5 TYPES OF GRANTS FOR NONPROFITS

There are five primary types of grant funding that your organization may qualify for and all of them should be considered in your funding strategy.

Private Foundations

A private foundation is a nongovernmental, nonprofit organization with funds managed by its own trustees or directors. It is established to aid social, educational, religious or other charitable activities, primarily through grant making. U.S. private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code.

These are generally founded by an individual, a family, or a group of individuals, and are organized either as a nonprofit corporation or as a charitable trust. Some of the oldest private foundations in the United States have become quite large and may manage billions of dollars. Examples include the Weingart, Ford, Ahmanson, and Kresge foundations. Currently there are an estimated 141,000 private foundations in the country.

Family Foundations

A subset of private foundations, family foundations derive funds from members of a single family. At least one family member must continue to serve as an officer or board member of the foundation, and is the primary donor. The family member plays a significant role in governing and managing the foundation throughout its life. Often, family members serve as trustees or directors of their foundation and do so on a voluntary basis, receiving no compensation. Family foundations range in size from very small, giving grants rarely, to much larger foundations that give sizable grants annually. Examples include the Boehm-Gladen Foundation and the Kobe and Vanessa Bryant Family Foundation. There’s an estimated 40,000 family foundation in the U.S.

Corporate Foundations

Corporate foundations–also a subset of private foundations–derive their grant making funds from the contributions of a profit-making business. The company-sponsored foundation often maintains close ties with the donor company, but it is a separate, legal organization. Sometimes a corporation will have its own endowment and at other times it is funded annually from the profits of the business entity. Examples of corporate foundations include Wells Fargo, Bank of America, and Allergan Foundations. There are almost 3,000 corporate foundations in the United States.

Community Foundations

A community foundation is composed primarily of permanent funds established by many separate donors for the long-term benefit of the residents of a defined geographic area. Typically, a community foundation serves an area no larger than a state, but they could serve a single city. Community foundations provide services to donors who wish to establish endowed funds without incurring the administrative and legal costs of starting independent foundations. Community foundations award grants on behalf of these donors. According to the Council on Foundations, there are more than 750 community foundations across the United States today. Examples include the Silicon Valley Community Foundation and New York Community Trust.

Government Grants

Government grants may include funding from city, county, state, and federal entities. Due to limited staff, time, resources, and expertise of government entities, they make grants to fulfill a need that they cannot fulfill themselves. Therefore, they seek experts to do the job they value as important. These are often much larger grants–sometimes in the millions–than given by any of the above foundations.

It’s important to dispel the rumor that government grants are “free” money. In fact applying for and implementing government grants is very time consuming and requires a tremendous amount of documentation to prove the funding was used as intended.