Grants are one of the best known ways nonprofits fund their work, and also one of the most misunderstood. A grant is money awarded for a specific purpose that does not have to be paid back, but it comes with an application, conditions, and reporting. Winning one is a process, not a lucky break.
This guide explains who gives grants, the kinds of support available, what a strong application contains, and where to research funders that fit your mission.
In This Article
Who Gives Grants: The Four Main Funders
| Funder | How it works | Where to look |
|---|---|---|
| Federal government | Competitive awards for programs that match agency priorities | Grants.gov lists federal opportunities |
| State and local government | Grants and contracts tied to public services | State agency websites and local budgets |
| Private foundations | Family and independent foundations that give from an endowment | Foundation websites and their Form 990-PF returns |
| Community foundations | Pooled local giving, often geographically focused | The community foundation serving your area |
| Corporations | Giving programs, sponsorships, and matching gifts | Corporate social responsibility pages |
Different funders behave differently. Government grants tend to be large and heavily regulated. Foundation grants vary widely in size and are usually more flexible. Corporate giving often favors causes tied to the company's communities or workforce.
Restricted, Unrestricted, and Project Support
The most important distinction in any grant is what the money can be used for.
- Project or program grants fund a defined activity, such as launching a job training class.
- General operating support covers ongoing costs like rent, salaries, and utilities, and gives the organization more flexibility.
- Capacity building grants pay for things like technology, training, or strategic planning.
- Capital grants fund buildings and major equipment.
Restricted funds can only be spent on the stated purpose, and the organization has to track that spending carefully. This is part of why restricted grants shape what nonprofits can buy, a point we come back to in our guide to selling to nonprofits.
Why Private Foundations Have to Give
Private foundations are a reliable grant source partly because the law requires them to give. A private non-operating foundation generally has to distribute about 5 percent of the value of its investment assets each year for charitable purposes. That minimum payout is why foundations run regular grant cycles instead of giving occasionally. For the difference between a public charity and a foundation, see our guide to nonprofit vs foundation.
For perspective on how much of the sector's money grants represent, our revenue breakdown puts foundation grants at about 4.2 percent of total nonprofit revenue. Grants matter enormously to some organizations and very little to others, so do not assume they should be your only funding plan.
The Application Process, Step by Step
- Research funders. Look for those that fund your issue, geography, and organization size.
- Read the guidelines closely. Many rejections come from applying outside the funder's stated priorities.
- Start with contact if allowed. Some funders welcome a short letter of inquiry or a call before a full proposal.
- Write the proposal. Explain the need, your approach, the outcomes you expect, and a realistic budget.
- Submit on time and complete. Missing attachments are one of the easiest ways to be disqualified.
- Report honestly. If you win, meet the reporting terms, because a good record leads to renewals.
What a Strong Proposal Contains
Most funders expect the same core parts: an organization background, a statement of need supported by evidence, clear goals and measurable outcomes, a description of activities, a detailed budget, and a plan for evaluating results. The best proposals do not overpromise. They are specific about who will be served, what will change, and how the organization will know.
How to Research Funders That Fit
One of the most useful research tricks is to read a foundation's own Form 990-PF, which lists the grants it has actually paid, to whom, and in what amounts. That shows who the funder really supports, which is often more revealing than its website. Our guide to Form 990 explains where to find these returns.
Researching Organizations to Partner With?
Our database lists 1.65 million nonprofits with revenue, employees, and contact details, useful for grantmakers, consultants, and researchers mapping the sector.
Explore the Database →