Chapter 1: Understanding Grants and Funding Sources

In 2017, 3-time world track champion and 11-time Olympic medalist Allyson Felix encountered a problem that shouldn’t have been one. She got pregnant. What should have been a joyous time was complicated by Nike, with whom she had a contract. The contract did not protect Felix in the case of pregnancy and Nike cut her pay by 70%. While Felix retired from running in 2022, she remained fired up.

Inspired by her own experiences, Felix had ideas about what kinds of support could be offered to athlete moms. Ideas without funding don’t tend to go too far though, so Felix began searching for grants. In 2021, she teamed up with Athleta and the nonprofit &Mother to provide free childcare at major track events. In April 2024, Melinda French Gates pledged $1 billion to support women and families, partnering with Felix to allocate $20 million for improving women's health.

What is the likelihood that you will have to ask for money to accomplish your work at some point in your career? If you are planning to go into the public or nonprofit sectors, chances are you will. And you may have to do it a lot. Grants are the backbone of much of the work that gets done in American society, and being skilled at getting them is more valuable than ever. Grant writing is a skill that may prove useful over and over.

What is a Grant?

Grants are financial awards provided by government entities, foundations, corporations, and other organizations to fund specific projects or initiatives. Unlike loans, grants do not need to be repaid, making them highly sought after by nonprofit organizations, educational institutions, researchers, and businesses pursuing innovative projects with social, environmental, or scientific impact. Grants are designed to support efforts that align with the funder's objectives, ranging from scientific research and technological innovation to community development and the arts. The essence of a grant is its purpose to enable progress and positive change in society by providing the necessary resources to those who have the vision and expertise to make it happen.

The process of obtaining a grant involves a competitive application process where potential grantees submit detailed proposals outlining their project's goals, methodologies, potential impact, and financial needs. Funders then review these proposals through a rigorous selection process, evaluating each project's feasibility, alignment with funding priorities, and potential for lasting impact. This meticulous approach ensures that the allocated funds are used effectively to achieve the desired outcomes. For many organizations and individuals, securing a grant can be transformative, providing the financial backing needed to explore new ideas, expand services, or bring innovative solutions to life.

Grants play a pivotal role in fostering innovation, supporting research, and enabling community services and projects that might not otherwise be feasible. They act as catalysts for growth and development across various sectors, from healthcare and education to environmental conservation and the arts. By financially supporting projects with specific goals and outcomes, grants contribute to the broader societal good, advancing knowledge, solving complex problems, and enhancing community well-being. The strategic investment of grant funds thereby creates a ripple effect, generating benefits that extend far beyond the immediate recipients to impact broader communities and, potentially, the world at large.

The Grant Lifecycle

The lifecycle of a grant encompasses the complete process from the conception of the funding opportunity to the ultimate closure of the grant. This lifecycle is generally divided into three phases: pre-award, award, and post-award (like in Fig. 1.1). You may find grants that vary from this a bit, the underlying principles apply to all grants, regardless of the specific calendar.

Figure 1.1. The Life Cycle of a Grant

In the pre-award phase, the funding agency develops and announces the funding program aligned with its mission. Applicants must then locate and assess these opportunities, ensuring they meet any specified registration requirements and submitting their proposals within the given timelines. Applicants should be aware that the submission process varies by agency, with some acknowledging receipt of applications and others not. Once submitted, the application undergoes a review for eligibility and compliance.

The award phase begins once the review is complete, and successful applicants are notified. The funding agency then finalizes the legal details of the funding agreement and disburses the funds. Recipients can then commence their projects, adhering to all required financial, administrative, and programmatic reporting standards.

During the post-award phase, the funding agency oversees the grant's administration, including regular checks on the recipient's reporting and, if necessary, conducting audits. Recipients are expected to provide financial and programmatic updates on their project's performance. Once all requirements are fulfilled, including the submission of final reports, the grant life cycle concludes.

Contrary to some beliefs, grants are not merely "free money" but are awarded based on a shared mission between the grantee and the grantor. The grant application, in essence, is a commitment by the applicant to perform specific tasks in exchange for financial support, representing a partnership where each party contributes essential resources towards common objectives.

The Role of a Principal Investigator (PI)

The Principal Investigator (PI) plays a critical role in managing a grant-funded project. This includes overseeing the project's intellectual direction, maintaining fiscal accountability, and ensuring compliance with relevant regulations. When a project has multiple leaders, they are referred to as Co-Principal Investigators. Despite there being multiple PIs, often one individual is designated as the primary responsible party. The PI’s responsibilities span both the pre-award and post-award phases, involving tasks such as identifying funding opportunities, developing and submitting the proposal, managing project finances, and ensuring regulatory compliance throughout the project's duration.

Who are Funders and Why do they give Grants?

In the landscape of philanthropy, foundations stand as pivotal entities channeling resources towards meaningful social, educational, scientific, and cultural initiatives. These organizations, whether operating as non-profit corporations or charitable trusts, share a common goal: to support projects and individuals that contribute positively to society. Understanding the types of foundations and their funding sources is essential for grasping the dynamics of grantmaking.

Government Agencies: It’s your Money

Government agencies at the local, state, and federal levels offer grants to support projects and programs that align with public policy objectives. These agencies typically have well-defined priorities based on legislative mandates or societal needs. Funding from government sources is often substantial but comes with stringent requirements for compliance, reporting, and performance outcomes. Understanding these agencies' priorities and operating within their guidelines will make securing and successfully managing government grants less stressful.

Private Foundations: Wealth for the Public Good

Private foundations are often the embodiment of philanthropic visions, funded by individuals, families, or corporations. A quintessential example is the Ford Foundation, which leverages its resources to address global issues. These foundations are characterized by a "payout requirement," a regulatory mechanism ensuring a minimum percentage of their assets is annually distributed in the form of grants. This mandate ensures that private foundations actively contribute to their chosen causes, making them a reliable source for potential grantees seeking support.

Interestingly, foundations can include both charities — in the form of charitable trusts — and nonprofit organizations, but foundations are created to monetarily support other organizations. A private foundation is defined as, “a nonprofit charitable entity that is generally created by a single benefactor, usually an individual or a business. Using this initial seed donation, known as an endowment, an investment is made to generate income, which is then dispersed in the form of grants to individuals or other charities in accordance with the foundation’s charitable purpose.”

There are many types of private foundations, and they serve wide ranging purposes from education initiatives to disease research. Examples of private foundations include:

• Cancer research organizations
• Private family foundations
• Arts foundations
• Community foundations

Grantmaking Public Charities: Collective Efforts for Community Impact

Contrastingly, grantmaking public charities, or "public foundations," pool resources from a diverse array of donors, including foundational grants, individual contributions, and government funds. The Save the Children Federation exemplifies this model, operating with widespread support to maximize its outreach. Community foundations fall under this category, serving as hubs for local philanthropy by aggregating donations to meet the needs of their communities effectively.

Both types of foundations are accountable to the IRS, with private foundations submitting Form 990-PF and public charities filing Form 990. These documents, accessible to the public, offer transparency into the organizations' operations, financial health, and governance.

Corporate Philanthropy: Business with a Heart

An interesting evolution in grantmaking is the role of corporate philanthropy. Companies, from giants like Wells Fargo and Target to Tyson Foods, allocate funds to support small businesses and community projects. This generosity is not merely altruistic; it stems from a commitment to corporate social responsibility (CSR). Through CSR programs, corporations signal to the public their dedication to societal welfare, enhancing their community standing and achieving tax benefits.

These initiatives often manifest through direct grants or the establishment of charitable foundations, allowing companies to channel their resources effectively while reaping fiscal advantages. Beyond tax savings, corporations recognize the value in building positive brand associations, thus using philanthropy as a strategic tool to bolster their reputations.

Individual Donors-Grassroots Giving

Individual donors provide grants based on personal interests, values, or connections to specific causes or communities. These funders may be motivated by a desire to create a lasting legacy, support innovation, or give back to their communities. Building a relationship with individual donors often requires a personalized approach, understanding their motivations, and demonstrating the direct impact of their support.

The synergy between private foundations, public charities, and corporate philanthropy creates a vibrant ecosystem of support, enabling projects and individuals across various sectors to find the backing they need to make a difference. Understanding the motivations and mechanisms behind these grants is necessary for navigating the world of philanthropy, whether one is seeking funding or looking to contribute to the greater good.

Understanding Funders

To craft successful grant proposals, one must understand the perspectives and priorities of those who provide the funding. Funders, whether they are government agencies, foundations, corporations, or individuals, have specific goals and criteria that guide their grantmaking decisions. This understanding forms the bedrock upon which effective and mutually beneficial relationships between grant seekers and grant providers are built.

Foundations, charities and nonprofits share many of the same characteristics — they’re philanthropic, rely on donations, support community and public interest initiatives, and more. Given their similarities, there is often confusion surrounding the three. But, each has its own unique function and structure, which are important distinctions for both those looking to support them and those looking to work for them. So, what should you know about foundations vs. charities vs nonprofits?

The Basics of 501(c)(3)

No matter what their specific mission happens to be, charities, foundations, and nonprofits generally have one big thing in common–tax exempt status. This status, technically referred to as 501(c)(3), grants these entities certain benefits not available to other organizations.

According to the IRS, “To be tax-exempt under section 501(c)(3) of the Internal Revenue Code, an organization must be organized and operated exclusively for exempt purposes set forth in section 501(c)(3), and none of its earnings may inure to any private shareholder or individual. In addition, it may not be an action organization, i.e., it may not attempt to influence legislation as a substantial part of its activities and it may not participate in any campaign activity for or against political candidates.” A 501(c)(3) will fall into one of the following categories

• Religious
• Charitable
• Scientific
• Testing for public safety
• Literary
• Educational
• Fostering of national or international amateur sports, or
• Prevention of cruelty to animals and children

In addition to fitting into one of these categories, foundations, nonprofits and charities must also abide by the following rules to retain their 501(c)(3) tax exemption.

“The organization must not be organized or operated for the benefit of private interests, and no part of a section 501(c)(3) organization’s net earnings may inure to the benefit of any private shareholder or individual. If the organization engages in an excess benefit transaction with a person having substantial influence over the organization, an excise tax may be imposed on the person and any organization managers agreeing to the transaction.”

Further, there is a specific set of rules that these organizations have to follow regarding any political or lobbying work that they may do. Organizations with a 501(c)(3) status, while primarily focused on charitable, educational, religious, or scientific purposes, are allowed to engage in lobbying activities, but there are specific limitations and rules they must follow to ensure they retain their tax-exempt status. Here's a simplified breakdown:

1. Limited Lobbying Activities

• Direct Lobbying: Nonprofits can engage in some direct lobbying, which involves attempts to influence legislation by communicating with legislators or government employees who participate in the formulation of legislation. This can include presenting positions on specific legislation or proposed laws.
• Grassroots Lobbying: This type of lobbying involves encouraging the public to act on legislation, such as asking members or the public to contact their representatives. This is more restricted than direct lobbying.

2. Restrictions and Limitations

• Substantial Part Test: The IRS stipulates that lobbying activities must not constitute a "substantial part" of a nonprofit's activities. However, the IRS does not define precisely what "substantial part" means, leaving it somewhat subjective but generally interpreted based on time and expenditures.
• Expenditure Test (501(h) Election): Nonprofits can opt to make a 501(h) election, which allows them to spend a specified amount on lobbying activities based on the organization's size, with clear limits provided by the IRS. This election provides clearer guidelines than the substantial part test and is often recommended for organizations that plan to engage in lobbying.

3. Reporting Requirements

• Nonprofits that engage in lobbying must keep detailed records of their lobbying activities and expenditures. Those that have taken the 501(h) election must complete specific sections of the IRS Form 990 to report these activities and ensure they stay within legal spending limits.

Nonprofits that exceed the permitted amount of lobbying activities risk losing their tax-exempt status. Additionally, they may incur taxes on the excess lobbying expenditures and possibly other penalties. So, while 501(c)(3) organizations are allowed to lobby within defined limits, they must carefully navigate these regulations to maintain their tax-exempt status and comply with federal laws. Engaging in lobbying requires strategic planning, meticulous record-keeping, and often, legal guidance to ensure all activities are conducted legally and effectively.

Organizations recognized under Section 501(c)(3) of the Internal Revenue Code, also navigate a narrow path when it comes to political activities. In order to maintain their tax-exempt status and comply with federal laws, it is extremely important to understand what is permitted and what is not.

Some examples (not even close to an exhaustive list):

Permitted Activities:

• Educational Activities: Nonprofits can conduct educational activities related to political processes, voter education, and issues of public concern, provided these activities are conducted in a non-partisan manner. This can include hosting forums, discussions, and providing educational materials as long as they don't advocate for or against specific candidates.
• Advocacy on Issues: Nonprofits can advocate for issues that align with their mission without linking their advocacy to any political campaign or candidate. It's important that these issue-based advocacies do not cross into direct or indirect support of political candidates.
• Lobbying Within Limits: As mentioned earlier, 501(c)(3) organizations can engage in a limited amount of lobbying to influence legislation relevant to their mission. The limits on what constitutes "limited" depend on the organization's choice between the "substantial part test" and the "501(h) election" for clearer expenditure guidelines.

Prohibited Activities:

• Political Campaign Activity: 501(c)(3) organizations are strictly prohibited from engaging in political campaign activity, meaning they cannot endorse, oppose, donate to, or fundraise for political candidates. This prohibition extends to any activities that could be construed as supporting or opposing a candidate for public office, including using organizational resources to favor or disfavor a candidate.
• Partisan Activities: Nonprofits cannot participate in partisan activities that show bias towards or against any political party. This includes distributing materials that favor a political party or using organizational platforms to express partisan viewpoints.

Entities that violate these rules risk losing their tax-exempt status, which can have significant financial and operational repercussions. Additionally, they could face taxes on political expenditures and other penalties from the IRS. The loss of public trust and credibility can also have long-term effects on the organization's ability to fulfill its mission. Thus, while 501(c)(3) nonprofits play a vital role in educating the public and advocating for issues, they must carefully balance their activities to avoid political partisanship and ensure compliance with their tax-exempt status regulations.

Benefits of 501(c)(3) Status

• Tax Exemption: Organizations are exempt from federal income tax. Many states also offer exemptions from sales and property taxes.
• Tax-Deductible Contributions: Donations made by individuals and corporations are tax-deductible, encouraging philanthropy.
• Eligibility for Grants: Many government and private grants are available only to 501(c)(3) organizations.
• Postal Discounts: Reduced postage rates are available for some types of mailings.

Obtaining 501(c)(3) Status

Obtaining tax-exempt status as a nonprofit organization in the United States is a process that involves several steps, primarily guided by the Internal Revenue Service (IRS), but also involving your state. Here’s a general overview of how to go about it:

1. Incorporate Your Nonprofit

• Begin by incorporating your organization as a nonprofit corporation in your state. This involves filing articles of incorporation with your state's Secretary of State office or similar entity. Make sure your articles of incorporation include the necessary language and clauses required by the IRS for tax-exempt status, such as a specific purpose clause and a dissolution clause dedicating your assets to another tax-exempt organization upon dissolution.

2. Obtain an EIN

• Even if you don’t plan to have employees immediately, you need to obtain an EIN from the IRS. This number is essentially your organization’s Social Security number and is required for tax filings and to open a bank account. You can apply for an EIN online, by fax, or mail through the IRS website.

3. Draft Your Nonprofit Bylaws

• Draft the bylaws for your organization, which will serve as the internal operating rules. While bylaws aren't submitted to the IRS, they may need to be provided upon request and are necessary for organizational governance.

4. Hold an Organizational Meeting

• Conduct an initial meeting of your board of directors as outlined in your bylaws. During this meeting, you should adopt the bylaws, set up an accounting period and tax year, and record the meeting minutes. These minutes are important for maintaining corporate compliance and proving your operational status to the IRS.

5. File for Tax-Exempt Status

• For most organizations seeking 501(c)(3) status, filing IRS Form 1023, Application for Recognition of Exemption Under Section 501(c)(3) of the Internal Revenue Code, is the key step. This detailed application requires information about your organization’s structure, governance, and programs. The IRS uses it to determine if your organization qualifies for tax-exempt status. Small organizations expecting to have $50,000 or less in gross receipts annually may be eligible to file Form 1023-EZ, which is a shorter version.
• State-Level Exemption: In addition to federal tax-exempt status, you may need to apply for state-level exemptions for sales, property, and income taxes. The requirements vary by state.

6. Await IRS Determination

• After submitting Form 1023 or 1023-EZ, the IRS will review your application. This process can take several months, and the IRS may request additional information. Once approved, you will receive a determination letter confirming your tax-exempt status.

7. Maintain Compliance

• Maintain your tax-exempt status by keeping accurate records, filing annual returns (Form 990 series), and adhering to the operational restrictions of tax-exempt organizations, such as limitations on lobbying and political activities.

Obtaining tax-exempt status is a meticulous process that can be complex depending on the size and scope of your organization. Many organizations seek guidance from legal professionals or tax experts to navigate the application process and ensure compliance with all federal and state requirements.

Types of Grants

Effective grant writing requires a deep understanding of the landscape of grant funding. Grants can come from a variety of sources and are designed to support a wide range of projects and initiatives. This section provides an overview of the primary types of grants, offering insights into their purposes, sources, and how they typically operate. This foundational knowledge will help you identify which grants are the best fit for your projects and how to tailor your proposals accordingly.

1. Government Grants

Government grants are funded by local, state, or federal government agencies. These grants are often substantial and can support a wide range of projects, from scientific research to community development and education programs. Applying for government grants is usually a competitive and rigorous process, requiring detailed proposals and strict compliance with regulations. Examples include grants from the National Institutes of Health (NIH) for medical research or the National Science Foundation (NSF) for scientific and engineering research.

Securing a government grant can be a significant boon for nonprofit organizations, offering substantial financial support to further their missions. However, this funding avenue also comes with challenges that need careful consideration. Below is an overview of the advantages and disadvantages associated with receiving government grants.

Advantages

• Stable Funding Source: Government grants can provide a substantial and stable source of funding for specific projects or operational costs, enabling organizations to plan and execute their programs with confidence over the grant period.
• Legitimacy and Recognition: Receiving a government grant can enhance an organization's credibility and visibility. It often acts as a seal of approval that can help attract additional funding from other sources, as it demonstrates that the nonprofit meets the stringent requirements and oversight typical of government funding.
• Potential for Large Awards: Government grants often involve larger sums of money than what might be available from private sources, allowing for significant project funding that can make a considerable impact on the organization's capabilities and reach.
• Focus on Public Benefit: Government grants are typically aligned with public policy goals and societal benefits, which means they support projects that have a clear and direct impact on the community or environment, aligning well with the missions of many nonprofits.

Disadvantages

• Complex Application Process: Applying for government grants can be a complex and time-consuming process, involving detailed proposals, strict guidelines, and often a competitive bidding process. The administrative burden can be substantial, particularly for smaller organizations.
• Restrictive Use of Funds: Government grants usually come with stringent conditions regarding how funds can be used, requiring organizations to adhere closely to the proposed activities and budget allocations. This can limit flexibility in responding to changing needs or unexpected challenges.
• Heavy Reporting Requirements: Recipients of government grants face strict accountability standards, including regular, detailed reporting on program progress, financial audits, and compliance with government regulations. The administrative load can be significant, diverting resources away from program activities.
• Risk of Dependency: Relying heavily on government funding can pose risks, especially if funding priorities change or if there are budget cuts. Organizations may find themselves in a precarious position if they haven’t diversified their funding sources.
• Potential for Mission Drift: In the pursuit of government funding, there's a risk that an organization may shift its focus towards projects that align with government priorities, possibly at the expense of its original mission. This can lead to mission drift if not carefully managed.

While government grants offer valuable opportunities for funding, recognition, and the ability to make a substantial impact, they also require careful navigation of complex application processes, adherence to restrictive use and reporting requirements, and the foresight to avoid over-reliance on this funding source to maintain organizational mission and stability.

Figure 1.2. Sample Government Grant

https://www.grants.gov/search-results-detail/352718

The Executive Summary and Background sections of this grant announcement are included below.

Executive Summary: The U.S. Department of State's Embassy in Ashgabat announces availability of funding as specified below through the Embassy's small grants for book clubs program. The U.S. Embassy Ashgabat has translated prominent American literature items into Turkmen language. This small grant program seeks to develop critical thinking among youth (teenagers and children) and their parents by promoting reading and discussions of the provided American literature. Applicants must develop a year-long program focusing on a selected audience and demonstrating the need and the will to engage into reading. 

Background: The U.S. Embassy Ashgabat has translated 19 prominent American literature items into Turkmen language. These books include adult, teenage and children's literature and are available in bilingual editions (English and Turkmen) at the U.S. Embassy and across American spaces in Turkmenistan. List of available books is provided below.

1. Little House in the Big Woods, Laura Ingalls Wilder
2. Farmer Boy, Laura Ingalls Wilder
3. A Wrinkle in Time, Madeline L'Engle
4. The Adventures of Tom Sawyer, Mark Twain
5. Where the Red Fern Grows, Wilson Rawls
6. Charlotte's Web, E. B. White
7. The Little Engine That Could, Watty Piper
8. Harold and the Purple Crayon, Crockett Johnson
9. Blueberries for Sal, Robert McCloskey
10. Peter's Chair, Ezra Jack Keats
11. The Runaway Bunny, Margaret Wise Brown
12. Good Night Moon, Margaret Wise Brown
13. To Kill a Mockingbird, Harper Lee
14. What do People do all Day, Richard Scarry
15. Best Little Word Book Ever, Richard Scarry
16. Hidden Figures, Margot Lee Shetterly
17. The Story of Helen Keller, Helen Keller
18. Giving Tree, Shel Silverstein
19. Native American Folk Tales

2. Foundation Grants

Foundations are nonprofit entities that provide grants to support charitable activities in line with their mission. These can be private foundations, established by individuals, families, or corporations, or community foundations that pool resources from multiple donors to support local initiatives. Foundation grants vary significantly in size, scope, and application requirements. Some foundations issue "open calls" for proposals, while others invite applications by direct solicitation only.

Securing a foundation grant can be a transformative experience for nonprofit organizations, offering not just the needed financial backing but also a partnership that can foster growth, innovation, and visibility. These grants are often targeted towards specific initiatives, mirroring the foundation's areas of interest such as education, health, or environmental conservation. This alignment between a nonprofit's mission and a foundation's focus can result in significant support for projects that are central to the organization's goals, potentially filling gaps that other funding sources might overlook.

Beyond the financial aspect, foundation grants can serve as a gateway to valuable networks and partnerships. Foundations are not merely funders; they often act as collaborators, offering access to a wealth of knowledge, expertise, and connections that can propel a nonprofit to new heights. Furthermore, being endorsed by a respected foundation can enhance an organization's standing in the community and among other potential donors, lending it a level of prestige and credibility that facilitates further fundraising and volunteer recruitment efforts. In some cases, foundations provide flexible funding, including unrestricted grants that allow nonprofits to allocate resources to operational expenses or wherever the need is greatest, offering a degree of financial latitude that is rare in the nonprofit sector.

However, the path to obtaining foundation grants is fraught with challenges. The application process is notoriously competitive, with numerous organizations vying for a finite pool of resources. Crafting compelling proposals requires significant time and effort, with no guaranteed outcome, particularly when aiming for grants from highly coveted foundations. Additionally, while some grants offer flexibility, others come with stringent restrictions, earmarking funds for specific projects or programs. This can limit an organization's ability to pivot in response to unforeseen challenges or to channel funds into core operational needs.

Figure 1.3. Sample Foundation Grant

Greater Cedar Rapids Community Foundation Grant Criteria

Purpose

Program Support Grants support new, Innovative programs and sustained current and/or ongoing programs of non-profits that serve Linn County, Iowa.

Deadlines

Program Support Grants deadlines for 2024 are Friday, March 1 and Friday, September 13 at 4:30 p.m. CST.

Organization Eligibility

The Community Foundation accepts applications from nonprofit organizations with a 501(c)(3) status, governmental organizations, and non-501(c)(3) organizations that have completed arrangements to obtain a fiscal sponsor.

Multiple organizations may submit a joint application for a collaborative project - contact Program Officer to discuss this further. Organizations based outside of Linn County may only apply for the Linn County portion of program costs.

Maximum Request Amount

For organizations with operating budgets greater than $125,000, the maximum request amount is $25,000 per year. Organizations with operating budgets less than $125,000 may request an amount up to 20% of their operating budget per request (rounded up to the nearest $100).

Duration of Grants 

12 - 24 months (for a two-year request)

Application and Forms 

Download 2024 Program Support Grants Application and Scoring Criteria 

https://www.gcrcf.org/resources-for-nonprofit-organizations-serving-linn-county-iowa/grants/grant-opportunities-and-deadlines/program-support-grants/ 

3. Corporate Grants

Corporate grants are offered by businesses as part of their corporate social responsibility (CSR) programs. These grants aim to give back to the community or support issues aligned with the company's values and goals. Corporate grants can support a range of projects, including educational programs, environmental conservation, and community development initiatives. Unlike government and foundation grants, corporate grants may also focus on partnership opportunities that offer mutual branding and marketing benefits.

Corporate grants can provide nonprofit organizations with financial support without requiring any loss of control or equity, allowing them to further their missions and expand their services without compromising their governance or objectives. Being selected for a corporate grant also enhances an organization's credibility and visibility, often coming with public recognition that can attract additional donors and volunteers by signaling trustworthiness and validation of the nonprofit's cause. Moreover, corporate grants may offer access to additional resources like expertise, technology, and networks, providing mentoring, training, and other forms of non-monetary support that can be invaluable for growth and development. Securing a corporate grant can be the start of a long-term partnership, where successful collaboration on a grant project leads to further funding and support opportunities, as well as potential joint ventures and advocacy. With corporate funding, nonprofits might have the opportunity to launch new projects, expand services, or innovate within their programming, which might not be possible through traditional funding alone.

However, corporate grants often come with strict guidelines on how the funds can be used, which might not perfectly align with the nonprofit’s most pressing needs, limiting flexibility in operations and project implementation. The process of applying for these grants can be time-consuming and resource-intensive, with detailed reports on fund usage required, adding to the administrative workload. There's also a risk of mission drift as nonprofits may shift their focus to align with the interests of their corporate funders, potentially diluting their impact and alienating core supporters. Accepting money from corporations, especially those with controversial reputations, can affect public perception of the nonprofit, leading stakeholders to question the integrity or independence of the organization based on its funding sources. Lastly, reliance on corporate grants for funding can lead to sustainability issues if that funding is reduced or withdrawn, making it difficult for nonprofits to plan for long-term financial stability without becoming dependent on corporate support.

Figure 1.4. Sample Corporate Grant

Walmart Spark Good Local Grants 

Program Guidelines

Spark Good Local Grants are awarded through an open application process to eligible organizations operating locally and directly benefiting the service area of the facility from when they are requesting funding. Grant amounts range from a minimum of $250 to a maximum of $5,000.

Organization Eligibility 

Organizations must have a Spark Good account and be verified by Deed, Walmart's third-party verification service provider. If recommended for funding, the organization must provide electronic payment information to complete the approval process. All grants are disbursed through electronic payment.

Organizations applying must meet one of the following criteria:

An organization holding a current tax-exempt status as a public charity under Section 501(c)(3) of the Internal Revenue Code, listed on the IRS Master File and conducting activities within the United States, classified as a public charity under Section 509(a)(1), (2) or (3) (Types I or II); and Deed verified.

A recognized government entity: state, county or city agency, including law enforcement or fire departments, that are requesting funds exclusively for public purposes and Deed verified.

A K-12 public or nonprofit private school, charter school, community / junior college, state/private college or university; or a church or other faith-based organization with a proposed project that benefits the community at large, such as food pantries, soup kitchens and clothing closets and Deed verified.

Selection and Approval Process

Facility management review applications and make initial funding recommendations on all submitted requests. Each facility manager may set the frequency and process in which application determinations are made. The facility manager and the grant administrator reserve the right to adjust the amount awarded to each organization without prior notice. Organizations will be notified of any decision via e-mail. Al funding decisions are final.

https://walmart.org/how-we-give/program-guidelines/spark-good-local-grants-guidelines 

4. Research Grants

The primary purpose of research grants is to provide financial support for investigations and studies across a wide array of disciplines, including science, technology, engineering, social sciences, and humanities. These grants enable researchers to pursue questions and hypotheses that contribute to their field's body of knowledge, potentially leading to breakthroughs, innovations, and solutions to complex problems.

Many countries have governmental bodies dedicated to funding research, such as the National Science Foundation (NSF) in the United States, the European Research Council (ERC) in Europe, and the National Natural Science Foundation of China (NSFC). These agencies support a broad range of research activities, from basic science to applied research. Nonprofit organizations, such as the Bill and Melinda Gates Foundation, the Wellcome Trust, and the Ford Foundation, provide grants for research projects that align with their mission and goals. These can include health, education, environmental conservation, and social policy research. Universities often offer internal grants to support the research of their faculty and students. These funds may come from endowments, donations, or institutional budgets. Companies across sectors also invest in research that can lead to new technologies, products, and processes, offering grants to academic and independent researchers whose work can contribute to their business interests.

Research grants are specifically for research, and therefore are limited in terms of eligibility. For researchers, however, the prestige associated with securing research grants can significantly enhance their standing within their academic or scientific community, marking a pivotal point in their career development. These grants are often seen as a badge of honor, reflecting the quality and potential impact of one's work, and are important for academics striving for tenure or looking to build their research portfolio. Beyond individual achievements, grants often play a role in building research infrastructure, from state-of-the-art laboratories to comprehensive digital libraries, thereby enriching the entire research ecosystem. Moreover, the collaborative nature of many grants fosters partnerships that cross institutional and geographical boundaries, promoting a multidisciplinary approach to research that can tackle complex global challenges more effectively.

However, the path to obtaining research grants is fraught with challenges. The competitive landscape can be intense, with funding bodies often receiving applications that far exceed their capacity to support, leading to low success rates in certain fields and among early-career researchers. The application process itself is often a Herculean task, requiring extensive preparation, writing, and revision, which can distract researchers from their focus on the research itself. Once a grant is awarded, researchers must navigate strict guidelines on fund usage, adhere to rigorous reporting requirements, and are expected to deliver results within the grant's timeframe. This pressure can be particularly acute in exploratory research where outcomes are uncertain.

Further, the reliance on external funding sources for research activities introduces an element of financial instability, making long-term planning and sustainability a challenge for both researchers and their institutions. The cycle of grant applications and the dependency on such funding can lead to periods of uncertainty, affecting the continuity of research programs and the morale of research teams.

In essence, while research grants are great for fueling discovery and advancing human knowledge, they come with a set of inherent challenges that demand careful consideration and strategic planning. The balance between leveraging the opportunities provided by grants and managing the demands they impose is crucial for sustaining the vibrancy and productivity of the research community.

Figure 1.5. Sample Research Grant

National Science Foundation Research Grant

The U.S. National Science Foundation's Directorate for Technology, Innovation and Partnerships (TIP) is charged with accelerating use-inspired and translational research and development (R&D) to advance U.S. competitiveness in key technology focus areas.

Advancing Cell-Free Systems toward Increased Range of Use-Inspired Applications (CFIRE) initiative will accelerate the adoption of cell-free systems, enable new applications of this technology and contribute to the growth of the U.S. bioeconomy.

Full proposal

September 20 2024 - Deadline date

Due by 5:00 p.m. submitting organization's local time

Program guidelines

Award information

The total funding available for this activity is up to $40,000,000 over 3 years. Estimated program budget, number of awards and average award size/duration are subject to the availability of funds.

Estimated number of awards

2 to 8

Estimated number of awards description

-Up to 8 awards are anticipated depending upon availability of funds on the quality, scale, transformative-potential and diversity of project ideas developed at the Ideas Lab. Awards will be funded up to $3,750,000 per year for up to 3 years. The budget for a given proposal should be commensurate with the complexity of the proposed research and development plan and the final maturity level and translational impact of the results.

https://new.nsf.gov/funding/opportunities/ideas-lab-advancing-cell-free-systems-toward 

5. Capital Grants

Capital grants play an important role in the advancement and sustainability of various organizations, with a particular emphasis on nonprofits, charities, and foundations. These grants are earmarked for significant expenditures such as acquiring, constructing, or renovating buildings and facilities, or purchasing essential equipment and large-scale assets. While offering a myriad of benefits, navigating the terrain of capital grants also presents a set of unique advantages and challenges that organizations must carefully manage.

The essence of capital grants lies in their purpose and the broad spectrum of objectives they aim to fulfill. Primarily, these grants are deployed to promote social goods, a priority for both the public and for private foundations. By funneling resources into the development of community centers, public health facilities, and similar projects, capital grants significantly contribute to the public interest, enhancing the quality of life within communities and providing essential services that might otherwise be inaccessible.

Beyond their social impact, capital grants are instrumental in stimulating economic growth. They provide a financial stimulus to specific regions or sectors, encouraging development and revitalization efforts that can lead to job creation, increased economic activity, and improved infrastructure. This aspect of capital grants underscores their role in fostering a dynamic and robust economic environment.

For nonprofit organizations operating on tight budgets, capital grants are a lifeline that sustains operations and facilitates expansion. These grants allow nonprofits to undertake projects and initiatives that broaden their reach and amplify their impact, enabling them to serve their communities more effectively. Moreover, capital grants support innovation by funding research and development projects or startups with innovative ideas, driving progress and technological advancements across various fields.

Capital grants are more than just financial aid; they are catalysts for social, economic, and organizational growth. They support a wide array of projects that serve the public good, stimulate economic development, sustain nonprofit operations, and encourage innovation. However, the process of obtaining and effectively utilizing capital grants involves navigating a complex landscape of application procedures, fund management, and project implementation, all while aligning with the specific goals and restrictions associated with each grant.

Figure 1.6. Sample Capital Grant

Illinois Department of Commerce and Economic Opportunity Capital Grant

The intent of this program is to assist companies with large-scale capital investment projects that commit to significant job creation for Illinois residents as they relocate or expand operations within Illinois. Business Attraction Prime Sites grants can encompass a wide range of economic development projects and may include infrastructure and capital equipment purchases that will result in job creation in the state of Illinois.

https://dceo.illinois.gov/aboutdceo/grantopportunities/2608-2023.html 

6. Endowment Grants

Endowment grants are voluntary, substantial financial gifts provided to organizations, typically with the stipulation that the principal amount is to be kept intact while the investment income is used for ongoing support. These grants can be transformative, offering a steady stream of income over time. However, managing an endowment comes with its own set of challenges alongside its benefits.

There are four types of endowments:

• Unrestricted Endowment – This consists of assets that can be spent, saved, invested, or distributed at the discretion of the institution receiving the gift.
• Term Endowment – The principal can be expended after a period of time or a certain event.
• Quasi Endowment – A donation made to serve a specific purpose. The principal is typically retained while the earnings are spent per the donor's specifications. These endowments are often started by the institutions that benefit from them via internal transfers or the use of unrestricted endowments.
• Restricted Endowment – The principal is held in perpetuity while the earnings from the invested assets are expended per the donor’s specifications.

Endowed funds differ from others in that the total amount of the gift is invested. Each year, only a portion of the income earned is spent while the remainder is added to the principal for growth. In this respect, an endowment is a perpetual gift.

Figure 1.7. Sample Endowment Grant

1. A XYZ University alumni makes a $50,000 gift to establish a named endowed scholarship in memory of her husband.
2. A gift agreement is drawn up between XYZ University and the donor to guarantee that her donation will be added to the Common Investment Fund and used only for its intended purpose.
3. The newly named scholarship fund buys "units" in teh Common Investment Fund, similar to how an investor would purchase shares in a mutual fund.
4. The donor's gift is invested across major asset classes in the university's portfolio to maximize long-term return within acceptable levels of risk within the policy parameters established by the university and the appropriate state and federal statutes.
5. A predetermined portion of the income earned on the investment is used to provide a scholarship for one student per year, per the endowment agreements instructions. The fund's principal remains intact.
6. The remainder of the income earned goes back into the account with the principal and is reinvested.
7. The named fund continues to grow, ensuring future scholarships.

7. Matching Grants

Matching grants are a unique funding mechanism where nonprofits must raise a certain portion of funds, which are then matched by the grantor, either partially or on a dollar-for-dollar basis. These grants, offered by corporations, foundations, or individuals, aim to amplify the impact of the donation by requiring the nonprofit to also contribute financially to their project. The matching process usually operates on a 1:1 or 2:1 ratio, meaning the donor will match the nonprofit's fundraising efforts equally or double the amount raised by the nonprofit, respectively.

Unlike traditional grants that provide funds directly to nonprofits, matching grants incentivize organizations to engage in their fundraising activities. For instance, in a scenario where a donor promises to double any donations received, a nonprofit is motivated to increase its fundraising efforts to maximize the potential grant amount.

Applying for a matching grant typically involves a direct application to the donor, whether a corporation or another entity, which will have set specific criteria for eligibility. The nonprofit must outline how it intends to use the funds to advance its mission as part of the application process.

Matching grants are particularly effective for funding projects with strong community support, leveraging local involvement and investment. Governments or organizations might allocate matching funds for community-driven projects, where proposals are developed and submitted for funding consideration. If approved, the grantor matches the community's contribution, often including labor and materials, not just financial donations, thereby enabling groups with more time than money to successfully fund and implement local improvement initiatives. This approach is widely used for projects like planting street trees or developing or refurbishing parks and playgrounds, harnessing the power of community engagement to achieve tangible outcomes.

Many cities set up matching grants as a way of improving areas while also involving community and neighborhood groups. For example, Seattle’s Department of Neighborhoods is particularly well known and respected for their success with matching grants. The Dept. of Neighborhoods sponsors four types of matching funds for different types and scales of project. The first of these is the Large Project Fund for projects lasting up to twelve months and that cost between $15,000 and $100,000. Second is the Small and Simple Projects Fund for projects seeking awards of $15,000 or less and that can be completed in 6 months or less. Third is The Tree Fund where neighborhood groups can apply for 10 to 40 trees for planting along residential planting strips. Finally, the Neighborhood Outreach and Development Fund funds projects that involve new people in neighborhood organizations or activities. They fund a variety of projects, at many different price points, but each one of them must come with matching funds.

Figure 1.8. Sample Matching Grant

Voluntary Agencies Matching Grant Program

The Matching Grant Program helps refugees and other ORR-eligible populations overcome barriers and quickly find jobs. The intent is for refugees to become economically self-sufficient through employment within 240 days and without accessing cash assistance programs. Participating in the Program 

Matching Grant program participants must meet certain employment requirements and must enroll within 31 days after their date of arrival or eligibility.

The program works closely with clients, providing:

• Case management
• Employment skills training
• Job referrals
• Family budget planning
• The program also helps refugees with:
• Housing, utilities, and food
• Transportation
• Health and Medical
• English language training
• Social adjustment and other services

Program Administration

The Matching Grant program is provided solely through the nine domestic resettlement agencies that have agreements with the Department of State to provide reception and placement services to refugees. These resettlement agencies in turn work with over 214 local service providers in 43 states, and enroll clients who are interested in the program after an orientation to their options for employment programs. Grant recipients agree to match ORR direct client assistance funding with cash and in-kind contributions of goods and services from the community at the rate of $1 for every $2 in federal funding.

https://www.acf.hhs.gov/orr/programs/refugees/matching-grants 

8. In-Kind Grants

In-kind grants offer a unique form of support to nonprofit organizations by providing goods and services instead of direct financial assistance. These grants can come in many forms, such as donated equipment, professional services, or materials, and they hold a distinct set of benefits and drawbacks.

Benefits of In-Kind Grants

• Cost Savings: In-kind grants allow nonprofits to save on operational and project costs. By receiving goods and services directly, organizations can allocate their financial resources to other areas of need, enhancing their ability to fulfill their mission.
• Access to High-Quality Resources: Often, in-kind donations include high-quality goods and services that might otherwise be unaffordable for the nonprofit. This access can significantly improve the organization's operations, from upgraded technology to professional expertise.
• Strengthening Community Ties: Receiving in-kind support from local businesses or professionals can strengthen the bond between the nonprofit and its community. These relationships can lead to ongoing support, collaboration, and a stronger presence within the community.
• Enhanced Credibility: In-kind support from reputable companies or individuals can enhance a nonprofit's credibility. The association with well-known entities can boost the organization's profile and attract additional donations, both in-kind and financial.

Drawbacks of In-Kind Grants

• Misalignment with Needs: One of the primary challenges of in-kind grants is the risk of receiving goods or services that don't perfectly align with the organization's current needs. This misalignment can lead to underutilized resources and missed opportunities for more effective support.
• Logistical Challenges: Managing in-kind donations can pose logistical challenges, from storage issues for physical goods to coordinating schedules for donated services. These challenges can consume valuable time and resources that might have been allocated elsewhere.
• Difficulty in Valuation: Valuing in-kind donations for reporting purposes can be complex and time-consuming. Accurately assessing the fair market value of goods and services requires effort and expertise, which can complicate financial reporting and auditing processes.
• Potential for Dependence: Relying heavily on in-kind donations can lead to a form of dependency, where nonprofits might adjust their operations or projects based on the availability of in-kind support rather than strategic planning and needs assessment.
• Lack of Flexibility: In-kind grants offer less flexibility compared to financial grants. Organizations are limited to using the specific goods or services provided, which may not always be the most pressing need or the most efficient use of resources.

In the realm of in-kind donations, creativity and resourcefulness can significantly reduce the financial burden of projects. Here are two examples that showcase how diverse forms of in-kind support can be leveraged:

Local School STEM Laboratory Upgrade

A local school aims to upgrade its STEM laboratory to provide students with modern scientific equipment and learning materials. The estimated cost for new equipment, furniture, and educational materials is $15,000. However, a tech company in the community offers to donate gently used laptops and tablets, while a university's science department provides surplus laboratory equipment. Additionally, a retired science teacher volunteers to organize and set up the laboratory, and a local office supply store donates desks and chairs. These contributions reduce the financial need to $5,000 for specialized equipment not covered by in-kind donations. In this scenario, the tech company's and university's donations of equipment, the retired teacher's volunteer time, and the office supply's furniture are all valuable in-kind supports that substantially decrease the project's cash funding requirements.

Community Garden Initiative

A neighborhood association decides to create a community garden to promote urban greening and local food production. The project's initial budget, including land preparation, purchase of seeds, tools, and irrigation systems, totals $10,000. A local landscaping company offers to prepare the land for free, and a gardening club donates seeds and volunteers to help with the planting. A hardware store provides gardening tools at no cost, and a drip irrigation company installs a water-efficient system as part of its community service program. These in-kind contributions reduce the actual funding needed to $2,000 for miscellaneous supplies and ongoing maintenance. The landscaping service, seed and tool donations, and the irrigation system installation represent significant in-kind support, showcasing community solidarity and reducing the financial strain on the project.

These examples illustrate the power of in-kind donations in enabling projects to move forward with reduced financial requirements, while fostering a sense of community involvement and partnership.

Figure 1.9. Sample In-Kind Grant

Service Objects In-Kind Grant Program 

Service Objects In-Kind grants will support organizations that encourage environmental leadership through the reduction of waste, and caring for our resources. We will provide in-kind donations to organizations that are working to encourage environmental conservation, as well as providing education for both personal and environmental health.

Data quality and validation services may include: address validation, email appending, phone number appending, email validation, demographics data, geocoding with latitude-longitude coordinates, and other data validation services. In-kind contributions support the programs and/or daily operations of an environmental organization. If you meet the following criteria, please fill out the application.

In-Kind Grants are offered to:

• Organizations that have 501(c)(3) status within the United States
• Projects that require community demographic, geographic, address information and related data validation services
• Programs that focus on reducing waste that directly impacts the environment
• Programs that focus on immediate support for natural environmental disasters
• Builds action-oriented public involvement
• Based on need, and awarded on an individual basis

Supporting the Organizations that Aid our Environment

• All funding requests should be quantifiable with specific product requests and plan objectives, with a clear measure for evaluating success.
• Projects should have a good chance of significant measurable results with momentum over a fairly short-term (one to three years)
• Applications that come with detailed projects descriptions will be viewed favorably, and will be taken into consideration during the granting process.

https://www.serviceobjects.com/about-us/in-kind-grants/ 

Conclusion

So, now we have traversed the comprehensive landscape of grants and funding sources, dissecting the various types of grants and understanding the diverse spectrum of funders, including governments, foundations, corporations, and individuals. This journey has hopefully helped you start to understand the intricacies of the grant ecosystem and also underscored the importance of navigating these waters with insight and strategy. If you are still confused or overwhelmed, don’t worry–we will get into all of these topics more deeply in the chapters ahead.

Grants, as we've seen, are more than mere financial transactions; they are the backbone of many projects and initiatives across sectors, enabling innovation, supporting services, and facilitating the advancement of knowledge and societal well-being. By delving into the nuances of different grant types, we've highlighted the importance of aligning project needs with the right kind of funding, perhaps the most critical step towards achieving project goals and maximizing impact.

Understanding the motivations and expectations of various funders has equipped us with the knowledge to tailor proposals and projects that resonate with their objectives, enhancing the chances of securing funding. The exploration of the grant ecosystem has further revealed the dynamic interplay between funders and recipients, emphasizing the value of building and maintaining robust relationships within this network.

As we close this chapter, it's clear that navigating the grant landscape requires a blend of knowledge, strategy, and relationship-building. The insights shared here aim to serve as a compass, guiding readers through the complexities of grants and funding sources. Whether embarking on a new project or seeking to expand existing initiatives, the ability to effectively engage with this ecosystem can be a decisive factor in turning visions into reality. Armed with a deeper understanding of grants and a strategic approach to funding, organizations are better positioned to make a meaningful impact in their respective fields and communities.

References

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Shakeel, M. (2024). Allyson Felix joins Melinda Gates and a Gymnastic Legend to Help Suffering Mothers Ahead of the Paris Olympics. Essentially Sports. Retrieved from https://www.essentiallysports.com/us-sports-news-olympics-news-track-and-field-news-allyson-felix-joins-melinda-gates-and-a-gymnastics-legend-to-help-suffering-mothers-ahead-of-the-paris-olympics/.

Walmart.org. (n.d.). Spark good local grants guidelines. Retrieved from https://walmart.org/how-we-give/program-guidelines/spark-good-local-grants-guidelines