6 Common Types of Grant Awards
There are different types of grant funding, with varying levels of “restrictions” put on the award. The following list isn’t meant to be comprehensive. But it does include the most common categories of grants for nonprofits, schools, faith-based organizations, and grassroots organizations.Update: I've written a follow-up post to this one, where I lay out an additional nine kinds of grants.
1. GENERAL OPERATING GRANTS
General operating grants provide maximum flexibility. You can use these unrestricted funds to cover overhead expenses and administrative costs—everything from salaries and equipment, to rent and paying the electric bill—or to support for the project or program of your choice. Unfortunately, operating support grants are relatively rare (I’ve heard that only 10% of grantmakers make this kind of award), and so you will likely have to be more specific in your ask. The good news is that even when applying for, say, a program or capital grant, some grantmakers allow you to allot up to a certain percentage of the budget to help cover administrative costs.
2. PROGRAM AND PROJECT GRANTS
Program and project grants are the most common type of grant award. They are more restrictive, since grant funds can only be used to create, support, or grow the programs or projects described in your grant. Grantmakers prefer to give this type of grant because (a) the projects they fund are more likely to align to grantmaker's own mission, and (b) it is easier to evaluate the impact of the grant award.
3. CAPACITY BUILDING GRANTS
Capacity building grants help an organization expand its overall potential—by establishing or improving internal systems, hiring or training staff, evaluating your overall effectiveness, etc. I’ve written capacity building grants that helped nonprofits create development plans, train board members in fundraising, and upgrade wireless connectivity. I even got a grant to pay for more hours for the grant writer!
4. CAPITAL GRANTS
Capital grants are aimed at constructing new facilities, renovating an existing space, or purchasing costly equipment. (These are occasionally referred to as bricks-and-mortar grants.) For large capital projects, grant writing is usually just one component of a multifaceted capital campaign. And some capital campaigns include a portion of funds set aside in a dedicated endowment. For example, I wrote grants for a capital project that included, among other aspects, a cool external elevator that would provide A.D.A. access to the second floor of an art gallery. Our capital campaign included an endowment that would help pay for ongoing elevator maintenance.
5. ENDOWMENT GRANTS
Endowment grants help establish or grow an endowment, which consists of a reserve of money (usually substantial in size) that has been set aside for perpetual use. The principal is invested. Your organization gets to draw funds from a percentage of the interest earned on that investment.
6. MATCHING GRANTS
Matching grants come in different forms. Imagine a major donor says she will contribute $10,000 to your nonprofit if you can raise that same amount from other sources: members, trustees, appeal letter, etc. In this scenario, you approach a grantmaker to help match that gift. In a second scenario, the grantmaker is asked via grant application to provide the initial seed funding. (This second type of matching grant is called a challenge grant.) Both scenarios can stimulate fundraising because they give other donors a chance to “double their impact.”P.S. Don't forget to check out that follow-up post with nine additional kinds of grants.