Grants for 501(C)(3) Organizations

By River Braun, J.D.

Grants for 501(C)(3) Organizations

By River Braun, J.D.

A nonprofit organization recognized by the IRS under Section 501(C)(3) of the Internal Revenue Code is typically known as a charitable organization organized and operated for a tax-exempt purpose. Some examples of exempt purposes include religious establishments, organizations that prevent animal or child cruelty, educational or literary organizations, and other charitable organizations that provide relief for poor or underprivileged individuals.

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Except for organizations that test for public safety, nonprofits that qualify for 501(C)(3) status may receive tax-deductible contributions, which make these organizations popular candidates for grants. This type of nonprofit may receive grants from foundations, private donors, and government entities.

Grants from Foundations or Private Donors

Foundation grants can be a large source of funds for a nonprofit organization. There are typically very little reporting requirements associated with grants from foundations. Many of them are set up by wealthy families or large corporations. They usually only offer grants to nonprofits that share the same mission as the foundation.

For example, if the foundation's mission is to promote healthy school lunches for children from low-income families, it will likely only approve grants to such organizations that also work toward promoting healthy eating for low-income families. The Foundation Center and theNational Council of Nonprofits are two sources for researching foundation grants.

Private donors may also be a source of grants and endowments for 501(C)(3) organizations. A private donor may set up an endowment that can provide a source of long-term funds for a nonprofit organization. Many individuals set up these trusts through their probate estate to take effect after they die. In most cases, a person's moral, ethical, religious, or political beliefs are the motivation for creating a foundation or endowment. Therefore, these donations are very specific and are typically not known to the general public.

Grants from Local, State, and Federal Governments

Many federal, state, and local government grant opportunities for 501(C)(3) organizations. You can search for federal grants on the Grants.gov website. The website also allows you to search based on a variety of filters so that you can narrow your search results to grants that your organization is likely to qualify for based on your mission. States may also be a great source of funds for nonprofits. You may want to begin by searching for information on your state's website for individual state agencies and departments.

However, in most cases, the funder expects the nonprofit to meet or exceed certain requirements or outcomes. The federal or state agency offering the grant may have strict reporting requirements to maintain the grant. Failing to meet the conditions or file the required reports typically result in the withholding or termination of a grant.

Local municipalities and agencies may also offer various grants to 501(C)(3) nonprofits. However, these grants are typically specific to a certain geographical area. If the nonprofit does not operate or provide services within the specific area, it does not qualify for the grant. The financial source for local government grants often come from state and federal funds. Therefore, 501(C)(3) organizations that receive grants from local government agencies must follow the rules for the grant set by the state or federal agency funding the grant in addition to following the rules imposed by the local agency.

Applying for some grants may require a lot of work. You may need to prepare letters of inquiry and detailed grant proposals. Approaching organizations and government entities that provide grants for nonprofits correctly is crucial. Research the organization or government entity before the initial contact to ensure that you follow the correct process set by the funder for requesting grants.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.

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