Grants for Nonprofit Startups: A Complete Guide

Developing a nonprofit startup isn’t an easy process, especially when getting the needed funding to get initial operations off the ground. Sadly, grants for nonprofit startups are notoriously competitive due to the limited number of grants available. To help you more easily navigate the complex realm of nonprofit startup grants, our team of passionate business experts from TaxRobot will explore all of the fundamental basics you’ll want to know about nonprofits. We’ll also cover the steps they need to take when applying for grants.

Related: Startup Equity: How It Works & Best Practices

Nonprofits: The Basics You Need to Know

Before getting into nonprofit grants, let’s first explore the basics of what nonprofits are. In short, a nonprofit is an organization that puts its social mission above producing a profit, unlike for-profit enterprises or benefit corporations that have baseline social missions but still prioritize profit. Nonprofits are also tax-exempt, according to Section 501(c)(3) of the Internal Revenue Service (IRS). They’re legally considered “public charities” because they exist to benefit the public. While you don’t have to be registered as a 501c3 to launch a nonprofit, getting funding- especially grants- is much more straightforward.

A person in a group of people holding a cardboard sign reading “Planet Over Profit.”

Steps to Take Before Searching For Nonprofit Grants

Before those running a nonprofit even start searching for grant funding, there are several steps they’ll want to take to ensure they have the best chance of being chosen to receive the financing they need. For example, nonprofits need to…

1. Determine How You’ll Use Any Grant Money You Get

Before giving out any money, agencies, businesses, and other programs give out grants want to know precisely where the money is going and how it will help the nonprofit succeed. Before applying for a grant, those running a nonprofit will need to determine where every cent will go. Will it be used to hire more people or launch a new aspect of the company? Will it help start or complete a specific project? You’ll want to outline the big picture of what the money will go to and get detailed about where money will go for more minor things.

2. Develop a Strategic Business Plan

While not all nonprofit funding sources require a business plan, grants almost always do. You’ll need to deliver a detailed business plan that explains your nonprofit’s key objectives, goals, how it will accomplish said goals, and much more to convince grant providers to risk giving you the funding you won’t have to pay back. Please read through our complete guide on how to develop an effective business plan to learn more. 

When it comes to running a new startup successfully, there are a lot of critical elements you’ll have to manage effectively, especially when it comes to taxes. Contact our experts at TaxRobot today to learn about how we can help.

3. Put Your Paperwork in Order

Like other funding agencies, grant providers need to ensure the nonprofits they’re funding are legitimate and set up for success, so they require a lot of financial documentation and other paperwork before agreeing to a payout so they can see how the nonprofit is operating. You’ll need to provide them with profit and loss statements, payroll, returns, and even personal tax documents.

4. Start Searching

Once you finish the three steps above, you can finally start searching for some quality grants that fit your nonprofit. Be warned, however, that grants can be challenging to find, are often only available for short periods, and are highly competitive. Always do plenty of research into any grant you consider applying for before starting the application process to save yourself a potential headache and wasted time. 

Related: Startup Valuation: How to Choose the Right Method 

Nonprofit Startups: The Key Grant Types to Apply For

While nonprofits can try to leverage a wide range of grant sources to get the necessary funding, the primary ones typically include federal grants, state and local grants, and private grants offered by larger businesses and corporations. 

Federal Grants

If you’re looking for federal grants to support your nonprofit, consider looking through Grants.gov and GrantWatch.com. These two sites are fantastic starting points for any nonprofit looking for a financial leg up that can help get operations rolling. It will likely take some time and searching to find the best grants for your company, but it should be worth it once you track them down.

State and Local Grants

State and local grants (meaning county or city level) are other excellent potential funding sources. While they tend to offer a lot less money than federal grants, they are easier to get and have less competition involved. Consider searching through your state and town’s official websites as a starting point. Many will have sections dedicated to information on how the local government or programs support nonprofit organizations.

Private Grants

There is also a range of private grants offered by foundations and companies throughout the country, whose sole purpose is finding different types of do-good organization projects that align with a specific set of goals and help them along. You’ll have to leverage a lot of search engine research to find private grants that your nonprofit may qualify for, but they can be a fantastic funding source once you locate ones that work.

Related: Private Investors for Startups: A Complete Guide

A nonprofit worker carrying a baby wallaby in a pink blanket.

Final Thoughts to Keep in Mind

Our team of experts at TaxRobot sincerely hopes that you’ll be able to leverage the above guide when applying for your own nonprofit grants. It should help you drastically increase your odds of earning the funding your business needs to succeed going forward. Read through our selection of other educational resources if you’d like to access some other great information on crucial funding sources for startups and small businesses. Also, don’t hesitate to contact us today online to learn about our services and how they can help your business succeed come tax season!

Are you struggling to navigate the complex tax requirements of operating a new startup business? Our team experts at TaxRobot are here to help make the process easier, so feel free to contact us and learn about what we can do for you.

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