Maybe you’ve heard the news about a local hospital or museum winning a $100,000 grant, and you’re wondering what grants are all about. Or you are seeking grant funding to improve the quality of life in your community. If so, the Grants Collection (a part of the Social Science and History Department in Pratt Library) can recommend numerous books, Web sites, and databases to help. This guide answers many basic questions about grant funding, and points you to other resources that can help:
This online guide is intended for nonprofit organizations in the United States. If you don’t make any money at what you’re doing, that doesn’t necessarily mean that you’re a “nonprofit.” For the purposes of this guide, a nonprofit organization is a specific type of corporation that:
Many hospitals, schools, homeless shelters, museums, and other organizations are nonprofits.
Using the words of the Association of Fundraising Professionals, a grant is “a financial donation given to support a person, organization, project, or program.” It is typically awarded to a nonprofit organization from a foundation, corporation, or government agency.
Grants are typically awarded to a nonprofit organization for a distinct program or purpose. A grantmaker generally focuses its giving on:
Many people think that grants are an easy way of getting funded, because grant money is free. In reality, even though you do not have to pay a grant back, you do have to invest a considerable amount of thought, effort, time, and money.
In addition to “doing what you do really well,” you need:
So, before you look for grant funding, you need to get your house in order. Make sure that you have the capability (knowledge and expertise) to carry out a program, before you ask for support for it. If you’d like to read about what it takes to implement a grant-funded project, one excellent guide is:
Grant Winner’s Toolkit: Project Management and Evaluation by James Quick. New York: John Wiley, 2000. SSH GRANTS COLL HV41.2Q54 2000Q.
Many people think that finding money is the first step in starting a nonprofit. But there’s a lot more to raising money than just having a good idea. Most importantly, since nonprofits and foundations exist in order to benefit the public, there must be a need for your organization and its work in the community. Before you look for funding for a new program, a key question to ask is whether any other organization in your area is already addressing the problem (and if they are, whether they are doing it adequately). After you’ve established that there is a need for your project, you also have to convince donors that your organization has the ability to carry out what it says it wants to do! Here are some of the most important things to consider:
A helpful resource for seeing things from the grantmaker’s perspective is the Council on Foundations’ Web site.
If you think your organization might be missing one of the pieces to this puzzle, there are many books, Web sites, and organizations that can assist you. For starters, take a look at The Foundation Center’s Establishing a Nonprofit Organization and Carter McNamara’s Free Management Library for nonprofits. These sites will link you to a variety of other helpful Web pages.
If your nonprofit is in Maryland, also read How to Start a Nonprofit Organization in Maryland from the Charitable Organizations Division of the Maryland Secretary of State’s office.
The Enoch Pratt Free Library State Library Resource Center’s Grants Collection also has books that cover nonprofit boards, financial management, legal issues, and other start-up topics.
Four of our best general books are:
When you are researching grant opportunities, you’ll see that many foundations only give to “501(c) 3” organizations, or require a copy of your organization’s “IRS determination letter.” In a similar vein, you will find many foundations that do not give grants to individuals. To put it simply:
Like a charity, a foundation is also a type of nonprofit, a legal entity that is exempt from federal income tax. In return for this tax-exempt status, the United States government regulates how foundations can give away their money.
By law, a foundation can only give funds for charitable purposes – to support:
See section 170 (c)(2)(B) of the Internal Revenue Code (also known as Title 26 of the United States Code). Section 170 (c)(2)(B) will in turn refer you to section 501 (c) 3 of the Internal Revenue Code, which lists types of charitable organizations to which foundations can safely make contributions to. This is why, in conversation, charities are often called “501 (c) 3 organizations” and foundations tend to fund only 501 (c) 3 organizations.
In order to be officially recognized as a tax-exempt charity, nonprofit organizations must take numerous steps, including filing paperwork with the IRS
After reviewing the documentation, and determining the nonprofit’s status, the IRS informs the nonprofit by letter. This is the determination letter you’ve heard about. To ensure that a foundation is giving donations to qualified charities, it usually requests a copy of each charity’s IRS determination letter for the foundation’s files before it will give a grant to that organization. This is because foundations must report their gifts and activities to the IRS each year.
What this means is that if your organization isn’t 501 (c) 3, you are bound to encounter a great deal of difficulty finding foundations that will fund your organization.
Foundations can only donate to individuals in particular circumstances, such as grants for students, artists, or researchers. There may be other possibilities for funding your project, including raising money from individual donors or partnering with an existing 501 (c) 3 organization.
Going to workshops and professional meetings is a useful way of learning about grantseeking and fundraising. The Pratt Library's Grants Collection offers free workshops in the Fall and Spring. If you contact us, be sure to ask us to put you on our mailing list. Other organizations in the Baltimore-Washington region offer free or low-cost training for nonprofits, including:
Once you’ve established your nonprofit organization, you’ve figured out your project’s goals and funding needs, and you’ve read up on the world of philanthropy, you may feel ready to look for grant opportunities. There are two major sectors to research: grants from foundations and corporations, and grants from federal, state, and local government agencies.
A foundation is a type of nonprofit organization that exists in order to give money away for charitable purposes. There are several types of foundations, including ones that are run by family members, members of the community, and corporations.
By law, tax-exempt foundations must file a yearly information return with the IRS (IRS form 990-PF), and this information must be made available to the public. So, unless you are a large organization that does a lot of grant fundraising, you probably do not need to purchase directories or databases. Instead, use the Internet, or – even better – visit your public library!
You can find a limited amount of information about foundations for free on the Internet. The Foundation Center’s Guide to Grantseeking on the Web (New York: 2003. SSH GRANTS COLL HV41.2F68Q) is a handy directory of online resources that you may want to start with.
If you know the name of a particular foundation, you can use the Foundation Center’s Grantmaker Web Sites page and Foundation Finder page to find the foundation’s Web site, current contact information, a brief description, and a link to a recent 990-PF form (the information return that foundations file with the IRS). Another helpful resource is GuideStar, a directory of more than 850,000 nonprofit organizations in the United States (registration is free).
The problem is, you may not know the names of foundations and corporations that fund projects or issues like yours. How do you find out?
If you live in the Baltimore area, come to the Enoch Pratt Free Library’s Central Library/State Library Resource Center (400 Cathedral Street, Baltimore) and start with the Foundation Center’s Foundation Directory Online.
More than 250 libraries throughout the United States offer free public access to Foundation Directory Online, FC Search, and other Foundation Center products. To find a library near you, use the Foundation Center’s directory of Cooperating Collections.
If you would like to learn how to use Foundation Directory Online, take a look at The Foundation Center’s tutorial, the Foundation Directory Online Guided Tour. Also, the Cooperating Collections (including the Pratt Library) and the Foundation Center’s headquarters and four field offices give free workshops on how to find funding with the Foundation Center’s databases and tools.
Another option is to find out whether there is a grantmakers’ association, or an association for nonprofit organizations, for your region or subject interest. Sometimes, these organizations publish directories and other information about their members or about grantmakers who fund them. Another option is to figure out whether a government agency in your state is responsible for keeping records on foundations.
If you are interested in organizations in other states, you can use the print Encyclopedia of Associations, (SSH XHS17.G36Q) to find information on some nonprofits’ and funders’ groups. You can also try the National Council of Nonprofit Organizations, which offers links to state associations of nonprofits, or GuideStar, a database of more than 850,000 nonprofit organizations in the United States.
Another thing to be aware of: some companies have “corporate giving programs” rather than “corporate foundations.” A corporate giving program, unlike a corporate foundation, is not a separate organization from the business that funds it – instead, it may be run by the company’s advertising, marketing, or public affairs department. Also, corporate giving programs (unlike foundations) are not required to make contributions to nonprofits, or report their activities to the IRS through the 990-PF form. So, they are not often listed in directories that are based on 990 filings.
There are sources available to assist you if you are searching for funding from a particular business:
When you are looking at the foundation’s record in these sources, compare your organization and its programs to the funder’s priorities. While you are researching, you might want to keep track of your prospects with worksheets.
Pay special attention to the funders’
Once you have identified some foundations that might help, it’s important to see if they really give to organizations or programs like yours. Do they have a history of giving to your cause and to organizations like yours? To find out more details:
Since funders’ interests and priorities can change, it’s a good idea to keep tabs on grantmakers in your regions. You may also want to follow the news, to find out about new foundations and funding programs.
If you’d like to find out the latest funding opportunities, two of the best free resources online are The Foundation Center’s Philanthropy News Digest/RFP Bulletin, and PNN, the Philanthropy News Network.
Another way to keep up is through reading trade magazines and journals for fundraisers. Although some magazines have online versions, allowing you to read some articles for free, you usually have to visit a library in order to read a magazine from cover-to-cover.
But these are only some of many useful magazines for nonprofit management and fundraising. The Foundation Center’s Washington, DC Library offers a larger selection of magazines and newsletters, which you can read for free if you visit their location.
If you are looking for government funding for your organization or project, you need to research opportunities on the federal (U.S.), state (e.g., Maryland), and local (e.g., Baltimore) level. Although some federal agencies award funding directly to nonprofits – these are sometimes called “discretionary grants” – most federal money is distributed to state, county, or city governments, who then decide which local charities get funding.
Although some parts of the process are similar, there are some key differences between foundations and government funders.
Another key difference between foundation and government grantseeking: it’s usually much easier to find information about federal grants for free on the Internet. The federal government uses several different Web sites and publications to notify the public about funding opportunities:
There are also Web sites that coach or guide nonprofits through the process of applying for federal resources, filing required paperwork, and implementing a federally funded program.
If your nonprofit operates in Maryland, you may be able to get a grant from the Maryland state government. An important resource is the Governor’s Grants Office, which links you to the Maryland Red Book, a database of state funding opportunities. The Grants Office page also gives names and phone numbers of grants officials in each Maryland state government department.
Another thing to pay attention to, when you’re researching grant prospects, is the method of initial contact. When you contact the foundation or government agency for the first time, should you telephone, arrange a meeting, write a letter, or send a full proposal?
Our best advice: give the donor what he or she asks for! Each grantmaker will have its own guidelines for the format and deadline of proposals, and there are often very good reasons behind these rules. For instance, if the funder asks for a letter of inquiry prior to a proposal, this may be because the foundation doesn’t have the staff to read hundreds of 10-20 page proposals.
Remember that grants are only part of your fundraising strategy. There are many other tactics you can use to acquire funding:
This guide should give you a good start in finding grant funding for your nonprofit. If you need further research help, we can recommend which resource you should try first. We can also look up contact information for a specific funder. Although we cannot do your research for you, we will be more than happy to show you how to use our collection of books, directories, databases, and Web sites on your own. Feel free to contact us by e-mail, phone (410-396-5321), or fax (410-396-1413). Or, you can write to us at:
Social Science and History Department
Enoch Pratt Free Library
Central Library/State Library Resource Center
400 Cathedral St.
Baltimore, MD 21201