Grant writing for a nonprofit organization starts by trying to understand who gives out grants. If the grant writer knows the process of distribution for a federal or state government, corporation or a foundation then the advice given to a nonprofit becomes invaluable.
Who Gives Out Grants
Grants are funded by the federal and the state governments, private foundations and community foundations as well as individual donors. Their initiatives vary widely. Their individual territories can be small or vast and the types of grants they award also vary.
An important element of fundraising for a nonprofit organization is often grants from corporations and foundations. These grants form the backbone of the funding revenue that most small nonprofit organizations receive.
Corporations and foundations are local and involved in the community and have a desire to give back to the community that has allowed their organization to prosper. Partnering with these entities has its advantages if the nonprofit organization’s mission fits well with their initiatives and goals.
Grant Writing for a Nonprofit Organization
When the grant writer approaches a foundation it is important to note if it is a private or public foundation. A private foundation derives all its assets from one source such as an individual, family or corporate donor.
Public foundations get their funding from a lot of different sources, usually in a specified community. They have to continue to raise funding from different sources in order to maintain a stable giving pattern. Individuals or organizations qualify to apply for funding from either source as long as the guidelines setup by the foundation is met.
Types of Foundations
When grant writing for a nonprofit organization it is important to know what type of foundation is being dealt with as there is several different types: independent, community, operating and family. These foundation types have different initiatives, creation, structure and revenue.
- Independent foundations are private entities setup to distribute grants to nonprofit organizations.
- Community foundations are public entities locally or regionally focused on distributing grants back to the community as an independent foundation.
- Operating foundations receive this classification from the IRS because they spent eighty-five percent of the earnings on the foundation to conduct research and run programs. They do not make grants.
- Family foundations are setup by one or two donors to ensure that future generations of their family award grants to uphold certain values established by the family at time of creation as a foundation. They make grants for the community and as a reward receive substantial tax breaks in return for the generosity of the foundation.
It is always best to understand the similarities and differences when grant writing for a nonprofit organization because it results in a more effective grant proposal based on the ability to provide a good match.
Who Has to Give Out Grants
The tax law binds foundations. Foundations receive special tax considerations and are required to give a back portion of their assets to the community annually. Some are required to give out five percent of the total principal plus interest each year in lieu of paying taxes to the federal government. In times of recession and depression the community expects them to give more then the five percent but they are not required to so.
The job, when grant writing for a nonprofit organization, is to seek out and discover those foundations or corporations that share the writer's mission and want to award grants to those that fit their initiatives.
For more on tips for effective grant writing see The Grant Proposal: Program Strategy and Tactics or Grant Proposal Strategy: Measurable Objectives.
