People new to the fundraising process often ask the following questions of Foundation Center staff.
What is a foundation?
The Foundation Center defines a private foundation as a nonprofit
corporation or a charitable trust, with a principal purpose of making
grants to unrelated organizations or institutions or to individuals for
scientific, educational, cultural, religious, or other charitable
purposes. A private foundation derives its money from a family, an
individual, or a corporation. An example of a private foundation is the
Ford Foundation. By contrast, a
grantmaking public charity (sometimes referred to as a "public
foundation") derives its support from various members of the public. An
example of a grantmaking public charity is the Ms. Foundation for Women.
Most community foundations are also grantmaking public charities.
Foundation Center publications and databases cover private foundations,
corporate giving programs, community foundations and other grantmaking
public charities. For more information see our FAQ What is a Foundation?
Who gets foundation grants?
typically fund nonprofit organizations that qualify for public charity
status under section 501(c)(3) of the Internal Revenue Code. These are
purposes are charitable, educational, scientific, religious, literary,
or cultural. Their income cannot benefit private individuals, and their
influence on legislation or political campaigns is restricted. Public
schools, libraries, and other government organizations also qualify as
public charities, although they usually have not applied for 501(c)(3)
funders will make grants to organizations whose tax-exempt status is
still pending, but most will ask for proof of your
nonprofit status before considering you for funding.
If you decide to seek nonprofit tax-exempt status, the Establishing a Nonprofit Organization online tutorial
should help you get started. Be aware, however, that procedures vary
from state to state; you may need to consult with an attorney or a
technical assistance agency whose staff is experienced in this area.
Foundation Center libraries have a number of relevant resource
materials on establishing a nonprofit organization.
federal law, foundations are permitted to make grants to individuals
and organizations that do not qualify for public charity status if the
foundations follow a set of very specific rules outlining their
expenditure responsibility. The rules for expenditure responsibility
require the foundations to file a number of reports certifying that the
funds were spent solely for the charitable purposes spelled out in the
Under certain circumstances individual grantseekers
may be able to proceed by affiliating with an existing organization
that is eligible to receive grants and willing to act as sponsor or
fiscal agent for your project.
What do funders look for in a grantee?
officials will first ascertain that the purpose of an organization or
project matches the funder's interests. They will also seek evidence
that an organization is well known in its community and that it
addresses an existing need. A history of funding by other sources,
whether governmental or private, helps establish credibility. Sound
fiscal management, a strong, involved board, committed volunteers,
qualified staff, and a realistic budget are also all very important
considerations. In today's economy, grantmakers will also look for
evidence of financial sustainability beyond the period of the actual
Do funders only support well-established organizations?
The answer depends on the foundation, its guidelines, and its grantmaking
patterns. Like individuals, some are cautious, others are risk-takers;
some conservative, others progressive. Foundations that support new
organizations or projects may be identified through the Types of
Support indexes in Foundation Center directories and through the search
capabilities of the Foundation Directory Online
under "Seed money." Newer or start-up organizations can establish
credibility in other ways, for example with a committed board of
directors or evidence of strong community support or collaboration.
What types of support will a grantmaker give?
Although many funders will consider general support, others want to fund
specific projects or activities. You will want to determine which
type(s) of support a funder prefers in advance, since there is no point
in approaching a funder for support for an addition to your building if
the foundation only funds research. For the most common kinds of
support, look at the Types of Support indexes in Foundation Center
print and electronic directories. In each index you will see a list
with definitions. For example, continuing support is
defined as renewal grants to the same recipient for the same purpose,
project, and type of support. Foundations occasionally restrict the
number of new proposals they will accept because of ongoing
commitments. One thing is certain: funders do not want grant recipients
dependent on them for an indefinite period of time.
Most, but not all, foundation support is made through grants. A few foundations
make program-related investments (PRIs),
which are most commonly loans to for-profit or nonprofit entities for
purposes closely related to the foundations' funding interests. To
identify foundations making PRIs, refer to the Foundation Center's The PRI Directory: Charitable Loans and Other Program-Related Investments by Foundations, or the Types of Support indexes in Foundation Center print and electronic directories.
Do foundations support for-profit initiatives?
generally do not award grants to for-profit businesses. However, some
make program-related investments as described above. For information on
federal funding programs, see the Small Business Administration's web site.
Does it help to know someone at a foundation?
In grantseeking, personal contacts usually do help. Although knowing
someone personally may make it easier to have your proposal considered,
putting pressure on those reviewing your proposal can backfire.
Demonstrating that your organization has strong leadership often will
go further toward securing a grant than personal contacts.
If a foundation's guidelines or descriptive directory entries state that
it makes grants to pre-selected organizations and that it does not
accept unsolicited requests for funds, explore the possibility that
someone who knows your organization well, such as a board member, may
have a contact at the foundation. If not, accept the challenge of
figuring out how to attract the foundation's interest over a period of