by Paul Diaz, Vice President Policy, Public Interest Registry
For the growing non-profit, being well-funded is key to doing good work—and essential for expenditures such as building a website, securing office space, hiring staff, and delivering on your mission. Individual donors, fundraising events, and corporate sponsorships are all great funding methods. “This is good news,” says Allison Gauss in her article There’s More Than One Way to Fund a Non-Profit on Classy.org, “because multiple streams of revenue protects [sic] nonprofits in cases where one fundraising source falls through.”
There’s another revenue stream that’s sometimes overlooked and often misunderstood: grants. For non-profits that want to include them as part of their plan, research is needed to learn what they are, the different types, how to excel at grant-writing, and more. Is a grant right for your non-profit? Do you qualify for one? Do you need staff devoted to procuring them? At PIR, our core mission is to support the .ORG community and help non-profits focus on what they do best: improving the world. So, we’ve done some of the homework for you. This blog post is the first in a series about grants: Welcome to Grants 101: An Introduction for Non-Profits.
What is a Grant?
Wikipedia defines grants as: “…non-repayable funds or products disbursed or given by one party (grant makers), often a government department, corporation, foundation or trust, to a recipient, often (but not always) a nonprofit entity, educational institution, business or an individual.” MacKenzie suggests a broader definition, where grants are evaluated not solely by what they are but also by what they can do. “Grants are an opportunity for non-profits and government agencies to obtain the funding they need to reach their goals and measurably impact the target sector they serve,” she says.
Different Kinds of Grants
Various entities offer grants, including federal, state, and local governments around the world as well as private, public, and community foundations. Opportunities abound, but it’s essential to read the fine print when searching for a grant that might fit your needs. Grants often list requirements about location, mission, and population served. In addition, the grantor may specify how funds should be used. According to this article by Ilma Ibrisevic on Donorbox, “Every grant-giving organization will have different requirements and those can also depend on the country in which your nonprofit is registered.”
The Upsides of Grants
The clearest upside is that grants are not loans; you do not have to pay them back. In addition, since foundations and governments often furnish grants, the amount of funding can be larger than what individual donors might provide. Grants also can get you on the right path to growing awareness and enhancing your reputation within the non-profit community. This piece in Society for Nonprofits lists three great reasons to consider seeking a grant::
- You can receive generous amounts of money.
- Once you have obtained one grant, you are more likely to receive others.
- Receiving grants is a good way to build your organization’s visibility and credibility.
The Downsides of Grants
Incorporating grants into your funding model shouldn’t be taken for “granted.” Some of the drawbacks of grants, according to Ibrisevic, include:
- Grants can take a significant amount of time. It first takes time to develop grant-writing skills that actually win grant proposals, it takes time to write a winning application, and then it can take time for you to see the funds.
- They come with specific conditions attached. These conditions apply to things like how exactly you can use the money. They also have specific reporting requirements that you should consider before applying. The conditions can also be related to particular outputs or outcomes or achieving agreed milestones.
- Grants are meant for specific short-term purposes, not to be a permanent nonprofit revenue stream.
While grants can be a good option for those willing to put in the effort, can your organization afford the amount of time and resources needed?
Special Considerations for International Non-Profits
As mentioned above, different countries have different rules and requirements for grants, so it’s important to check with your specific government. Also, some international corporations offer grants as part of their Corporate Social Responsibility (CSR) programs. According to Funds for NGOs, “Many of them also have established exclusive foundations to support projects and programs for reducing poverty and improving the living conditions of the poor around the world.” A list of these potential international corporate grantors can be found here.
In summary, while grants can help you fund your work and raise your profile, there’s a lot to know about them. In our next article, we will explore which non-profits are eligible for grants.