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Types of Grantmaking Organizations

There are several different types of organizations that may present funding opportunities for your neighborhood association.

This is the second article in a series on grant writing. Read the introduction to the entire series.

It is important to know the difference between these organizations so that you understand what they may be looking for, the type of language to use when applying, and how rigorous they may be in their reporting requirements. The below definitions provide a broad overview. It is important to read through all guidelines and documents provided within an RFP to ensure you fully understand what is required both in the proposal submission and once you receive the award.

Generic image of a group meeting.

A private foundation is typically a nonprofit organization, but not a public charity, that was set up to tackle a specific area of need in the community. There are two types of private foundations, an operating foundation and a non-operating foundation. A private operating foundation has its own programs that exist for charitable purposes, and often won’t distribute funds to other nonprofits unless they are working directly with their programs. A private non-operating foundation is one that is set up specifically to grant money to other charitable organizations. Non-operating foundations are typically ones that will have grant opportunities available for your organization.

Private foundations are often set up by families and look to make an impact on a community need that is important to that family. Many private foundations invest their principal funding (often from the family itself) and use the income from that initial investment to fund grants. The board of directors is often made up of members of the family who began the foundation.

Proposals are typically reviewed by the board of directors, other family members, and staff members of the foundation if they have any. While the scope of the foundation’s work can vary, the focus is generally narrower than other types of funders. It is important to understand the history of the foundation and the language they use to explain their purpose while you are crafting a proposal.  One foundation may have been set up decades ago by a wealthy banker and is now run by that banker’s descendants. Another foundation may have recently been set up by a successful artist who still has a hand in running the organization. Both of these foundations may use different language and have very different priorities. Being able to tap into their history and the language they use will be an important step to securing funding.

When crafting these proposals, it is important to match the language used by the foundation (formal vs. informal), understand that these causes are near-and-dear to the staff/family of the foundation, and to ensure your project truly fits within their stated purpose.

Public Charity
Public charities may look similar to private foundations but can operate very differently. Public charities may have their own programs that they operate. Alternatively, they may be more of an umbrella organization that is looking to fund and link resources in the communities they serve. Like your organization, they are established to tackle a specific issue in the community and to fill a perceived gap in community resources. Public charities typically receive donations and may themselves receive grant funding that is then subgranted out. This means they are accountable to those funding sources. They may be required to report on outcomes for a grant they are administering. They also must be held accountable by their current board of directors. All of this means their reporting requirements will vary, not only from organization to organization, but even among different funding opportunities within the same organization.

Many public charities rely on the community to help with their proposal review process. Some public charities put together committees to review proposals they receive. These committees can be made up of donors to the charity, experts in the field, general community members, charity staff/board members, or a combination of all these groups. This means someone could be reviewing your proposal who has no background in the issue you are applying for. You want to be able to convey knowledge and authority on the subject without getting bogged down in jargon, technical terms, or acronyms.

An example of a well-known public charity with chapters in many communities is United Way.

Corporate giving can either come directly from a for-profit corporate entity or from a charitable organization that was started by that for-profit company. These entities will often only serve areas where their for-profit businesses are in operation, so it is important to note any geographic limitations right away to determine eligibility. Corporate funders will usually have a specific need they are trying to fill, and many times that need is directly related to the goods or services offered by the corporation.

Proposals to corporate funders are generally reviewed by staff within the corporation. This will give you a hint as to the type of language and information that will be useful in your proposal. If the proposal is from a bank, then you know bankers are likely to be reviewing your application. They may be more interested in the statistics and hard numbers on the need and outcomes of your program. Banks are also required, by the Community Reinvestment Act, to target their giving to low- or moderate-income (LMI) individuals and, as a result, applicants must demonstrate how their proposals serve these target populations.

One thing that most corporate funders have in common is their desire to promote their business interests in the community. Many corporate funders have set up a foundation as part of their branding or outreach efforts. They want people to feel good about buying their product or service, and they point to the good causes they support to bolster their own image. If your program is visible in the community, or you can visibly recognize the corporation, it may be useful to include that information in your proposal.

Governments at all levels often provide funding opportunities for their constituent communities. Many government agencies require applicants to have registered with them as a vendor or have a pricing agreement in place before responding to an RFP. If you are interested in government funding at any level, it is helpful to review each agency’s submittal requirements and make sure your organization has all required documents on hand and is set up in their system before applying for funding.

Government agencies tend to have larger awards than other funding agencies. Keep in mind that the larger the award, the more capacity an organization must have to apply for the grant, administer the program as promised, and fulfill reporting requirements. Preparing a government application is generally no easy task – it often requires a detailed and lengthy description of the proposed project and numerous attachments. Once a government grant is secured, reporting can be a time-consuming endeavor, and organizations usually need to dedicate time to meeting the reporting requirements. You should not be discouraged from applying for government funding, but it is important to weigh the costs and benefits and ensure you can manage the funding if it is awarded.

Government, and particularly federal, agencies often use experts in the particular field to review grants. These reviewers can be from anywhere within the agency’s geographical constituency. Sometimes they are paid, but many times they are volunteering. While you may have more leeway to use industry-specific terms, it is still important to keep your proposal clear and streamlined, and make it stick out from a large stack of applications.