4 Types of Grants for Nonprofits [Plus 9 Diverse Funding Sources]

With so many different types of grants and funding sources available, it can be difficult to understand them all. Between the various names, nuances, and criteria, they all may blur together.

The good news is that there are typically only two different types of funders: the government and foundations.

Of course, there are many distinctions within these groups, and they all differ in the types of grants they use to disperse funds. 

It can feel overwhelming at first as you learn about the various types of grants, but don’t worry!

This article will unpack what you need to begin grant-seeking for your own organization. Let’s go!

Grants come in various forms from several different types of entities. In the United States, there are four primary types of grants: competitive, continuation, pass-through, and formula grants. 

We’ll go over all of them in detail below.

Competitive Grants (Most Popular Method)

Competitive grants are incredibly popular because they allow grantors to select the most promising projects or organizations to fund through a competitive application process. 

Competitive grants are offered by a wide range of grantors, including:

• Government agencies
• Private foundations
• Corporations 
• Nonprofit Organizations 

You must submit a proposal in order to be considered, and they are then carefully evaluated based on the organization’s funding criteria, including:

• Program match
• Values alignment
• Funding needs
• Community impact
• And more! 

Most competitive grants assign a score to each proposal based on predetermined criteria. The proposals with the highest scores are awarded grant funding, which ensures that all funds go to initiatives with the greatest potential impact. 

You can see an example of this with Walmart’s grant eligibility requirements. 

Continuation Grants (For Nonprofits with Track Records)

Continuation grants provide funding for a nonprofit to renew a previously awarded grant for another grant cycle. 

What types of grants typically qualify for continuation grants?

• Government-funded programs
• Multi-year initiatives 
• Established relationships

Keep in mind that to receive a continuation grant, it’s necessary to meet all the terms of the initial grant. This can include:

• Achieving proposed outcomes
• Meeting reporting deadlines
• Maintaining consistent communication with the funder

These opportunities are most often fostered through developing a strong relationship between your nonprofit and the funder, and you can see an example of that at SAMHSA.

Be aware that not all funders offer continuation grants; it’s essential to do research on each funder to determine if this type of grant may be available.

Pass-Through Grants (the Intermediary Grant)

Pass-through grants get their name because they pass through another organization en route to their final destination - nonprofits like you! 

“Pass-through grants are distributed by a federal or state agency to a local government or organization, which then allocates funds to other organizations. Non-profits with solid relationships with local government entities or those in consortia or networks may find these grants beneficial.” - Rachel Gusin, Project Coordinator for the Legal Aid Society of San Diego. 

Take the below example from the Office of the Texas Governor. These are federal funds that the state of Texas then disperses across various grants at a local level. 

Nonprofits can position themselves to win these grants by:

• Making connections with local governments
• Leveraging existing networks for introductions 
• Demonstrating value in the community through programming
• Providing innovative solutions to help solve community challenges.

Because they’re often federally funded, these are highly competitive grants, and applicants must apply to their state or local government for consideration.

Formula Grants (For Nonprofits who Meet the Criteria)

Formula grants are non-competitive grants where funds are distributed to an organization as long as they meet the predetermined set of criteria. 

Sample criteria include:

• Population size
• Poverty rates
• Crime rates
• Specific community needs
• Census data
• Demographics

Formula grants are typically administered by federal, state, and local governments. They are widely used across the public sector, including:

• Education
• Public Health
• Transportation
• Housing

“Nonprofits that offer services aligned with these predetermined criteria and who serve large or specific populations may find these grants suitable.” - Rachel Gusin, Project Coordinator for the Legal Aid Society of San Diego.

You can see an example of a formula grant from the U.S. Department of Health & Human Services, outlining its state formula grant guidelines for the child welfare system. 

All applicants who meet the criteria will receive funding, though amounts will vary.

In general, if you are seeking a formula grant, you want to keep in mind that higher funding may go to projects that:

• Impact more people
• Meet a community epidemic
• Prove innovative solutions that can be replicated on a large scale.

At the end of the day, pass-through grants help provide predictable and equitable distribution of funds, which is essential. 

Grants can be funded and distributed by different entities.

The type of funder will generally determine the processes for applying, receiving the award, and reporting on the grant’s outcomes. You can read more about these categories below and the different types of grants.

Government Grant Types

Government grants are awarded to serve a public purpose. They’re funded by tax-payer dollars, and the allocation of these grants is determined by legislation. 

There are typically three types of government grants that are available for nonprofits, and we’ll discuss these below.

Federal Grants

Federal grants are grants administered by the federal government. Typically, they’re open and competitive on a national scale unless otherwise specified.

Grants.gov offers a comprehensive list on their website, so they’re easy to find.

State grants

State grants for nonprofits are distributed by state governments., and they’re often pass-through grants. In order to qualify for state grants, your nonprofit organization should be:

• Located locally 
• Serve the community
• Meet any specific criteria as outlined in the grant 

Many state funds are allocated for specific purposes, including:

• Education
• Health
• Transportation
• Environmental

Building strong relationships with your local legislatures can help your nonprofit stand out during the application process.

Most states have an online grant system to help you locate all of the state’s funding opportunities, like the one in New York.

These opportunities will vary from state to state, so be sure to take some time to familiarize yourself with the opportunities in the state in which your nonprofit is located.

Local (City or County) Grants

Just like with state governments, city and county governments also often have grants to distribute to specific regions that fall under their jurisdiction. These are often pass-through grants from state or federal entities.

Some cities and counties share grant information via an online system, such as New York City’s PASSport. This system lists all city funding opportunities, including: 

• Health and human services
• Arts and education
• City Council discretionary opportunities

If your city or municipality does not have a centralized system, don’t worry! You can find your local government grant opportunities in other ways, such as:

• Visit local libraries to identify local funding opportunities
• Connect with government offices to enquire about open opportunities.
• Call, email, or schedule a meeting with your local elected officials to talk about grant opportunities. 

Local elected officials sometimes have discretionary funding that they can allocate in the form of a grant, so getting to know these people is a great way to get access to funds to support your nonprofit!

Foundation Grant Types

A foundation is an entity that awards grant funding to organizations such as nonprofits.  

There are two types of foundations. Private foundations acquire their funds from individuals, families, or corporations. Public foundations amass money through fundraising and often receive donations from a variety of sources.

Instrumentl makes it easy to find different types of grants. Below, we’ll examine the six main types of foundation grants you should know to help you narrow down your search. 

Family Grants (Private)

Typically, family foundations are small and are focused on a specific issue in the community.  

There are several areas to keep in mind when it comes to family grants. The family typically has:

• A deep, personal connection with the issue.
• A seat at the table, informing the foundation’s grantmaking and dispersing the funds based on the interest of the family.
• A hand in the operations, serving as the foundation’s officers or trustees. 

Instrumentl makes it easy to locate family grants by sharing basic information about the foundation, who they fund, and more. 

Independent Grants (Private)

Independent private foundations are similar to family foundations. The main difference is the trustees are not composed of the donor or their family. 

However, these foundations are often still required to steward the foundation’s funds in ways that align with the donor’s charitable interests. 

Corporate / Business Grants (Private)

Sometimes, companies have foundations to help them centralize their charitable efforts. 

• They often have common themes, which align with their business goals.
• Their foundation is often funded by business profits, board of directors, and donations.
• They are highly competitive.

For example, the W.K. Kellogg Foundation - the cereal company - focuses their grantmaking on projects that meet the needs of vulnerable children, including those facing food insecurity. 

Because a business’ services and charitable contributions are closely linked, your nonprofit must also be aligned to help maximize your chances of landing these grants.

Financial Institutions (Private)

Another common type of grant that nonprofits may be eligible for comes from financial institutions, which can include:

• Large national banks
• Small local banks
• Credit unions

“Start locally! Banks often have fairly easy applications and area foundations are there to support local initiatives! Once you've conquered the local funding scene, you can reach out to other funders in your area/region.” - Sarah Lange, CEO/Founder.

They often have charitable trusts to which you can apply for grants to support your project or nonprofit. This helps foster goodwill in the community.

Federated Funds (Public)

Federated funds fundraise from multiple sources to create a fund used for charitable purposes. The amount it can award in a year is determined by how much it raises in a year. 

Two of the most popular examples of this are:

• United Way
• Combined Federal Campaign

These foundations often select a portfolio of nonprofits to support on a regular basis based on their specific foundation’s vision and goals. 

Community Grants (Public)

Grants from community foundations focus on nonprofits or projects that positively impact the foundation’s immediate community. 

The Council on Foundations is a great resource for finding a community foundation. They have a tool that helps you locate local opportunities.

Community foundations combine multiple funding sources to create a large pool of funds to allocate to nonprofits in their community. They also administer funds for donors who want to make charitable contributions without starting their own foundation.

There are often restrictions on how you can use the funding from the different types of grants. Here’s a look at four of the different areas in which a nonprofit can use grants. 

1. Program and Service Enhancement

Generally speaking, program and service enhancements help to empower your nonprofit’s overall operations. This can show up in five different ways.

• Program and service grants are used to fund a specific initiative. 
• Research and evaluation grants are used to help drive research that could lead to important breakthroughs and evaluate the outcomes of programming.
• Outreach and awareness grants can help you promote your organization, including through marketing, public engagement, education, and more. 
• Capacity-building grants help you enhance your internal operations.
• Capacity expansion grants help you grow your infrastructure.

Keep in mind that many of these grants will have reporting requirements. So, you’ll have to document how you allocated the resources in alignment with the grant’s objectives. 

2. Resource Acquisition

These can also be called capital grants, which help you obtain the resources you need to succeed. It will vary from organization to organization and can include:

• Personnel and staffing
• Equipment and supplies
• Technology and infrastructure
• Building and office space

Resource acquisition grants can help you increase your effectiveness and become more sustainable in the long term. 

3. Collaboration and Advocacy 

Collaboration and advocacy grants help you grow your reach, connecting organizations to make an even bigger impact in the community and the world around you. 

How can they do this?

• Connect newer organizations with seasoned professionals to enhance collaboration.
• Foster partnerships in the community to maximize impact.
• Drive advocacy and influence public policy for critical community issues.

These grants are often offered in conjunction with multiple organizations and partners. They can be great for promoting your organization’s visibility and expanding your network.

4. Emergency and Sustainability

Sometimes, grants can help support nonprofits in both the short term and the long term. Examples of these grants include:

• Emergency or crisis response, which helps your organization support an ongoing situation with immediacy. 
• Generating operating support, which are unrestricted funds that can be used toward the organization’s operating expenses and overhead costs.
• Sustainability efforts, which help advance your nonprofit’s green footprint.

Ultimately, emergency and sustainability grants fund issues that can have a global impact because of their focus areas.

For nonprofits ready to start searching for and pursuing different types of grants, Instrumentl is the perfect platform to help you jump-start your search. 

Why? 

• Instrumentl allows you to set up projects and matches you with public and private grant opportunities that meet your criteria.
• You can set up saved searches to check daily and receive automatic notifications for new funding opportunities. 
• You can save favorite grants, receive deadline reminders, and manage all your grant prospecting in one location. 

If your nonprofit is looking for grant opportunities and you are unsure of how to get started, sign up for your free 14-day trial today.

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