Many people think that having a great idea is the first step in starting a nonprofit. But there's a lot more to raising money than just having a good idea. There must be a need for your organization in the community. After you've established that there is a need for your idea, you also have to convince donors and funders that your organization has the wherewithal to carry out it's idea!
Here are some things you might want to consider to ensure that you have a chance of receiving grants:
- Clear mission, goals and objectives
- Committed and capable management, staff, and volunteers
- Legal eligibility to do business in your community
- Appropriate tax status (501(c)(3))
- Good governance policies
- Programs that are important for the well-being of the community or target group
The Importance of Being a 501(c)(3) Organization
Many foundations provide grants only to 501(c)(3) organizations. To ensure that a foundation is giving donations to qualified public charities, it usually requests a copy of each public charity's 501(c)(3), IRS determination letter before it will give a grant to that organization. Therefore, obtaining 501(c)(3) status is often the first step in applying for grant funds.
How are grants awarded?
A grant is typically awarded to a nonprofit organization for a distinct program or purpose. A grantmaker generally focuses its giving on: A specific population, certain types of nonprofits (such as animal rights or environmental groups) and particular types of support (such as funding for equipment). After winning a grant, you will have to keep track of income and expenditure, measure the success and failure of your project, and report back to the funder.
Finding Grant Opportunities for Your Nonprofit
Once you've started your nonprofit organization, and have figured out your project's goals and funding needs, you may feel ready to look for grant opportunities. There are two major grant sources:
- Foundations and corporations
- National, state and local government agencies.
Grants almost always come with conditions, for example: particular outcomes, achieving agreed upon milestones and unspent monies to be returned to the funder.
Places to Find Grants for Your Nonprofit
If your nonprofit is looking for new grant opportunities, here are some places to find them:
- Let your board members know that you are conducting research to determine which foundations to apply to for grants. Let them know that you will only be writing grants to foundations that closely match your project needs. Ask your board members if they know of any family foundations, corporate foundations, or other grantmakers who might fund work like your nonprofit's.
- Spend some time searching on Google for foundations that fund nonprofits like yours. You can use Google to find not only foundation websites, but also lists of grants on nonprofit websites.
- Some cities and states maintain a directory of organizations that make grants to nonprofits in the area. If your area has an organization that maintains such a list, use it to research grant opportunities for your nonprofit.
Some Reasons Grant Writing for Nonprofits Could Be a Mistake
If you think that grant writing is a quick, simple solution to your nonprofit's funding needs, you're sadly mistaken. Applying for grants is hard work: If you want a reasonable chance of getting your grant application accepted, you won't be able to write one generic application and send off duplicates to foundations. You'll need to do some intense research to tailor your application. And even when you do the work, there’s no guarantee you'll be funded!
Grants can't be your bread and butter: Grant-based funding isn't sustainable alone: it has to be part of a diversified fundraising plan. Most recommend around 20% of your funding be grant-based; any more than that, and you risk sinking your organization if a key grant falls through.