Important Types of Grant Funding You Should Know About

Apr 26, 2024 

Disclaimer: Although we do not provide legal advice, we can assist you with your filings and corporate documents and help you apply for 501(c)(3) status under the Internal Revenue Code (IRC). Visit our service pages to learn more about what Pearl Solutions can offer. 

Importance of Grants for Nonprofit Organizations

Grants are an incredibly important source of funding for nonprofit organizations. The funds are attractive for several reasons, but the biggest benefit that comes with securing grant funding is that in most cases you don’t have to pay that money back to the funder. 

Another reason grants are important is that they provide nonprofits with a sustainable source of income. When you know how much money you have coming in, it’s easier to allocate your funds and prepare an accurate budget. You’ll also be able to focus your other available resources on areas you might not have been able to invest in before. This all contributes to sustainable growth.

Winning a grant also attracts positive attention. When you receive a grant, this signals to other people—supporters, donors, potential partners—that a funder believes your mission is important and that your organization can achieve its goals. This vote of confidence provides an increase in legitimacy and credibility that may inspire other funders to award you a grant in the future. This attention may also help you grow your audience and expose your mission to people who might otherwise not have heard of your work. 

Keep reading to learn about the types of grants by source (where the money is coming from) and types of grants by goal (how the money must be used). 

Types of Grants by Source

Federal grants

As the name suggests, federal grants are a form of financial assistance provided by the U.S. government. Just a few of the organizations that provide federal grants include the U.S. Agency for International Development (USAID), AmeriCorps, the U. S. Department of Agriculture (USDA), the U.S. Department of Education (ED), and the U.S. Department of Health and Human Services (HHS). 

There are many different types of federal grants. Take education grants, for example. ED grants include Federal Pell Grants, Federal Supplemental Educational Opportunity Grants (FSEOG), Iraq and Afghanistan Service Grants, and Teacher Education Assistance for College and Higher Education (TEACH) Grants. 

Grants.gov is a great resource for organizations looking for more information on finding and applying for federal grants. You can also research grants via sites like GrantWatch

Eligibility criteria for federal grants

All grants have certain eligibility requirements that organizations have to meet. One of the first things you should look for is the type of organization that is eligible to receive the grant. If your organization is a 501(c)(4) nonprofit and only 501(c)(3) organizations are eligible to receive that grant, it’s not the grant for you. 

Don’t forget that you need to meet every single one of the eligibility requirements to be considered for the grant. Your project may be worthy and your proposal might be compelling, but that won’t matter in the end. Applying for grants is a time-consuming process. Don’t waste your time and resources on applying for grants that you have zero chance of receiving. 

How to apply for federal grants

After you research your grant and confirm that your organization is eligible to receive it, you can start the application process. You should be able to find information on applying for a grant on the grant-making body’s website. You may be able to apply directly through them, but some agencies direct applicants to apply through sites like Grants.gov. 

When in doubt, defer to the grant-making organization or department and reach out to them for more information. 

State grants

State grants are grants offered by agencies or organizations at the state level. 

Eligibility criteria for state grants

Understandably, you can only win a state grant if you apply to the right state agency or organization. When checking your eligibility, pay attention to which organizations can apply: Can you apply if you operate in that state or if you’re registered in that state? You might operate in Nebraska, but if your organization isn’t registered there—if you didn’t start and incorporate it in that state—you might not be eligible to receive one of their state grants. 

How to apply for state grants

As you know, the application process varies from grant to grant. The grant-making agency or body’s website will include information on how to apply for a state grant. If you have questions, reach out to them directly and make sure you’re applying through the correct channel.

Corporate grants

In addition to federal grants and state grants, your nonprofit should consider applying for grants provided by corporations. 

What is a corporate grant?

Corporate grants are simply grants offered by corporations. An example includes Google Ad Grants, which is a type of grant offered by Google. 

Benefits of corporate grant funding over other types of grants

There are several benefits that come to applying for funding from corporate grants. 

First, corporations may require fewer conditions or have fewer strings attached to the grant money. That means you have more flexibility to distribute the corporate grant funds. The applications also usually require fewer steps to complete or “hoops to jump through” than government grants. 

Corporations often want to promote their corporate social responsibility initiatives, which means they could introduce your organization and mission to a broader audience that may include new supporters and donors. Some corporations even donate a portion of their proceeds to their nonprofit partners. 

Corporations with bigger budgets have the flexibility to offer grants to nonprofits that address a variety of causes. This means that your organization’s mission doesn’t necessarily have to line up perfectly with what the corporation does or sells. With this increased availability of funds, you may find that these grants are less competitive than other grants like those from foundations. 

The corporation may also encourage its employees to volunteer with or donate to your organization and include incentives like volunteer time off or matching donations in their benefits package. 

These are just a few of the benefits that make this type of grant funding more attractive than other types of funding. 

Foundation grants

Foundation grants are grants provided by organizations that are usually formed specifically for a philanthropic purpose. Examples of foundations include the Bill & Melinda Gates Foundation, the Ford Foundation, and the Rockefeller Foundation. Many corporations form foundations to manage their corporate social responsibility efforts. An example of this is The Coca-Cola Foundation, which is the global philanthropic arm of The Coca-Cola Company. 

These grants are usually more competitive than corporate grants. 

Types of Grants by Goal

In addition to looking for grants by source, you can look for grants by goal. In this case, you will want to look at your mission and the way you approach your work.

Research grants

As the name suggests, research grants are grants used to support research efforts. Consider the type of research you want to conduct and search for organizations that want to fund that type of research. Again, make sure you only apply for grants if you’re eligible to receive them. If a grant is only available to organizations doing research in one state and you’re not working in that state, don’t apply to that one.

Conditional grants

Conditional grants are grants that will only be awarded to a nonprofit if it meets certain conditions. Although they sound similar, conditions are not the same as eligibility requirements. Think of eligibility requirements as the first hurdle a nonprofit has to jump. You have to meet those in order to be in the running for the award. 

Let’s say your organization meets all of the eligibility requirements. You’ve submitted a grant proposal, and the funder has decided your organization is worthy of receiving the grant funds. If the funder will only award the grant to your organization if it meets one more condition or has one more barrier to cross, the foundation is offering a conditional grant. 

Capital grants

Typically, capital grants are large grants that are designed to help an established nonprofit organization increase its capacity to carry out its mission. An example of a capital grant would include providing a nonprofit with enough money to “break ground” on a building that will eventually allow the nonprofit to double the number of people it serves.

Project grants

Project grants are grants designated for a specific project. In other words, these grants are restricted. If you win a project grant that is designated only for an end-of-year gala, you can’t use those funds on anything else. 

If you’re looking to apply for and win a world-changing grant, we’d love to support you. Learn more about the grant proposal writing services we provide at Pearl Solutions. 


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