Grants are a form of nonprofit financing organizations can get to help support their work. As part of their funding strategy, many nonprofits will decide to apply for grants from foundations and other external sources.

Grants can be tricky to navigate. You might have a lot of questions and not know where to start. That’s why you have to read this article. It will walk you through the basics of how grants work for nonprofits.

Types of Grants for Nonprofits

Grants are one of the most important sources of funding for nonprofits. Grants are awarded by government agencies, private foundations, and other organizations. In addition to grants, many donors provide unrestricted funds, often called in-kind grants. The following types of grants are available for nonprofits:

In-Kind Grant Contributions

These are contributions a nonprofit organization makes in the form of goods or services, for example, textbooks for children or computers for youth. Donors can make in-kind grants in cash or equipment.

Program/project grants

Nonprofits most commonly use these to support the completion of specific projects. They can be given as one-time awards or ongoing payments based on an established formula, such as a project cost percentage. In addition, some nonprofit organizations use these types of grants to cover salaries or other operating costs. Some examples include:

General Operating Grants

Nonprofits often use these to cover operating expenses such as salaries and rent. Organizations can also use them to subsidize their fundraising efforts or provide additional funding for certain programs or events.

Capital Funding Grants

These funds are typically awarded to help improve a nonprofit’s physical facility (such as adding new space) or equipment (such as computers).

How Grants Work for Nonprofit Organizations

Grants are one of the most important ways that nonprofits can raise funds. Grants are typically funded through a grants management system and grant proposal templates. Grant proposals often require a detailed budget and other supporting documents, such as specific performance metrics.

The process of applying for grants is similar to other forms of funding. Nonprofits must submit an application, which includes information about what they plan on doing with the money they receive and how it will benefit their organization or cause. A grants management system may also require extensive research into the nonprofit’s mission and accomplishments and the community where it operates.

If your nonprofit is lucky enough to win a grant, it still takes work to ensure that the organization maintains the funding. Nonprofit organizations need to know how to effectively manage their grants to ensure the continued flow of funds.

Suppose you are a nonprofit organization applying for federal or state grants. In that case, you must evaluate your current grants management system to ensure that it meets the requirements to submit and successfully manage a grant proposal. You will need to consider each area and focus on those areas that require improvements, such as information systems and research effectiveness.