Grant money for worthy organizations and causes can originate from three major sources: corporations, the government and nonprofit foundations. Regarding funding, each of these sources has its own perspective, standard for funding eligibility and anticipated return on the grant-making investment. Organizations seeking grant funding may find benefits to soliciting dollars from a mix of these three types.
Grants from corporations frequently originate in the company's commitment to corporate social responsibility. These dollars can help establish community benefit or contribute to a tax write-off. In addition, a corporation sometimes directs grant money to assist the industry or advance a corporate goal. An oil company, for example, may direct grant money to researchers exploring ways to break down petroleum after a spill. Or a paper company may establish grants to help community groups maintain nature trails in woodlands.
Government grants are offered under the authority of Congress or a state legislature. These grants generally have a defined public purpose, often related to social services, and more stringent entry barriers. For example, a business seeking a government grant must have an identification number from Dun and Bradstreet and an employer identification number from the IRS. Government grants -- including the purpose, award and stakeholders -- are matters of public record.
Private foundations provide a considerable amount of grant financing, particularly to arts and special-interest groups. Foundations are required under IRS regulations to expend a specific part of their asset base on annual grantmaking, depending on each foundation's circumstances. Most foundations have a defined purpose and will only consider grants that fall within that line. For example, local community foundations only fund projects within the city or county area, and arts foundations only fund specific art and performance projects.
To receive grant money, in general, an applicant must be a registered nonprofit organization under section 501(c)3 of the Internal Revenue Code, or its equivalent. Businesses that want grant funding may be eligible for funding under their own foundation. Some grants may flow to eligible individuals - such as artists or writers -- or to government entities -- such as school districts. Some funders, particularly corporations, will fund a for-profit enterprise, and some government grants related to business development may fund a for-profit company.