Non-Profit Grants

Grants for non-profit organizations comprise the vast majority of all grant funding awarded.

Donations, major gifts and bequests are tax-deductible by the donor for Federal tax reporting only if the recipient is a 501(c)(3) charity or is recognized as having federal status for exemption, as described in IRS publication 557. Likewise, grantees (the recipient of the funds) do not have to report these funds as income, and therefore do not have to pay taxes on the proceeds, so long as the income is used to support the organizational mission or program.

Non-profit funding is available for just about any mission or focus imaginable, and often the grant is specifically restricted to non-profit organizations.  Some very few private foundations even provide seed money for non-profits.  More commonly, non-profit grants are awarded to fund program-specific needs.

Non-profit grant awards originate from RFP’s (or RFA’s if it is a non-profit government grant program).  The agency or organization that has money in reserve for certain project types will post a notice inviting formal applications for the money.  They may also limit the number of applications by requiring a letter of inquiry (LOI), which is really a request to be allowed to submit the application. Still others may do their own research and send out invitations only to specific grantees.

Non-profit grants always require proof of non-profit status, typically by asking for a copy of the IRS 1023 letter.  For this reason, new organizations that have not requested approval from the IRS are often excluded from applying.

Many non-profit grants are geographically limited.  The RFP may state that non-profit funding is only available to non-profits in certain counties or states.  This is especially true of community-based foundations and corporate foundations.  Some very large corporations may alternate areas from year to year, focusing on the southeast United States one year, and perhaps the West the next year.  They may also limit the area to only those localities in which they have a physical presence.

Non-profit grants normally have a requirement to include certain somewhat formalized sections.  They will usually require a program description, a statement (or justification) of need, a program budget, a means to measure effectiveness in use of the grant funds, and a summary of the program at the very least.  Organizations applying for funding must be careful to fulfill these requirements exactly.  Non-profit funding requests are often “scored”.  The grantor will have a set of criteria with specific point values for each one,  and the application will be examined  to see that it meets those criteria. In cases where there are a significant number of applications, even a single point deduction could mean that the funding request will be denied.