Did you know that each year, billions of dollars in grants are awarded to nonprofits across the US? While that number might be staggering, for many nonprofits, the challenge isn’t just finding the money — it’s knowing which grants to apply for.
Securing the grants can be the key to transforming your organization’s mission into reality. Yet, many miss out simply because there are so many types of grants for nonprofits; it feels overwhelming to target the right one.
Here’s how you can figure it out. Grants can be categorized in three broad types:
- By their purpose (what they’re used for)
- By their source (where the money comes from)
- By their method of distribution (the process used to allocate funds)
Knowing all these dimensions simplifies your search and helps you focus on funding that perfectly aligns with your nonprofit’s goals.
So, let’s break down the different types of grants every nonprofit should know to help you unlock the doors to new opportunities.
1. Types of Grants by Purpose (How They Are Used)
These grants are categorized based on their intended use within the organization. They are designed to fund specific types of activities or needs with which nonprofits must align their objectives.
Some common types include:
Program Development Grants
Program development grants are foundational for many nonprofits, as they fund specific projects or initiatives that align closely with the nonprofit’s mission. These grants are often project-specific, meaning that the funds must be used for a defined initiative with clear goals, outcomes, and timelines.
Successful grant proposals for these funds typically feature detailed plans, including the needs being addressed, the project’s objectives, the target population, and the anticipated outcomes.
Funders want to see clear evidence of community needs, as well as a solid plan for how the program will achieve meaningful change.
Organizations should also demonstrate a clear connection between the proposed project and the nonprofit’s overall mission, as funders are looking for initiatives that have long-term potential for impact.
Program development grants are ideal for nonprofits looking to expand services, introduce new programs, or address emerging community needs.
Examples:
A nonprofit dedicated to youth education might apply for a program development grant to launch an after-school tutoring program for underserved children. This program would focus on improving literacy and math skills, with clear benchmarks for measuring student progress.
Operating Fund Grants
Operating grants, also known as general support grants, provide unrestricted funds to cover a nonprofit’s day-to-day operational costs. These grants are not tied to any specific project or program, allowing organizations to allocate funds where they are most needed.
This flexibility makes them highly sought after, as nonprofits often struggle with covering basic expenses such as rent, salaries, utilities, and other overhead costs.
Operating grants provide the breathing room that nonprofits need to grow without worrying about how to keep the lights on. They are particularly valuable during times when nonprofits may face reduced revenue streams or increased demand for services.
While they are incredibly useful, these are the most competitive grants due to their versatility. Therefore, nonprofits seeking these grants must demonstrate a strong track record of success, financial transparency, and long-term sustainability plans in their grant applications.
Examples:
A nonprofit may receive an operating fund grant to cover administrative costs, such as staff salaries, rent, or utility bills. Additionally, they could use operating funds to invest in technology upgrades, allowing the organization to operate more efficiently and scale its operations.
Capacity Building Grants
These grants are transformative for nonprofits looking to improve their internal processes, enhance staff capabilities, or increase their ability to deliver services effectively.
Rather than funding specific programs, these grants are designed to strengthen the nonprofit itself. This could involve upgrading technology systems, expanding staff skills through training, improving fundraising capacity, or developing strategic plans to guide future growth.
Capacity-building grants are particularly helpful for smaller or newer nonprofits that may not yet have the internal infrastructure needed to grow. However, established nonprofits can also benefit from these grants when looking to scale or adapt to changing environments.
Funders who offer these grants are looking for organizations that are committed to long-term growth and effectiveness. Therefore, nonprofits should demonstrate how the capacity-building activities will lead to improved service delivery, increased fundraising efficiency, or enhanced operational capabilities.
Examples:
A nonprofit may apply for a capacity-building grant to invest in leadership development for its management team, hire a consultant to help create a long-term strategic plan, or upgrade its IT systems to improve data management and client tracking.
Capital Grants
Capital grants provide large-scale funding for physical infrastructure projects or major equipment purchases.
They are ideal for nonprofits that need to invest in new facilities, renovate existing buildings, or buy equipment that will significantly enhance their ability to deliver services. Due to the scale of the investment, these grants typically require a longer application process.
Nonprofits must show in the grant proposal that the project will have a lasting impact on their mission and operations. It has to directly improve service delivery, create new opportunities for community engagement, or otherwise elevate the nonprofit’s capacity to fulfill its mission.
Because capital projects are large and costly, nonprofits must also show that they have a solid plan for maintaining the new facility or equipment after the grant is awarded. This includes outlining how the investment will benefit the community for years to come.
Examples:
A nonprofit might apply for a capital grant to construct a new community center that offers free tutoring, job training, and after-school activities. Another example could be to renovate an existing building to make it more accessible for people with disabilities.
Endowment grants
Endowment grants are designed to help nonprofits build or grow their endowment funds, creating a stable and reliable source of income. They are often seen as a vote of confidence in the nonprofit’s longevity and mission.
While these grants do not provide immediate financial relief, they contribute to an organization’s financial stability by generating ongoing income from investments. The principal amount of the grant is invested, and only the interest or returns are used to support the nonprofit’s operations or specific programs.
By building a robust endowment, nonprofits can secure a steady revenue stream, allowing them to weather financial fluctuations, grow their programs, and maintain operations in the long haul.
These grants are often used to ensure the long-term sustainability of organizations focused on education, research, or cultural preservation. However, funders will first determine whether the organization has a strong governance structure to manage the endowment.
Examples:
A nonprofit focused on higher education may receive an endowment grant to establish scholarships for underrepresented students, providing ongoing support for decades to come.
Technical Assistance Grants
These grants are focused on providing nonprofits with expert advice, training, and resources to improve their operational effectiveness. They typically support activities such as strategic planning, financial management, program evaluation, and marketing.
The goal of technical assistance grants is to build the capacity of the nonprofit to operate more efficiently, ensuring that the organization can deliver higher-quality services to its beneficiaries and achieve greater impact.
Nonprofits applying for a technical assistance grant should have a clear understanding of the areas where they need improvement and be able to explain how external expertise will help them achieve their goals.
Organizations that are committed to continuous improvement and have a plan for implementing the technical assistance they receive often have higher chances of successfully securing this grant.
Examples:
A nonprofit might apply for a technical assistance grant to hire a consultant to develop a comprehensive marketing strategy or to improve financial transparency through better accounting systems.
By addressing specific operational challenges, the nonprofit enhances its overall effectiveness and ability to scale.
Research Grants
These grants are relevant for nonprofits that focus on collecting data, conducting studies, or advancing knowledge in their specific field. They are especially common in healthcare, education, and social sciences sectors, where research is essential for informing policy, developing best practices, or testing new approaches to solving societal challenges.
Unlike other types of grants that focus on direct service delivery, research grants emphasize the importance of data and evidence. A nonprofit must outline a clear research methodology, demonstrate the significance of the study, and explain how the findings will benefit the community or field of study in their grant application.
A research grant often requires partnerships with academic institutions or professional researchers to ensure credibility and rigor. Nonprofits that can show a track record of producing actionable insights from their research are well-positioned to secure funding.
Examples:
A nonprofit focused on public health might apply for a research grant to study the long-term impacts of a vaccination program in underserved communities. Another example could be a nonprofit conducting research on affordable housing models to address homelessness in urban areas.
Project Grants
Project-based grants fund specific initiatives with a clear beginning and end, rather than ongoing operations. These grants are typically tied to short-term goals, making them ideal for nonprofits looking to pilot new initiatives or address a particular need over a set period.
Unlike operating grants, which cover day-to-day expenses, project grants are restricted to the costs associated with the project outlined in the grant proposal.
They are often used to test new ideas or innovative approaches, which, if successful, can be expanded or replicated with future funding. This allows nonprofits to address temporary issues or seasonal needs without committing to long-term operational costs.
If you plan to get a project grant, you should clearly articulate the project’s goals, timeline, and intended impact. You should also demonstrate how the project aligns with the grantor’s mission and how the lessons learned from the project could be applied to future initiatives.
Examples:
A nonprofit focused on environmental conservation might apply for a project-based grant to run a six-month tree-planting campaign in urban areas. Similarly, a nonprofit working on food security could seek a project-based grant to develop a one-year pilot program that delivers fresh produce to underserved communities.
Seed Money Grants
Seed grants provide initial funding to help nonprofit organizations launch new or innovative projects. These grants are particularly valuable for testing new ideas or piloting early-stage initiatives that have the potential to grow with additional funding in the future.
These are often the first source of external funding for a new project, and their primary goal is to help the nonprofit prove the concept and show its feasibility.
Securing a seed money grant can also help nonprofits attract future funding by allowing them to gather initial data, demonstrate early successes, and refine their approach before seeking larger investments from other sources. It’s a first step in a longer journey toward sustainability.
Nonprofits seeking seed grants should emphasize the innovation of the project, explaining why the approach is new or different from existing solutions. Grantmakers are often searching for high-risk, high-reward initiatives that could have a significant impact if successful.
Examples:
A nonprofit may apply for a seed grant to develop a new digital education platform, allowing the organization to pilot the project, gather initial feedback, and refine the platform before seeking larger-scale funding to expand its reach.
Emergency Grants
Emergency grants are critical for nonprofits facing unexpected crises or urgent needs. They are often awarded on a short timeline and typically focus on organizations with a proven ability to respond effectively in times of crisis.
Whether it’s natural disasters, pandemics, or other unforeseen events, an emergency grant provides nonprofits with the immediate financial support they need to mobilize quickly and provide relief.
Funders offering these grants prioritize organizations that can demonstrate their capacity to deliver rapid and impactful services. The nonprofits must explain how the grant will be used to meet urgent needs, whether it’s providing shelter, distributing food, or offering medical care.
Emergency grants are often short-term solutions, but they can have long-term benefits by helping nonprofits stabilize during a crisis and continue their operations as the situation evolves.
Examples:
During the COVID-19 pandemic, many nonprofits applied for emergency grants to help meet the increased demand for services such as food distribution, mental health support, and healthcare.
Similarly, a nonprofit responding to a natural disaster might seek emergency funds to provide immediate shelter and supplies to displaced families.
2. Types of Grants by Source (Where They Come From)
These grants are categorized based on the entity providing the funding, varying from government agencies to private foundations. Each has its own grant application process, priorities, and requirements.
That’s why nonprofits must understand where the grant funding is coming from. The major sources include:
Government Grants
Government grants are a major funding source for nonprofits. They are offered by federal, state, or local government agencies to provide financial support for a wide array of public service initiatives.
These can be highly competitive and often come with strict grant compliance, mandating nonprofits to meet detailed reporting requirements.
There are three main types of government grants:
1. Federal Grants:
These are distributed by federal government agencies and can address a wide range of issues, including national, regional, state, and local concerns such as healthcare, education, public safety, and scientific research.
Here are some examples:
- Small Business Innovation Research (SBIR) Program: Offered by various US federal agencies such as NIH, NASA, and the Department of Defense, this program provides funding to small businesses engaged in scientific research and development with commercial potential.
- National Endowment for the Arts Grants: The independent federal agency NEA offers these federal grants to support nonprofit arts organizations.
2. State Grants:
Offered by state-level agencies, these grants usually focus on regional issues and are often tailored to state-specific priorities like local infrastructure, education programs, or community development.
3. Local Grants:
Local government entities, such as cities or counties, also provide grants, often targeted at community development projects, arts initiatives, or social services. These grants specifically focus on meeting the unique needs of local communities.
Foundation Grants
Private and community foundations are another crucial source of nonprofit funding. These foundations are typically established by individuals, families, or corporations with the goal of supporting specific causes or sectors.
Foundation grants are often less restrictive than government grants, allowing nonprofits more flexibility in using the funds. However, they can also be highly competitive, with specific criteria aligned to the foundation’s goals.
Let’s have a look at each type of foundation:
1. Private Foundations:
A private foundation grant funds large-scale initiatives or specific projects that align with their mission and values.
For instance, the Ford Foundation offers grants that promote social justice, human rights, and economic equality. It also funds programs related to democracy, creative expression, gender equality, and more.
Another example is the Robert Wood Johnson Foundation, which focuses on improving public health in the United States. It funds projects that address pressing health issues like health equity, access to care, and the social determinants of health.
2. Community Foundations:
These are regionally focused entities that pool donations from multiple donors to fund local initiatives. They aim to improve the quality of life in a specific area, making grants to nonprofits working in sectors like education, healthcare, and community development.
Examples include the Cleveland Foundation, the oldest community foundation in the world, which focuses on improving the lives of residents in the Cleveland area.
Also, the Silicon Valley Community Foundation, which is one of the largest community foundations in the US. It supports charitable causes in Silicon Valley and beyond, focusing on areas such as education access, affordable housing, and services for immigrant communities.
Corporate Grants
Corporate grants are offered by businesses as part of their corporate social responsibility (CSR) efforts. They can be an excellent resource for nonprofits, offering not only financial support but also opportunities for collaboration and brand exposure.
Here are a few examples:
- Google Ad Grants: Google provides up to $10,000 per month in free Google Ads to qualifying nonprofits, helping them raise awareness and engage with new audiences. The Google Ad Grants empower nonprofits to extend their online reach without the financial burden of traditional advertising costs.
- NBCUniversal Local Impact Grants: NBCUniversal provides unrestricted, local impact grants for nonprofits to support them in areas like youth education, storytelling, and community engagement.
- Spark Good Local Grants: The Walmart Foundation provides community grants for projects addressing hunger, workforce development, and disaster preparedness. For example, it offers grants to food banks and initiatives that help individuals gain new skills to improve their employment opportunities.
- Microsoft’s AI for Good Program: This initiative offers grants to nonprofits using artificial intelligence for humanitarian causes, such as improving climate models or enhancing accessibility for people with disabilities.
Individual Grants
Individual grants offer nonprofits the chance to receive significant support from influential figures who are deeply committed to the causes they fund.
High-net-worth individuals or philanthropists often contribute substantial funds to specific causes through individual grants. These donors are typically motivated by personal passions, making their contributions highly targeted and impactful.
To mention a few:
- Chan Zuckerberg Initiative: Founded by Mark Zuckerberg and Priscilla Chan, this organization provides grants focused on education, health, and criminal justice reform. Their approach emphasizes personalized learning and the advancement of equity, with the ultimate goal of improving outcomes in these critical areas.
- Oprah Winfrey Foundation: Oprah Winfrey has long been involved in philanthropy, funding scholarships, and educational initiatives aimed at empowering women and girls. Her foundation supports leadership development and community building, investing in organizations that align with her passion for education and social change.
- Bezos Earth Fund: Launched by Jeff Bezos, this fund is dedicated to combating climate change and preserving the environment. The Bezos Earth Fund has awarded billions to organizations working on conservation efforts, reducing carbon emissions, and developing renewable energy solutions.
Donor-Advised Funds
Donor-advised funds (DAFs) offer nonprofits a steady stream of potential grants from a diverse pool of donors, often with fewer restrictions than traditional grant sources.
They are a popular vehicle for individual donors to contribute to causes they care about through financial institutions or foundations. Donors receive immediate tax benefits and can recommend grants to specific nonprofits at their discretion.
Here’s a look at some examples of DAFs:
- Fidelity Charitable: One of the largest donor-advised funds in the US, Fidelity Charitable enables donors to contribute assets such as cash, stock, or real estate and then recommend grants to their preferred charities. The fund supports a wide variety of causes, from education and healthcare to disaster relief and environmental conservation.
- Schwab Charitable: Schwab Charitable simplifies the process of charitable giving, allowing donors to contribute and then direct grants to nonprofits. This flexible option helps donors support causes that matter most to them while giving them control over how and when their contributions are distributed.
3. Types of Grants by Distribution Method (How They Are Allocated)
These grants are categorized by the process of fund allocation, from competitive selection to automatic distribution based on criteria. Applicants must understand these methods, as each has specific guidelines and impacts how funding is awarded and eligibility determined.
Here are the seven method types:
Competitive Grants (Discretionary Grants)
Competitive grants, also known as discretionary grants, are awarded through a highly selective process. Nonprofits must submit detailed grant proposals that clearly outline their project goals, strategies, and potential impact.
These proposals are then evaluated by the grantor, which may be a government agency, foundation, or other funding body, based on specific criteria such as innovation, effectiveness, and alignment with the grantor’s mission. Only the most compelling and eligible proposals are funded.
This process can be both challenging and rewarding. Organizations need to invest considerable effort into crafting a grant proposal that stands out from the competition, often involving multiple drafts, extensive research, and collaboration among team members.
However, receiving a competitive grant can significantly boost a nonprofit’s credibility and visibility within its sector, positioning it as a leader in its field.
For Example:
A university might apply for a competitive research grant to fund a groundbreaking study on climate change. Several institutions could be vying for the same grant, but only the most compelling projects — those that clearly align with the grantor’s priorities and demonstrate the potential for high-impact results — would receive funding.
Continuation Grants
These grants provide ongoing support for projects or programs that have already demonstrated success through previous funding. They are awarded to ensure the sustainability of initiatives that have made measurable progress and need further financial assistance to reach their full potential.
Continuation grants can be critical for long-term projects, as they allow nonprofits to maintain momentum without the disruption of seeking new funding sources.
Nonprofits receiving these grants typically need to report on the outcomes achieved with the initial grant and demonstrate the need for additional funding to continue their work.
A continuation grant not only reinforces the organization’s success but also shows the grantor’s commitment to seeing the project through to completion.
For Example:
A nonprofit organization that has been working on a multi-year project to improve public health in underserved communities could receive an initial grant for the first phase of the project.
As the nonprofit meets its milestones and demonstrates measurable success, such as reducing disease incidence or improving access to healthcare services, it may apply for continuation grants to fund the next phase, ensuring the program’s sustainability and long-term impact.
Pass-Through Grants
Pass-through grants involve a two-step distribution process. A primary entity, such as a federal or state government, receives the grant and then redistributes the funds to smaller entities, often local nonprofits or community organizations.
The intermediary, or pass-through entity, ensures that the funds are allocated according to the original grantor’s guidelines, often adding an additional layer of oversight.
For nonprofits, receiving a pass-through grant often means working closely with the intermediary to meet reporting requirements and ensuring the funds are used as intended.
These grants can be particularly beneficial for smaller nonprofit organizations that might not have the resources or capacity to compete for large federal grants on their own.
Suppose a federal grant gets awarded to a state government to support educational reform. The state then acts as the pass-through entity, distributing portions of the grant to local school districts based on need or performance.
For Example:
A state could receive $10 million in federal funding, and pass $500,000 to a local nonprofit organization to implement after-school tutoring programs in underperforming schools, ensuring that the funds reach the communities where they are most needed.
Formula Grants
Formula grants are awarded based on predetermined criteria, such as population size, poverty rates, or other statistical data.
Unlike competitive grants, formula grants are automatically allocated to recipients who meet the established qualifications, eliminating the need for a proposal or application process. This method of distribution ensures that funding is distributed equitably based on need or other factors deemed important by the grantor.
For nonprofits, a formula grant offers a more predictable source of funding, as they can anticipate the amount they will receive if they meet the formula’s criteria. However, these grants may also come with stringent restrictions on how the funds can be used, limiting the nonprofit’s flexibility.
For Example:
A state government may receive a federal grant based on a formula that considers factors such as population size, poverty rates, or healthcare needs. For instance, a state with a large low-income population might automatically receive formula-based funding to enhance healthcare services, such as expanding Medicaid or providing resources for mental health care.
Matching Grants
Matching grants are a powerful tool used by grantmakers to encourage nonprofits to raise additional funds from other sources. In this model, the grantor commits to providing a certain amount of funding, but only if the nonprofit can match it through private donations or other fundraising efforts.
This type of grant not only amplifies the impact of the original grant but also serves as a motivator for nonprofits to engage their donor base and demonstrate their financial sustainability.
Matching grants can be a challenge for some nonprofits, particularly smaller organizations, as they require upfront fundraising efforts. However, they can also serve as a valuable endorsement from the grantor, showing that the nonprofit is capable of attracting other supporters.
For Example:
A nonprofit organization focused on environmental conservation might receive a $100,000 matching grant from a foundation to support its reforestation efforts. However, to unlock the funds, the nonprofit must raise an additional $100,000 from individual donors, corporate sponsorships, or community fundraising.
Challenge Grants
Similar to matching grants, challenge grants push nonprofits to meet specific goals in order to receive funding.
However, rather than merely matching funds, the grantor sets a particular challenge — such as expanding services, increasing the number of beneficiaries, or achieving a significant operational milestone.
Nonprofits must meet these challenges within a designated timeframe to qualify for the grant.
Challenge grants can inspire nonprofits to stretch beyond their current capabilities and foster innovation and growth. They create a sense of urgency and can galvanize both internal teams and external supporters to rally behind the organization’s mission.
For Example:
A foundation might issue a challenge grant to a nonprofit that runs a community food bank, requiring them to expand their services by increasing the number of families served by 50% within a year.
To meet the challenge, the nonprofit would need to develop new partnerships, recruit more volunteers, and secure additional resources, such as food donations or logistical support.
If successful in meeting these targets, the nonprofit would receive the grant, which could then be used to further expand operations or scale up outreach programs.
In-Kind Grants
These grants differ from traditional monetary grants in that they provide goods, services, or resources instead of cash. They can be incredibly valuable to nonprofits for reducing operational costs and allocating more of the financial resources toward programs and services.
In-kind donations can range from office supplies and technology to professional expertise, such as legal services or marketing assistance. They offer nonprofits the opportunity to receive essential resources that may otherwise be out of reach due to budget constraints.
These donations often come from businesses or individuals looking to support the nonprofit sector without offering direct financial contributions.
Examples:
A nonprofit working in the education sector might receive an in-kind grant from a local tech company that donates new computers and software to support their digital literacy programs. This reduces the nonprofit’s operational costs and enables them to offer better services to students in underserved areas.
Additionally, a law firm may offer pro bono legal services to help a nonprofit navigate complex regulatory requirements, ensuring they remain compliant and avoid costly legal issues, allowing them to focus more resources on their mission.
The Bottom Line
Nonprofits should think strategically by considering the purpose, the source, and the distribution method when seeking grants. By targeting the right grants for the right needs, organizations can greatly increase their chances of securing funding that supports both immediate goals and long-term sustainability.
So, if you’re ready to take the next step, platforms like Foundation Directory Online, Grants.gov, and GrantWatch are great places to find grants.
But if you’re not confident in navigating the grant process alone, let us help! Our team of grant experts is here to guide you every step of the way. Contact us today for a consultation and boost your chances of securing the funding you need to make a lasting impact!
