Building a nonprofit organization from the ground up takes time, hard work, and dedication. It also typically takes money, which may be hard to come by if you don’t yet have a track record of successful programs under your belt.
The good news is there are nonprofit startup grants available that can help a newly formed organization get up and running. Finding — and getting — a nonprofit business startup grant isn’t always easy, though. Here’s what you need to know.
Key Points
• Startup grants for nonprofits are crucial to cover essential expenses such as office space, staff, and marketing.
• Proper documentation — including legal status, mission, and budget plans — is vital for grant applications.
• Researching databases, networks, and similar nonprofits helps in finding suitable funding sources.
• Adhering to grant application guidelines and utilizing feedback can enhance future application success.
• Diversifying revenue streams through crowdfunding, fundraising, and loans supports nonprofit sustainability.
Why Are Grants Important for Nonprofit Startups?
For nonprofits at any stage, grants often serve as a significant and reliable source of income. If you’re launching a new nonprofit, a startup grant can give the funds you need to rent office space, hire employees, initiate programs, and spread the word about your organization and mission through marketing.
You can think of a nonprofit startup grant as akin to the seed funding a for-profit business startup might get from an angel investor or venture capitalist. In this case, however, the funding comes from grant-giving foundations, government agencies, and corporations.
Common Challenges Nonprofits Face in Securing Grants
Directors seeking grant money for nonprofits face an array of obstacles. Uncertainty about government funding is a central issue. Due to cutbacks in government spending, many federal grants and contracts for nonprofits are likely to be paused or canceled; others remain uncertain amid legal challenges.
According to a recent Urban.org survey, roughly 20% of all nonprofits received more than half of their revenue from a government source in 2023.
A limited pool of major donors presents another difficulty. With 88% of nonprofits’ funds coming from just 12% of donors, applicants compete fiercely to build and sustain relationships with these sources.
Nonprofits also face the challenge of ensuring and maintaining compliance with grantmakers’ requirements. Falling short of funders’ terms and conditions could cause donors to withhold money or impose penalties.
4 Steps to Getting Grants for Startup Nonprofits
If you’re looking for a grant to help fund a new nonprofit, here are four steps to follow.
1. Get Your Documentation Together
Grantmakers want to be sure that their money is going to a good purpose. So you’ll want to offer as much evidence as you can that your organization can and will do what it says it will. It’s a good idea to gather (or prepare) documentation that shows:
• Your legal status
• Your mission, goals, and objectives
• Your target population and their needs
• Background information on your board members, staff, and volunteers
• Major accomplishments to date (if any)
• Fundraising plans
• A budget showing how you plan to use the grant funds
Recommended: How Much Does It Cost to Start a Nonprofit?
2. Finding the Right Grants
You can find small business grant opportunities using online databases and government resources (for more on that, see below). Also, consider tapping your network — ask your board, staff, and volunteers if they have any connections with grantmakers who might consider funding your organization. It can also be helpful to research existing nonprofits that are similar to yours to see where they get their funding.
To come up with a list of viable sources for nonprofit business startup grants, you’ll want to consider:
• Does this grantmaker generally fund nonprofits like yours?
• Do you meet the grantmaker’s geographical restrictions?
• Does the grantmaker typically fund startups or only well-established nonprofits?
• Does the grantmaker typically offer funding for the kind of project or operational expenses you need funding for?
• Do the grantmaker’s interests and mission mesh well with yours?
3. Follow Guidelines and Apply
Grant applications typically take a substantial amount of time and effort, so before you start an application, it’s a good idea to carefully review the qualification criteria. It won’t take much time to re-read the grant’s eligibility requirements, and it could potentially save you hours and hours of work if you discover a reason why your nonprofit might not qualify. Also, be sure to follow the application directions to the letter. Otherwise, your application might get automatically rejected.
4. Listen to Feedback
If your application is denied for any reason, and you receive feedback, it’s a good idea to carefully read through it. You may be able to glean useful information that you can use when applying for other grants or for a grant from that organization in the future. You may also consider soliciting the feedback of a grant specialist if you’re not sure why your application was denied.
Recommended: Foundation vs Charity vs Nonprofit: Key Differences
Nonprofit Grant Sources
Here are some potential sources of nonprofit startup grants.
Federal Grants
There are a number of agencies funded by the federal government that offer grants to nonprofits, from startups to small, fully established organizations. These grants might be targeted to certain programs or available to help cover operational expenses. A good place to start your search for federal grants is Grants.gov.
State and Local Grants
State and local governments also offer grant money for nonprofits. You can often find information about these grants through state, city, and town websites. To further suss out municipal and local grants, consider reaching out to local councils and commissions; they may be able to connect you with someone who has direct knowledge about grants in your area. This could help you find a small business grant that suits your needs.
Corporations
Many corporations offer financial support to nonprofits. Sometimes they readily advertise their grants for startup nonprofits, and sometimes they don’t. Therefore, even if a corporation doesn’t state that it partners with nonprofits, that doesn’t mean they don’t or wouldn’t be willing to. It might be worthwhile to set up meetings to pitch your nonprofit’s mission and needs to nearby corporations you think might be sympathetic to your cause.
Private Foundations
Many privately funded foundations offer grants to nonprofits. In fact, many are formed exactly for that purpose. To find a foundation that might be willing to offer startup funding to your organization, you might want to start local. With a little research, you may be able to find grant-giving foundations located in your area. To expand your search, consider using a database like Candid.org.
Community Foundations and Donor-Advised Funds
Funded largely by public donations, a community foundation typically supports area nonprofits via donor-advised funds (DAFs) and other types of grants. DAF donors need not designate the recipient of their funds right away; they may prefer to let the assets grow under management for a while or set up smaller, recurrent transfers to their recipients. The Council on Foundations’ community foundation locator can direct you to philanthropies near you for more details.
Other Ways for Nonprofits to Receive Funding
Grants are only one potential source of nonprofit funding. As a nonprofit founder, you’ll ideally want to have several funding strategies. The more diverse your revenue streams, generally, the more likely your nonprofit is to succeed. Here are some other options to consider.
Crowdfunding
There are many different types of crowdfunding, but the one most used by nonprofits is donation-based crowdfunding. This works by asking large amounts of people to donate small amounts of money, typically via an online crowdfunding platform. You can launch a crowdfunding campaign to raise startup funds for your nonprofit or to fund a specific program within your organization.
Fundraising
Many nonprofits raise significant funds through donations, so if you don’t have one already, you’ll want to create an online donation page. Some ways to encourage donations include promoting your organization and cause on social media, asking for donations at community events, and hosting charity events (such as a walk-a-thon, gala dinner, concert, or auction).
Loans
While you might associate loans strictly with for-profit businesses, nonprofits can sometimes qualify for different small business loans. If you have strong personal credit and your startup nonprofit is already generating revenue, it may be worth applying for a loan through your local bank or credit union (if they lend to nonprofits).
You might also want to look into online business loans. Online (also known as alternative) lenders tend to have more relaxed requirements and are typically faster to fund. However, these types of loans often come with higher interest rates.
Partnerships and Sponsorships
Companies or affinity groups that have a connection to your nonprofit’s mission may be willing to join forces with your organization for fundraising. This might include sponsoring revenue-generating events such as walk-a-thons or silent auctions. In return, your nonprofit can include the companies’ logos or branding in event ads and souvenirs. With this type of arrangement, your nonprofit can raise funds while minimizing overhead and other expenses.
The Takeaway
If you’re looking to start or expand a nonprofit organization, you may be able to qualify for a small business grant or a nonprofit business loan. Once you’ve zeroed in on the likeliest sources for funding, gathered the necessary documentation, and submitted your grant application, you’ll probably have to wait weeks or months to hear back. In the meantime, it may be worth setting up other avenues for raising money, such as crowdfunding or corporate sponsorships.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
Can nonprofits be startups?
Yes. Just as in the business world, people often create nonprofits to offer a new solution to a problem. And just like for-profit startups, nonprofit startups typically need seed funding.
How do you start a nonprofit with no money?
You may be able to start a nonprofit with no money by:
• Finding an attorney willing to donate their services to help you register your nonprofit
• Finding an online fundraising tool that’s free to start
• Gathering donations from friends, family, and board members
• Planning free and low-cost fundraising events
How do nonprofits get seed funding?
Nonprofit startups often get funding through crowdfunding, grants, and donations from friends, family, and members of the community.
What is the easiest grant to get for a new nonprofit?
Many organizations, including smaller nonprofits, have easily accessed the Google Ad Grant. The grant pays for the nonprofit to have ads for its site listed among Google search results. To qualify, all the organization has to do is register with Google for Nonprofits, install Google Analytics on its website, and wait for Google to verify the site. Upon approval, the nonprofit is granted $10,000 worth of ad credits each month.
How long does it take to receive nonprofit grant funding?
The wait for grant money can vary widely, often based on the source of the funding. For foundation grants, approval and notification may take 30 days to 18 months. For grants from federal sources, you may wait six to nine months, because those applications often face stricter compliance reviews. The money typically arrives one to three months post-approval.
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