Are you wondering, “What is a grant?” A grant is a sum of money awarded by a funding organization to your nonprofit to support specific programs, projects, or operational activities that align with the funder’s charitable mission and priorities. Unlike loans, grants don’t need to be repaid, making them one of the most sought-after funding sources in the nonprofit sector.
Types of Grant Funders
Grants come from several types of organizations, each with different focuses and requirements.
Government grants from federal, state, and local agencies typically fund large-scale programs addressing public needs like health, education, or social services.
Private foundations range from large national foundations like the Gates Foundation to small family foundations, each with specific cause areas they support.
Corporate foundations and giving programs often prioritize projects that align with their business values or benefit their local communities.
Community foundations focus on improving their specific geographic regions and can be excellent sources for locally-based nonprofits.
The Grant Relationship
When you receive a grant, you’re entering into a formal agreement with specific obligations. The funder expects you to use the money exactly as proposed, achieve the outcomes you promised, and provide detailed reporting on your progress and expenditures. This isn’t just receiving a donation – it’s a partnership where you’re accountable for delivering results that advance the funder’s charitable goals.
What Is a Grant? Five Types of Grant Support
Grants can fund different aspects of your organization’s work.
Program grants support specific initiatives or services you provide.
Operating grants help cover general organizational expenses like rent, utilities, and staff salaries, though these are often harder to obtain.
Capital grants fund major purchases like buildings, equipment, or technology.
Capacity building grants help strengthen your organization’s infrastructure, staff development, or systems.
Some funders also offer planning grants to help you develop new programs or seed funding to launch innovative initiatives.
The Grant Process
Securing grants involves several key steps. First, you’ll research potential funders whose priorities align with your mission and verify you meet their eligibility requirements. Then you’ll develop a compelling proposal that clearly articulates your project‘s need, approach, expected outcomes, and budget. The application process can range from a simple online form to a comprehensive multi-page proposal with extensive supporting documents.
After submission, funders typically conduct a review process that may include site visits, reference checks, or presentations. If awarded, you’ll receive a grant agreement outlining the terms, reporting requirements, and payment schedule. Throughout the grant period, you’ll need to track progress, manage funds according to the approved budget, and submit regular reports demonstrating your impact.
Strategic Considerations
Successful grant fundraising requires strategic thinking beyond individual applications. You’ll want to diversify your funding sources to avoid over-dependence on any single funder. Building relationships with program officers and foundation staff can provide valuable insights and increase your chances of success over time. It’s also important to align your grant strategy with your organization’s capacity – taking on grants that exceed your ability to deliver can damage your reputation and future funding prospects.
What is a Grant? Challenges and Realities
Grant fundraising is highly competitive, with success rates often below 20% for many funders. The application process can be time-intensive, sometimes requiring months of preparation for a single proposal. Many grants come with restrictions that limit how you can use the funds, and the reporting requirements can be substantial. Additionally, most grants are time-limited, meaning you’ll need to plan for sustainability or ongoing funding to maintain successful programs.
Understanding grants as more than just “free money” – recognizing them as partnerships with accountability requirements – will help you approach grant fundraising more strategically and build stronger relationships with funders over time.
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