Types of Grants and Investments Explained
There are seven different categories of support that grantmaking foundations can provide to nonprofit organizations:
Program Grants are given to support specific activities with defined objectives and a clear timeline. These grants come in a variety of forms, but are almost always tied to the mission of the organization and are restricted only to expenses related to the project. These are the most common types of grants.
Operating Grants are used to support the general operations of a program or organization. Also referred to as general purpose grants, operating grants often come with very few restrictions and are made with the foundation’s trust in your organization to use the money as will best support your mission. While these grants are the most desirable, they are also one of the least common and are often found where the foundation and grantee have a strong history of working together.
Capital Grants are used to upgrade, purchase, or build physical assets that will benefit your organization over a number of years. Such grants may be used to purchase property, build or repair infrastructure like buildings, or acquire and improve equipment like information technology systems or client transportation.
Management/Technical Assistance is given to organizations to build organizational capacity in specific areas in order to better accomplish their mission. Examples of these types of grants are those used for board development, financial management training, social media engagement, or IT training. Such grants are not used directly on programs, but are intended to improve the effectiveness and impact of organizations in implementing those programs.
In-Kind Giving is frequently used by corporations that have products or resources other than cash that may be helpful for furthering the mission of organizations. In-kind donations from foundations include a spectrum of items, from allowing organizations to use meeting space for free to providing school supplies for an after school program. If the items being offered are relevant to the work and programs of your organization, this may be a useful source of support that can advance the mission of your organization.
Donor Advised Funds (DAFs) are the fastest growing vehicle for charitable giving in the nation. Sponsored and administered by public charities such as community foundations, DAFs are established by donors, who then recommend grants to their preferred charities from the fund over time. Donors receive an immediate tax deduction upon opening a DAF. Currently minimal public information is available on DAFs, and there is no payout requirement (such as payout within a timeframe or by a percentage of assets).
Program-Related Investments are investments made by foundations to support charitable activities that are aligned with the foundation's mission and involve the potential return of capital within an established time frame.