Let’s say you’ve been tasked with finding and applying for a grant for the first time. Grant seeking can certainly be a mysterious or overwhelming process for newcomers (and experienced fundraisers, for that matter). 

And you know that grants can be extremely competitive. Even though foundation assets are at all-time highs ($1.48 trillion), payout growth has slowed in the turbulent post-pandemic economy. More organizations than ever are competing for the same buckets of funding.

If you have no idea where you’d start with your grant search, we recommend reviewing the essentials of the grant landscape.

Who Provides Grants to Organizations?

Funding organizations, also called grantors, can be a diverse group. These are the primary types of grantors you’ll encounter:

Foundations

• Public foundations (or public charities), which raise funds from several sources, including the general public. This group also includes community foundations.
• Private foundations, which are generally funded by a single benefactor or family.

Government agencies at the federal, state, and local levels tasked with administering programs through grant making.

• Corporations that pursue corporate social responsibility (CSR) through grant making.

> Corporate foundations are often created to manage CSR programs.

What Kinds of Organizations are Eligible for Grants?

In general, any 501(c) nonprofit organization with an IRS Letter of Determination can apply for grants. This group includes these types of organizations:

• Nonprofits (public charities)
• Unincorporated community groups with fiscal sponsor
• Faith-based organizations
• Tribal organizations
• Some housing authorities
• Local governments

It’s important to note, however, that specific eligibility requirements can vary significantly between funders and opportunities.

If your organization is an association, keep in mind that while most grants are geared towards 501(c)(3) nonprofits, some associations are classified differently, often as 501(c)(4) or (6). 

While this might not immediately disqualify your association, it does mean you’ll need to carefully read the requirements before deciding to pursue a grant. If the guidelines are unclear, contact the funder directly with your questions.

Taking the time to check all requirements upfront can ultimately save you a lot of energy down the road. This is especially true if you’re working as a freelance grant writer and aren’t intimately familiar with the organization applying for the grant.

What Are the Most Important Types of Grants?

No two grants are exactly alike, but most are structured in common ways. We can break them down into a few categories based on how they pay out awarded funds and how they require grantees to report back on progress and spending:

Grant Funding Categories

When you win a grant, you’ll receive the funding in a combination of these ways:

• Restricted or unrestricted. A restricted grant must be used only for the specific project detailed in your proposal. An unrestricted grant can be used for anything, like general operating expenses, although these are fairly uncommon.
• One-time or installments. Grants might be paid out in a single lump sum, but they’re more commonly provided in staggered payments following a preset timetable.
• Flat or matched. A grant can be provided as a flat amount with no additional contingencies, or it may be “matched,” meaning your organization is required to cover a certain amount of the project’s total cost. 50% matching grants are common, with grantees providing half the cost and receiving the other half from the funder.

The payout specifics of a grant will directly impact its reporting requirements and your recording of the receipt of the funds. 

Grant Reporting Categories

Funders set reporting requirements to keep tabs on project progress and ensure that funds are being used appropriately. Reporting requirements generally fall into one of these categories:

• Unconditional. These grants have minimal reporting requirements and are often awarded as upfront lump sums, meaning you can immediately record the revenue.
• Contingent. Grants with installment payouts usually require organizations to fulfill specific project benchmarks before receiving the next payment. This means that you should record incoming payments over time.
• Reimbursable. These grants essentially pay you back after you cover the initial costs of the project, and they have stringent reporting requirements to document and prove these costs (and many require separate audits after the total awarded amount is reached). Grants from the federal and state governments are often reimbursable, so be prepared to keep very thorough records and follow tight guidelines if you pursue one.

In Conclusion

Grants play essential roles in the nonprofit ecosystem for all kinds of organizations. You shouldn’t approach them haphazardly—that’s a recipe for wasted time, energy, and resources.

Instead, start by reviewing the different categories and structures to expect. Get familiar with the foundations and corporate philanthropy programs active in your area. Be prepared to read and reread a grant’s guidelines and eligibility requirements. This will help you first determine if an opportunity is the right fit and then will help you lay out a more effective plan for winning it.