The Three Types of Grants

Finding the Best Option for your Non-Profit
Tom Camacho

A study by Giving USA in 2012 reported that overall “individual” giving in the United States accounted for 72% of contributed income for not-for-profit organizations while grants contributed 15%. Although support from your individual donors should constitute a minimum of 60-80% of contributed revenue for your not-for-profit organization, and earned revenue should support most of your operational expenses, grant income is also obviously crucial. Grants not only provide obvious financial support but also are an endorsement of your work through the notoriety of recognized funders who are willing to support your efforts. These endorsements not only lead to additional grants, but also can be included on your website and promotional materials to increase your individual donorship and are an excellent tool for audience or constituency development. 

In a general sense, there are three overall types of grants: foundation, corporate and government. Grant types and classifications can be confusing so this article is designed to help simplify things regarding types of funders and how, on a basic level, to approach them. These classifications are very general and each category has many sub-categories that would encompass much more space, but this will provide some general knowledge to get you started. 

Foundation Grants
A charitable foundation is a not-for-profit organization that provides grant funding to specific organizations and/or causes that align with their mission and vision. Many foundations are established from endowments that originate from people whose lives were dedicated to certain causes that comprise those missions. These are called “family foundations,” and they are generally established as a charitable trust where the original endowment is invested and the revenue from those investments are distributed as grants. With this means of operation, they are very dependent upon the economy as it impacts their investment portfolio. Therefore, a poor economy directly relates to reduced funding in that year. 

Foundation grants, particularly those from local family foundations are a great place for small not-for-profit organizations to start to build their grant portfolio. The proposals are generally much less labor intensive and they are more open to funding new ideas that align with their missions. Many of the smaller family foundations do not have websites and are staffed by only a few part-time people. You want to assure first that your cause is a good match; an excellent means of doing so is to look at their past 990 forms to see which organizations, projects and causes they have been funding.  These can easily be downloaded online through the Foundation Center’s 990 Finder.

Once you have established that you might be a match for a specific foundation, you may find that they do not accept unsolicited proposals (Some foundations ask that proposals be submitted by invitation only). Do not let that stop you.  First, find the names of key employees and Board Members of the foundation, then see if anyone in your pool of contacts or on your board has a relationship with these people and could endorse or hand-carry your information into the foundation.  If not, there is nothing wrong with sending a short letter of introduction to a key employee that introduces your organization to them and explains what your organization does aligns with the foundation mission. Do not request funding in this letter.

Corporate Grants/Sponsorships
Corporate grants are provided by corporations or other “for-profit” businesses that have charitable arms. Grant information can generally be found on the community pages of their corporate websites. Keep in mind that the main reason for most corporate funding is marketing/advertising–based and that they support causes as a means to communicate their care interest within communities where their products are sold. Think of these grants as a source of advertising; the intent is to do good in communities while at the same time, providing the largest reach and scope for the presentation of a corporate brand in those communities. When you speak to a program officer or write your narrative, calculate how many people your program will impact, if your work and the collaboration is news worthy, and if you are able to include employees of the corporation in the services that you provide. 

Again, with these types of grants you will want to consider how your program will impact target communities and how that overall impact will align with the distribution of the funder’s products or services. Many corporations prefer to choose who they will fund internally. Corporate contributors generally adhere to more stringent guidelines than those of foundations and they may not accept unsolicited letters of introduction. Always keep in mind though that if you don’t ask, the answer will certainly be no. 

Government Grants
Government grants provide funding at city, state and federal levels to not-for-profit projects that serve specific communities and projects. There are currently 26 federal agencies, such as the National Endowment for the Arts and the National Endowment for the Humanities that administer more than 1,000 grant programs annually to fund the arts, educational institutions, and agricultural projects among others. These grants are primarily supported by taxes and are generally more difficult for new and smaller organizations to acquire as they are based on the size of organizational budgets, years of operation and projected sustainability of your business. The proposals are the most difficult of the three classifications to complete and are extremely competitive. 

Although smaller not-for-profit organizations are less likely to garner federal grants, every state and most cities provide local grants. There are arts and social service councils in the majority of states and most cities provide similar programs at the municipal level. Examples of such programs are listed on CAR under “Grants/Awards” and through the city of Chicago’s website. Check your state and your city websites for information on these types of funding. 

All of these classifications are very general and not field specific but one thing to always remember when approaching funders is that donors give because your proposals and communications trigger an emotional response. No matter if you are approaching a government entity or a small family foundation, always include the core rationale for why you started your organization and why you are doing what you do in your narrative and correspondence. Use caution not to “sterilize” what you saying. Keep your heart in it.  

Series Assignment: 

Tom Camacho is a grant writer and a strategic planning and education outreach and curriculum development consultant for such non-profit arts and social service organizations as The Joffrey Ballet, Giordano Jazz Dance Chicago, Cerqua Rivera Dance Theatre, Ensemble Español Spanish Dance Theater, the Jane Addams Hull House, the Chicago Park District, Animal Rescue & Veteran Support Services, Amnesty International and Youth Technology Corps. Camacho holds a BA in arts and media management from Columbia College Chicago and an MA in communication media & theater from Northeastern Illinois University.


Photo by Mike Canale

Published by CAR_Editor on Sun, 04/27/2014 - 3:54pm
Updated on Tue, 07/15/2014 - 6:36pm
The Three Types of Grants | Chicago Artists Resource


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