Grants for Nonprofit Startups: Everything You Need to Know

When you’re looking at grants for nonprofit startups, you’re looking at an area that’s crowded with a lot of competition. But, if there’s one thing startup entrepreneurs are known for, it’s tenacity.

The reason there’s so much competition is, a) there are a limited number of grants and, b) grants — unlike other forms of funding — don’t have to be paid back. Sounds appealing, doesn’t it?

But if there’s one field that’s very familiar with grants, it’s the nonprofit field. Here’s an overview of how to secure grants to start to nonprofit startup, as well as a few types of grants for starting a nonprofit.

What is a nonprofit?

A nonprofit is an organization that puts their social mission before profit. In contrast, a social enterprise is a for-profit company that also has a social mission. For example, a benefit corporation is a company that puts profit first and has a social mission. The difference is subtle, but important.

Another way that nonprofits differ from social enterprises is in how they’re structured. Nonprofits are tax-exempt under the Internal Revenue Section 501(c)(3). They’re considered “public charities” because they exist to create a public benefits.

While you don’t have to be a registered 501c3 in order to launch a nonprofit, it does make some things — including getting funding — a lot easier. If this is the path you want to take, then get started on the process now.

What to do before you even search for a grant

Step 1: Figure out how you’ll use the money

This may seem basic, but the very first step for getting a grant is figuring out exactly what you’ll be using the money for. Any agency giving out grants is going to want to know precisely where the money is going.

So sit down and work it out. Do you need the money to hire more people? To launch a new aspect of your company? To complete an already started project? Outline not only the big picture of what they money will be used for, but also smaller things and how much money you think you need for each.

This step also helps you figure out what grants are the best fit for your startup — and which ones to not even bother applying for — as most grants have clear directives about use.

Step 2: Make a business plan

While not all startup funding sources require a business plan, grants definitely do. So be sure to get yours in order before you start applying.

For most founders, writing a business plan feels like the startup equivalent of homework. It’s the thing you know you have to do, but nobody actually wants to do.

Here’s the good news: writing your business plan doesn’t have to be this daunting, cumbersome chore.

Once you understand the fundamental questions that your business plan should answer for your readers and how to position everything in a way that compels your them to take action, writing it becomes way more approachable. Check out our full guide to creating a great startup business plan.

Step 3: Get your paperwork in order

Just like other funding sources, agencies that give out grants are going to need financial documentation from you. If your company has been going for a little while, get together any financial document that shows how you’ve been doing. You’ll need your returns, your payroll, your profit/loss statement — you get the idea. And if you’re brand new — or even just a couple years old — be prepared to present your personal tax documents as well. They’re going to want to make sure that you’re going to use their money well, after all.

Step 4: Get searching!

Once you have your paperwork in order, it’s time to start searching for grants that could be a good fit for your business! But be forewarned: Grants are notoriously difficult to find and also many have certain time periods in which they’re open or closed. So before you start the laborious process of apply for a grant, do yourself a favor and double check to make sure it’s still available.

Types of grants for nonprofit startups

No one knows grants like nonprofits! Because as the name makes clear, nonprofits don’t have any other profit source. As a result, there are a lot of grants out there available for nonprofit organizations.

As most grants are only offered within a specific period of time, GrantWatch.com is a great resource for finding grants that match your nonprofit. The Small Business Association also offers grants for nonprofits, in addition to low interest loans and other financial and training assistance.

Let’s take a look at three types of grants for nonprofits: federal, state and local, and private.

Federal grants for nonprofit startups

If you’re looking for a federal grant for your nonprofit startup, a great place to start is ]Grants.gov. The UX on the site isn’t great (no surprise — few government websites are) but you can find grants specifically for nonprofits by clicking “nonprofits having a 501(c)(3)” under the “eligibility” tab on the left. It’s going to take some sorting to find the grants that fit your company best, but we never said finding and getting grants would be easy!

State and local grants for nonprofit startups

State and local (meaning city or county-level) grants can be a little bit easier to get than federal grants, if only because there are fewer applicants. However, they may also be for smaller amounts than federal grants, so that’s something to keep in mind.

When you’re looking for state and local grants for your nonprofit startup, a good place to start is on your state or town’s website. You can also run searches with your state’s name and terms like “endowment,” “philanthropy,” and “philanthropic foundations,” in addition to terms to that are specific to your non-profit’s mission.

This is also a good time to activate your community. Find other non-profits in your area and ask them what they did for funding. Whenever possible, get a warm introduction to that funding institution or individuals. When you’re working on a local level, nothing is better than showing you know the same (or the right) people.

Private grants for nonprofit startups

Private foundations exist throughout the country and their sole purpose is providing funding for the types of do-good projects that align with their missions. Your job, as the founder of a nonprofit startup, is to find those foundations, which is where your search engine skills are going to come in handy! Be ready to spend some dedicated time researching first the foundations that might work for you nonprofit, then their requirements, and then applying to a select few.

Other grant information

Want to learn more about grants? Check out these Startups.com guides.

Federal Government Grants for Small Business: What You Need to Know

How To Secure Grants To Start A Business

Small Business Grants For Immigrants and Minorities

What is a Business Grant?

Types of Small Business Grants

Business Grants for Women: What You Need to Know

Business Grants for Veterans: What You Need to Know

All images from The Gender Spectrum Collection.