Seventeen ways grantmakers can make a difference
Grantmaking—your most powerful tool. Generally, grantseekers submit a proposal to the board to fund a specific project and, if approved, receive a check from the foundation. While this is the most common type of grant, it is only one of many ways foundations can offer support to grantees. A standard project grant may be ideal for funding an innovative or proven program, but not the best way to help a fledgling organization or one under pressure to raise money quickly. This slide show offers an overview of the many grant types available to support philanthropy.
Seventeen ways grantmakers can make a difference
Project support
Project support grants typically fund a specific project or outcome as outlined in the applicant’s proposal and approved by your board. This is a simple, straightforward offer of support. Image courtesy of The DreamYard Project.
Matching/challenge grants
Matching/challenge grants encourage organizations to raise money by pledging to match a fixed amount raised from other sources. Grantors have the option to match the money raised dollar for dollar or by a specified ratio.
Seed money
Seed grants are used to help launch a new organization or program. The money can be allocated toward planning, projects or staffing and operations—whatever is needed at the start of a venture.
Collaborative grants
When a project is too large or complex for one funder to single-handedly support, collaborative grants are the best option. Like-minded funders support these projects together for the benefit of the field and the community.
Field scans
Field scan grants are tools that provide funders with the “big picture.” Grantors use field scans to study a given field and identify where the opportunities, needs and gaps in funding lie.
Infrastructure support
This type of grant is ideal for keeping the field connected. Infrastructure support grants are used to support the networks, associations and advocates for a particular field or cause.
Emergency funds
Emergencies do happen, and these types of grants allow organizations to respond to immediate needs within the community or to float an organization through a crisis. Reserving funds for these situations is just good planning.
Impact grants
If the objective is to launch a fundraising or endowment campaign, then impact grants are a good option. Impact grants are typically large, one-time gifts given at the beginning of a new project or program.
Restricted funds
Any grant that sets limits, such as a specific geographic region, demographic or cause, is defined as a restricted fund. Restricted funds are limited to the purpose(s) specified by the grantor.
Scholarships/award funds
Scholarships and awards are used to support or honor outstanding individuals who excel in areas supported by the foundation. The IRS imposes strict regulations on grants given to individuals, which includes obtaining approval for grants before they are distributed. For this reason, many foundations prefer to give grants to institutions or nonprofits for the benefit of an individual.
General operating support
General operating support grants allow grantees to use foundation money according to their discretion, whether for administrative costs, fundraising, overhead or stabilizing the organization.
Capital grants
Capital grants are used when there is a need to purchase land or improve an existing structure. Grantees may also finance the construction of a building, purchase equipment or renovate an old facility.
Program-related investments (PRIs)
PRIs give nonprofits access to capital through low-interest loans, loan guarantees or equity investments for projects such as community revitalization and low-income housing. PRIs are not outright grants but loans the grantee is expected to repay by a specified period.
Impact investments
Impact investments provide a measurable, positive impact while generating a financial return. These grants fund ventures that fulfill both a social mission and address current global challenges through market-driven mechanisms.
Endowments
Grantees gain financial stability by establishing or increasing the organization’s endowment. Grantees cannot touch the principal, but are allowed to use the income generated by the endowment for general operating expenses.
Research grants
Research grants provide support for research projects conducted by universities, medical institutions and think tanks. These grants directly benefit the field through the acquisition and sharing of information for a specific purpose.