Types of Grant Opportunities for Nonprofits
To
be financially successful, every nonprofit should
understand the world
of grants. From a distance, it seems that grantors
distribute money to all kinds of organizations, all in the same way, using one set of criteria in the
decision-making process. Also, many nonprofit organizations are under the impression that once they receive
a signed check, they can use the funds any way they wish, without
follow-up or oversight
- nothing could be
further from the truth.
Grantors award funds in a very strict manner
and according to rigid sets of rules
and criteria, which
are often specific to each individual grant opportunity.
Furthermore, funding is almost always accompanied by detailed reporting and oversight
requirements, where the nonprofit is required to submit comprehensive compliance reports throughout the life of the awarded
grant. It is also essential to understand that not all grants are the
same. In general, grants can be divided into several different categories, each with their own requirements.
Program Grants
This type of grant is funding is to be used towards a
specific program for use on particular project. When applying for a program
grant, information must be included in the application pertaining to the
specific details of the project, such as the budget, timeline, objectives,
metrics, etc. In other words, the grantor needs to know the exact definition
and scope of the project and, subsequently, exactly how the funds will be
spent. Since tracking funds designated for a specific
project is relatively simple, grantors tend to award
program grants with greater
frequency and in more significant amounts. These grants normally range anywhere
from $25,000 to $250,000.
General Operating Grants
A general operating grant is a grant that finances the
ongoing activities of a nonprofit organization. In contrast to other types of
grants which are allocated for use in specific projects, a nonprofit can use
the funds from a general operating grant according to its own discretion. For
example, to cover salaries, rent, or other basic, ongoing activities. In general, this type of grant ranges from $50,000
to $100,000.
Unfortunately, grantors rarely
award general operating grants today, mainly
due to the frequency of abuse and misuse of funds in the past.
Most foundations that give grants
will now require
extra levels of scrutiny before deciding to award general operating grants, if they even award this type of grant at all.
Capital Grants
Capital grants are typically used to fund the
construction of buildings and structures, such as university departments,
museum wings, hospital wards, and places of worship (e.g. churches, synagogues,
and mosques). In general, capital
grants end up being requests for very large sums of money, generally anywhere
from $250,000 up to tens of millions of dollars. With such large funds, though,
come certain catches. First, the grantor will often
request naming rights
to the building. Second, it is rare that a single grantor
will cover the cost
of a project in its entirety. Most of the time, the grantor will cover a certain percentage of the cost,
meaning the organization must acquire the rest of the funds from other
funding sources. Capital fund grantors will also often ask to see building
plans before even considering a grant application. This means that a nonprofit
must first be in a position to fund a significant amount of the building costs
itself before it should even consider applying for a capital grant. Grant
funders will typically not be a lead gift on a capital project.
Conditional Grants
A conditional grant is one that kicks in only when an organization succeeds
in raising a designated amount of funding from another source. In
most of these situations, a grantor will promise to match the amount of that other funding source. Conditional grants commonly
come about when a donor wants to fund a project, but it will not finance the entire project and is unwilling to make the
donation unless he knows that project will indeed receive all the required funding. Essentially, by offering a conditional grant, the grantor is requiring
the organization to prove its ability to finance the project through
to the end, before it is willing
to contribute its share. In general,
conditional grants are large - anywhere from $50,000 to $500,000 - and it is typically
easy to convince grantors
to approve such grants. However,
conditional grants also come with risks. For example,
in the situation where a nonprofit organization succeeds in securing
funding from two separate conditional grants, it sometimes happens
that neither grantor
wants to be the first to write the check, and the funding for the
project completely collapses.
Start-Up/Seed Grants
These grants can be hard to find and even harder
to obtain. Exactly
as the name suggests, a start-up or seed
grant can be used to help a new nonprofit
organization get off the ground
and make it through the start-up
stages. This type of grant is generally small - between $100 and $5,000
maximum.
Takeaways
It should be clear that choosing the right type of grant
to pursue is critical to an organization’s ability to
successfully secure grant funding. With such fierce competition for grants,
more and more nonprofits have come to understand the importance of managing the process of resource development in an organized and professional manner, which includes only applying for the right grants from the right grantor. How can
an organization determine which grants are the “right” grants? By knowing the
goals and activities of the nonprofit inside and out and by taking
the time to determine which
grantors most support
the type of work
the organization does.
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