Foundation vs Government Grants: Which Should You Pursue?

Are you overwhelmed in the world of grant searching and writing? Maybe you’re not sure what types of grants are “worth it” or manageable for your organization. We’re here to help.

We surveyed a group of professional grant writers to see what entities they seek funding from. Their answers and insights will help you discern what it's like applying for foundation vs government grants and which ones your nonprofit should pursue.

Let’s see what these nonprofit pros had to say about the difference between private and public funding:

Let’s start with the basics: foundation grants.

Foundation grants are awarded by foundations, individuals, families, or even corporations and are a crucial source of funding for nonprofits.

Foundation grants can be very lucrative for nonprofits because there are usually a lot of opportunities available locally, regionally, and nationally. These grants are often designed to support specific causes, such as education, arts and culture, social causes, healthcare, or education.

Are You Funding Ready?

There are a few things your nonprofit will need to do to ensure you are ready to apply for foundation grants. Here are two overarching considerations to keep in mind:

1. Does your nonprofit meet the minimum eligibility requirements? Foundations will specify the requirements that your nonprofit must meet to be eligible to apply for funding. Whether it is holding 501(c)3 status or having a focus on a specific area (i.e., education, animals, the environment, etc.), you shouldn’t even start the application process until you know your nonprofit meets these minimum requirements.
2. ‍Is your entire team up to the task of applying for funding? Applying for grants isn’t a small undertaking or a one-person show; in fact, it could take anywhere from six to eight weeks to complete. And once you’ve won funding, there’s a lot that goes into tracking the award, implementing it, and reporting on its outcomes. This is why you need your entire team on board and invested in the grant-seeking process.

These are just two “big picture” questions you need to answer before you apply for foundation funding. For a more detailed analysis, you can review this comprehensive grant readiness checklist to help you further decipher if you are funding-ready.

How To Find Foundation Grants

You can find foundation grants by doing a simple Google search or looking up individual foundation websites, but these options will take quite a bit of time.

A simpler and more efficient way to quickly and easily find foundation grants is by using Instrumentl. Instrumentl’s grant database allows you to filter which types of funders you would like to see grants from:

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You can create a free Instrumentl account for 14 days to search through the more than 400,000 funders and active grant opportunities. You can also filter your search by geographic location, focus area, funding amount, and much more. That way, you aren’t sifting through hundreds of grant opportunities that don’t meet your needs.

Public vs Private Foundations

According to the IRS, the main difference between public and private foundations is the amount of public involvement they have in their activities.
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“Public charities generally receive a greater portion of their financial support from the general public or governmental units, and have greater interaction with the public. A private foundation, on the other hand, is typically controlled by members of a family or by a small group of individuals, and derives much of its support from a small number of sources and from investment income.” - IRS

What does this mean exactly? While a public foundation relies on donations from the public (at least one-third of the funding must be from the general public), a private foundation is usually funded by a single individual, family, or corporation.

For example, the Make-a-Wish Foundation is a public foundation because most of its funding comes from the general public, while the Bill and Melinda Gates Foundation is a private foundation because it is supported by Mr. and Mrs. Gates, their investments, and other private individuals.

We were curious which type of funding grant writers won most often. Here’s what we asked in our survey:
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Which type of funder do you win most often?

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The answer was clear: over half of the respondents reported winning grants from private foundations most often.
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Why is this? Keep reading and we’ll explain why government funding is often more difficult to secure.

Government grants are monetary funds allocated by local, county, state, or federal agencies and departments.

Government grants can offer nonprofits financial stability because they are usually much larger than other types of grants and are typically allocated over a number of years. However, they also come with stricter guidelines and reporting requirements, making the application process much more detailed than other types of grants.

Are You Government Funding Ready?

Government grants are definitely a rewarding venture, but they are also very time-consuming when it comes to getting funding ready.

Here are some questions that can help you determine if you’re government funding ready:

1. Has your nonprofit requested a DUNS Number and registered with Sam.gov and Grants.gov? This should be your first step in making sure your nonprofit is government funding ready. There may be additional registrations, such as the uniform grant guidance 2 CFR 200, which you will have to complete depending on the specific government agency that is funding the grant. This quick video shows you how to register with Grants.gov.
2. Do you have the staff time to complete the application process and grant cycle? Government grants are much more complicated than other funding opportunities, so you’ll need the appropriate staff and resources to apply, including reviewing the request for proposal (RFP), developing a program model, and creating the budgets required for the proposal.
3. Can your staff internally collect and measure data and manage the grant budget? Government grant funders love data and, as such, have extensive reporting requirements. If you don’t have the staff expertise to collect and report on outcomes, you may want to consider hiring an external evaluator. The same holds true for the budget—you will need financial experts who can track, analyze, and report on the spending of the government funds.

As mentioned above, there may be other government requirements depending on the agency allocating the grant. For example, Rachel Werner, the Owner & CEO of RBW Strategy, discusses another possible eligibility requirement under the Office of Management and Budget:
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“If you are a recipient of government funding, then you probably are aware of 2 CFR 200, which is the uniform grant guidance under the Office of Management and Budget…So in order to make sure that you continue to be a good steward, you need to make sure that you understand 2 CFR 200 and understand its components.”

Ms. Werner has served as a nonprofit fundraiser/grant writer, grants manager at an education management organization, and management consultant overseeing federal government contracts. So, she knows the tedious processes of applying for government grant funding!

Our survey respondents agreed! When asked which type of funder they prefer writing grants for, the answer was clear: writing applications for private foundation grants is much preferred to writing applications for government funding!
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The majority of grant writers surveyed also revealed that they mostly write grant applications for private funding. This makes sense, given the difficulty of government grant applications!

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However, if your nonprofit has the resources and bandwidth to apply for and manage government funding, these grants can be a great way to secure large and multi-year funding support for your mission.

How To Find Government Funding

If you are still interested in applying for government funding, there are a few places we suggest you start your search. Grants.gov is a solid resource for government grants because it includes a database of all federal and some state-level grant opportunities.

However, Grants.gov doesn’t have robust keyword search options, so the results tend to be overwhelming for nonprofit professionals.

Instrumentl, on the other hand, allows you to filter your search by funding source (including state/local government grants), area of focus, funding amount, geographic location, and more!
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These advanced search filters make it easy to identify the most relevant government funding opportunities for your organization.

These advanced search filters make it easy to identify the most relevant government funding opportunities for your organization.

Local vs State vs Federal Funding

Government grants can be offered on the federal, state, or even local level.

State and local grants can be very attractive to nonprofits because they are distributed to specific regions. This makes them less competitive than federal grants that may have a national or global scale.

You can even use Instrumentl to narrow your search to funding opportunities that are only available in your specific county or region.

However, some of the largest funding opportunities come from federal agencies; while they may be more competitive, winning them can be a huge financial boost to your organization.

There are certainly advantages to both foundation and government grants. However, there are also important things to consider for each.

Three of the most important things to think about when deciding between foundation and government grants are timing, resources, and the scale of the project.

Timing

Timing is an important factor to consider when applying for foundation versus government grants. Here are some interesting grant statistics we found on the time it takes to complete foundation grants versus federal government grants:

• A foundation grant may take between 15-20 hours to complete.
• A federal government grant may take up to or more than 100 hours to complete.

When deciding which type of opportunities to pursue, make sure to consider how much time your team has to develop a competitive proposal.

Resources

Government grants also require a lot of staff time and resources to apply for and manage.

Government grants often have stricter reporting requirements, requiring your team to gather program data, submit frequent and regular reports, and possibly prepare for audits. Although foundation grants do have some tracking and reporting requirements, they are generally much less detailed and intense than those for government grants.

Scale of Project

Funding from state and federal government grants can be quite substantial when compared to foundation grants.

A report from 2019 shows how much larger federal government grants can be for versus foundation grants:

• The median largest award from a community foundation - $10,800.
• The median largest award from the federal government - $425,000.

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That is a more than $400,000 difference between an individual foundation award and an individual federal government award!

Because federal grants are so large, they often can be used for large-scale projects that otherwise might not have been possible.

Which Types of Grants Should Your Organization Seek?

Choosing between foundation and government grants ultimately depends on the capacity of your nonprofit and the scope of your projects and services.

Here’s a helpful table that outlines the differences between the two:
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In the end, government grants offer much larger monetary awards, but are much more labor-intensive during the application process and the management of the award. Foundation grants offer smaller awards but are much less time-consuming for you and your staff and can be less competitive as well.

We suggest starting your search for both in Instrumentl to see what is available. Then, you can compare the opportunities and decide which ones are worth pursuing for the highest return on your investment for your nonprofit!