Can You Fund a Startup Nonprofit Using Grants?

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No matter how impactful your idea may be, you can’t use a grant as seed money for a startup nonprofit.

True, you may find a small, family foundation willing to make a small grant to help you get established. But chances are slim you’ll get a substantial amount.

Federal grants are generally off the table for new nonprofits, too. Federal agencies rarely award funding to new nonprofits without prior experience winning and managing grants. We’ve experienced this many times when writing grants for extremely worthwhile nonprofits. Federal funders are almost always more likely to award money to an established nonprofit that can point to prior experience and successes.

Grants don’t fund operating costs

It’s not that funders don’t want to give money to startup nonprofits. It’s that grants aren’t intended to fund operating costs. Grants shouldn’t be used to pay your nonprofit’s rent, utility bills, or other regular expenses.

Instead, grants are intended to fund a specific project or program. Plus, grants often have an end date. Many federal funding grants operate on a multi-year cycle. The grant will award your nonprofit X-amount of dollars each year for three or five years. After that period, you will need to reapply for the grant or find another funding source for your project.

If you’re using grant dollars to pay regular operating expenses, what happens if the grant goes away? How will you pay the bills? That’s why it’s vital to have sources of income in place that can cover your operating expenses.

Funders don’t fund startups

Even if your overall concept is great, funders won’t put dollars behind an unproven nonprofit. To win grant funding, you’ll need to get your organization on its feet first. Once you have some wins and show you’re able to move the needle, funders will take your grant proposals more seriously. Funders also like to see evidence that you’ve managed grants previously.

 But that’s the catch, isn’t it? How can you prove yourself without funding to do it? 

A funding solution for inexperienced nonprofits

For nonprofits with little or no grant experience, obtaining grant funding can be a challenge. To get grant experience, partner with an established nonprofit.

You’ll need to branch out and forge relationships with nonprofits that have experience managing grants. By signing on as a partner organization with a larger, more established nonprofit’s project, you gain instant credibility as well as grant management experience.

We’re not suggesting signing on in name only strictly for your benefit. Your nonprofit should be able to contribute substantially to the project. That’s why it’s not as simple as asking an established nonprofit to put your organization’s name on a project. You must ensure your mission jives with that of the other organization and your service offerings will positively impact any potential project.

Be intentional in your relationships

It’s vital that you’re intentional when it comes to networking. Seek out organizations with similar missions. That way, your services and expertise will be of benefit to the other organization’s projects and programs. Not only will you be able to do more good by working together, but your fledging organization stands to gain lots of real-world experience.

Want more insight into winning grants? Reach out today and learn how we can help you do more, better.


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