Building a strong grants portfolio for nonprofits
The pros and cons of government grants, private and public foundation grants, and corporate foundation grants
For nonprofit organizations, securing a diverse and sustainable grant portfolio is important to fulfilling your mission and creating a positive impact. Government grants, private and public foundation grants, and corporate foundation grants are the three main types of grants that nonprofits can tap into.
Each type of grant has its own advantages and drawbacks, and choosing the right mix can help improve your organization’s financial health and long-term success. In this blog, we will explore the pros and cons of each along with guidance on building the best grant strategy for your organization.
government grants
A grant is a way the government funds your ideas and projects to provide public services and stimulate the economy. Grants support critical recovery initiatives, innovative research, and many other programs. Government grant funding can come from federal, state, city, or municipal governments.
Pros of government grants:
Significant Funding: Government grants often provide substantial financial support, enabling nonprofits to undertake large-scale projects and initiatives.
Stability and Longevity: Government funding tends to be relatively stable and predictable, offering support over an extended period.
Wide Range of Focus Areas: Government grants cover diverse sectors and social issues, offering opportunities for various types of nonprofits to secure funding.
Credibility Boost: Receiving a government grant can enhance a nonprofit's credibility and reputation in the community.
Cons of government grants:
Complex Application Process: Applying for government grants can be time-consuming and involve extensive paperwork and reporting requirements.
High Competition: Government grants are highly competitive, with numerous organizations vying for limited funds.
Stringent Compliance: Non-compliance with government regulations and reporting standards can result in penalties or loss of funding.
Bureaucracy: Dealing with government agencies may involve navigating bureaucratic processes and potential delays.
Political Uncertainty: Government funding levels can fluctuate based on political priorities and budget constraints.
Reimbursement Model: Some federal grants work on a reimbursement basis which could require nonprofits to have ample cash on hand to cover expenses until government funds arrive.
Private and public foundation grants
Private foundations are created by an individual or a family and most of their grant funding comes from endowments and investments for issue areas important to that individual or family. Public Foundation funding is often raised from the community through fundraising, with grants going to community needs.
Pros of private and public foundation grants:
Mission Alignment: Private foundations often have specific focus areas aligned with nonprofit missions, increasing the likelihood of finding a good match.
Flexible Use of Funds: Foundation grants may offer more flexibility in using funds for various aspects of a nonprofit's operations and projects.
Less Bureaucratic: The application process for foundation grants is generally less bureaucratic and more streamlined than government grants.
Potential for Long-Term Support: Establishing strong relationships with foundations can lead to ongoing support and multiple grant opportunities.
Networking and Collaboration: Foundation funding often involves networking opportunities and potential collaborations with other grantees.
Cons of private and public foundation grants:
Varied Funding Amounts: Foundation grants can vary significantly in size, with some providing only modest funding.
Limited Duration: Foundation grants are often project-specific and may not offer long-term funding for general operations.
Restricted Geographic Reach: Some foundations only support nonprofits in specific geographic regions, limiting access to funding for organizations outside those areas.
Limited Application Windows: Foundations may have limited application windows, and missing the deadlines means waiting for the next cycle.
Corporate foundation grants
Corporate foundations are created by companies, with grant funding usually coming from the company’s profits and going towards priorities that further the company’s values and corporate social responsibility efforts, or environmental, social, and governance goals.
Pros of corporate foundation grants:
Visibility and Publicity: Partnering with a well-known corporation can raise a nonprofit's visibility and attract additional support.
Flexible Partnership Opportunities: Corporate partnerships can lead to long-term collaborations, joint initiatives, or cause-related marketing campaigns.
Potential for Non-Financial Support: Corporate grants may come with non-financial resources such as employee volunteers or in-kind contributions.
Faster Decision-making: Corporate grant decisions may be quicker compared to government or foundation grants.
Cons of corporate foundation grants:
Dependency on Corporate Interests: Corporate grants may prioritize the corporation's interests, and shifts in their priorities or business circumstances can affect funding availability.
Limited Duration and Scale: Corporate grants may be project-based and might not offer long-term funding or substantial amounts.
Competition with Other Causes: Corporations often support multiple causes, leading to competition for limited funding among nonprofits.
Potential Conflicts of Interest: Accepting grants from certain corporations may raise concerns about conflicts of interest or perceived bias.
How do I figure out what the right mix of grants is for my organization?
Selecting the right mix of grants for your nonprofit is a strategic decision that requires careful consideration.
Here are some guidelines to help you build a strong funding portfolio:
Align with Your Mission: Prioritize grants that align closely with your nonprofit's mission and programmatic goals. Seek funders who share your values and objectives.
Diversify Funding Sources: Avoid over-reliance on a single funder. Diversify your funding sources to reduce financial risks and increase stability.
Assess Your Capacity and Expertise: Consider the administrative and reporting requirements of each grant type. Ensure your organization has the capacity and expertise to meet the demands of different funders.
Understand Timing and Duration: Be aware of grant application cycles and the duration of each grant. Plan accordingly to maintain a steady stream of funding and allocation of efforts.
Evaluate Long-Term Impact: Assess how each grant aligns with your nonprofit's long-term strategic plan and its potential to create lasting impact.
Build Relationships: Cultivate relationships with funders, whether they are government agencies, foundations, or corporations. Strong relationships can lead to additional funding opportunities and partnerships.
Stay Informed: Keep track of funding trends and opportunities in your sector. Be proactive in seeking out new funding sources.
Building a diverse grant portfolio for your nonprofit allows your organization to not only increase funding, but also be more resilient by not relying heavily on one funding source. Each grant type offers unique benefits and challenges and by carefully considering the pros and cons of each, aligning funding opportunities with your nonprofit's mission, and maintaining strong relationships with funders, you can create results that support your organization's growth and impact.
I don’t have time to research and determine the best grants mix for my organization. can this be outsourced?.
Yes! Grants are a great place where you can supplement your team's efforts with outside consultants. Capacita has a proven and successful process of systematically researching grant opportunities, evaluating fit, and then prioritizing your efforts, taking into account the pros and cons discussed above for our client partners.
At Capacita, we are passionate about the impact you are having on your community and understand that there are often not enough hands to get everything done! That's where come in, as an extension of your team that is invested in your success.
Get in touch with us today for a free consultation and we'll tell you all about how we can help.