Types of Non-Profit Grants
Grants comprise a significant portion(11% to 30%) of the revenues of nonprofit organizations and charities. This is because the Internal Revenue Service provides tax shelters for foundations that agree to give 5% of their assets each year to nonprofits that have been awarded IRS 501(c)(3) tax exempt status. The funder always determines how the money can be spent by specifying what type of grant it is.
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Function
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Funder organizations, usually called foundations, operate around a mission statement that describes their giving priorities. For example, many community foundations only give grants to nonprofits that are headquartered in certain target areas while others, like the Bill & Melinda Gates Foundation, may fund grants on a national or international basis. Most foundations focus their giving around certain populations or purposes such as the alleviation of hunger, research to prevent Cystic Fibrosis or the promotion of arts and culture. They also set the types of grants that they award. There are three overall categories of grants: restricted grants, unrestricted grants and in-kind grants.
Restricted Grants: Endowments and Scholarships
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Restricted grants must be spent exactly as the grant proposal describes. These include grants to fund endowments like the $168,350 that the United States Ski and Snowboard Association received in 2004 from the Abar Foundation of New Jersey. The money had to be invested in the endowment fund where the principal could not be touched except under certain very specific pre-arranged circumstances. Scholarship funds are another type of restricted grant. The Tilles Foundation of St. Louis, Missouri, funds one full four-year tuition scholarship per year at each Missouri university. Tilles scholars do not get the money; it gets paid directly to the school.
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Restricted Grants: Programs
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Other types of restricted grants include program grants that help to pay for one activity. In effect, the foundation becomes a sponsor of the program, which could be anything from a series of lectures at a university to a school supply drive for impoverished children in an inner-city school district. Grants to fund building programs are also restricted grants. In addition, grants that help organizations or a new program get started are called grants of seed money. For example, a grant of $75,000 from the Altman Foundation of New Jersey funded Jazz at Lincoln Center in 2005.
Unrestricted Grants
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Unrestricted grants can be used for any purpose by the recipient nonprofit organization. General fund campaigns collect unrestricted donations from both individual donors and foundations. These tend to be for smaller amounts such as the $1,000 that the Minneapolis Foundation gave to Feed the Children, Oklahoma, in 2007. Matching gifts can be either restricted or unrestricted. They come as the result of a challenge to the individual donors of a nonprofit organization. The foundation will give a certain amount of matching grant money once the organization has amassed a certain set amount from other sources. Many employers participate in a matching gift program. They give equal amounts to whichever nonprofits their employees support. The most common recipients of matching gift programs like this are universities, high schools and other educational institutions.
In-kind Grants
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When a foundation contributes equipment, tools, supplies or other material goods instead of money, the grant is called an in-kind grant. One foundation that specializes in matching the in-kind needs of nonprofit organizations with suppliers of the same is the Gifts In Kind Organization. To become one of their recipient organizations, go to their website (see Resources below) and sign up. To locate other grants for your organization, check out the Foundation Center Online, which is the most highly regarded database of grant funders. You can also check for government grants (which also come in many of these types but are more difficult to apply for) at grants.gov (see Resources below).
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