.

a)Federal Grants: Federal grants are offered by government agencies such as the Department of Health and Human Services (HHS), Department of Education, and the Environmental Protection Agency (EPA).

To succeed with federal grants, ensure that your proposal aligns with federal priorities. Emphasize compliance, accountability, and impact measurement.

The official portal, Grants.gov, is the central hub for all federal funding opportunities.

Thousands of federal grant opportunities are released every year, covering sectors from healthcare to environmental protection.

b) State and Local Grants: State and local governments offer grants tailored to address regional and community-specific needs. These grants may have less competition and more flexible application processes compared to federal grants.

Highlight how your project addresses local challenges. Use keywords like community engagement, local impact, and sustainability.

For instance, a local government might offer a capacity-building grant to support administrative upgrades for nonprofits.

2. Foundation Grants: Foundation grants come from private, family, or community foundations that are focused on specific causes or geographic areas.

a)Private Foundations: Prestigious private foundations such as the Bill & Melinda Gates Foundation or the Ford Foundation offer grants for projects aligned with their missions.

Research each foundation’s past grants and guidelines. Tailor your proposal using keywords like innovation, impact, sustainability, and community.

Many private foundations prioritize transformative projects with long-term impact.

b) Community Foundations: These foundations work at a local level to improve community well-being. Community foundations focus on projects that have a direct, visible impact on local residents.

Emphasize how your project fosters community collaboration, social equity, and local impact. Check out your local community foundation’s website for specific funding opportunities.

c)Corporate Foundations: Some corporations maintain their own foundations as part of their corporate social responsibility (CSR) initiatives. Highlight measurable outcomes and strategic brand alignment. Use terms like efficiency, innovation, and scalability.

Example: A tech company might support a nonprofit’s digital literacy initiative that aims to bridge the digital divide.

3. Corporate Grants: In addition to corporate foundations, many companies offer grants directly through their CSR programs.

Corporate grants can support diverse initiatives including educational programs, environmental projects, and community development.

Show how your project can enhance the company’s public image and fulfill its CSR goals. Use brand alignment, social responsibility, community engagement, and impact to convey your message.

Real-World Example: A large retailer might fund a community food security project to reinforce its commitment to local communities.

4. Program-Related Investments (PRIs): Program-Related Investments (PRIs) are a unique form of funding that combine elements of grants and investments.

PRIs are investments made by foundations to support projects that further their charitable missions. They can take the form of loans, equity investments, or guarantees.

They often come with favorable terms such as lower interest rates and extended repayment periods, supporting long-term sustainability.

Highlight your organization’s financial stability, long-term impact, and growth potential.

Investment, financial sustainability, and capacity building are crucial in your proposal for PRIs.

5. Capacity Building Grants: Capacity building grants are essential for nonprofits looking to enhance their internal operations.

These grants are aimed at improving organizational infrastructure—upgrading technology, enhancing staff skills, or developing strategic plans.

Strengthening your internal capacity makes it easier to manage larger projects and secure additional funding over time.

Provide a clear plan on how the funds will improve efficiency and sustainability.

Studies by the Nonprofit Finance Fund suggest that investing in capacity building can boost program effectiveness by up to 30%.

Growth, efficiency, and capacity building should be at the forefront of your proposal.

6. Project or Program Grants: Project or program grants are designed to fund specific initiatives rather than general operating expenses.

These grants require you to detail a specific project with clear goals, timelines, and outcomes.

Your proposal should include a detailed budget, project timeline, and clear evaluation metrics.

Results-oriented, project management, evaluation, and impact measurement are key terms to use.

Example: A nonprofit running a literacy program might apply for a project grant to launch after-school tutoring sessions, explaining how the project will improve reading skills among children.

7. Research Grants: Research grants provide funding for nonprofits involved in academic or policy research, driving innovation and new insights.

These grants support studies that can influence public policy, improve community health, or contribute to academic research.

Emphasize the rigor of your research methodology and the potential impact of your findings.

The National Institutes of Health (NIH) is a primary source for research grants in the public health sector.

Innovation, data-driven, evaluation, and impact are crucial in crafting a compelling research grant proposal.

8. Challenge Grants: Challenge grants are unique in that they require your nonprofit to meet certain conditions before receiving the full funding amount.

A donor offers a challenge grant contingent upon your nonprofit raising a specified amount from other sources.

This type of grant can spur community engagement and encourage additional fundraising. Detail your strategy for mobilizing support and meeting the challenge criteria.

Community engagement, collaboration, leveraging funds, and challenge are important to highlight.

Example: A nonprofit might secure a challenge grant for building a community center if it can demonstrate strong local support and additional donor contributions.

9. Endowment Grants: Endowment grants focus on establishing a long-term funding source through invested capital.

These grants provide the means to create an endowment, generating income that can support your nonprofit’s mission indefinitely.

Your proposal should emphasize sound financial management, a robust investment strategy, and long-term stability.

An endowment can reduce reliance on annual fundraising by providing a predictable revenue stream.

Sustainability, investment, long-term planning, and financial stability are key to this type of proposal.

Final Thoughts

Every grant proposal is a story waiting to be told – a story of how your nonprofit is making a difference in the world.

Whether you’re aiming to improve public health, bridge the digital divide, or foster community development, the right grant can be the catalyst for real, lasting impact.

Thank you for joining us on this comprehensive journey through the different types of grants for nonprofits.

With persistence, continuous learning, and the strategies outlined in this guide, you’ll be well-equipped to secure the funding your organization needs to thrive.

Remember, success in grant writing isn’t about luck—it’s about preparation, clarity, and a relentless commitment to your mission.

If you found these insights helpful, be sure to subscribe to the Grant Writing Academy Newsletter to access even more expert tips, strategies, templates, and tools designed to boost your nonprofit’s success.