Decoding Grants: 10 Key Definitions Every Nonprofit Needs to Know
Grants can feel like navigating a maze with blindfolds and a timer, but fear not—we’re here to illuminate the path. Below, we’ve defined the key grant-related terms every nonprofit leader should know.
1. Institutional Funding
This is the bread and butter of many nonprofits. Institutional funding refers to grants, sponsorships, and partnerships provided by organizations like foundations, corporations, and government entities. These funders support nonprofit missions, often focusing on specific causes, populations, or program areas.
2. Prospect
A prospect is a potential funder identified as a good match for your nonprofit. This could be a foundation, corporation, or government entity with funding priorities that align with your mission.
Evaluating prospects involves:
Reviewing their giving history.
Understanding their priorities.
Assessing their capacity to give.
In short, prospects are your funding soulmates—if you’re strategic about matching.
3. Funding Strategy
A Funding Strategy is your nonprofit’s strategic playbook, a 12-18 month action plan designed to take the guesswork out of securing institutional funding.
This playbook:
Identifies the best-fit grant opportunities that align with your goals, focusing on grant award sizes that can actually move the needle.
Outlines the timing and approach for each opportunity, ensuring you know exactly when and how to apply.
Matches your grant focus and project with funder priorities, aligning your work with what funders care about most.
Tailors your positioning to present your project in a way that speaks directly to each funder’s goals and values, increasing your chances of success.
With a Funding Strategy, you’re not taking random shots in the dark—you’re executing a carefully crafted plan to achieve your funding goals. It keeps your organization focused, efficient, and ready to tackle the twists and turns of the grant landscape—all with a little less stress and a lot more confidence.
4. General Operating Grants
Think of general operating grants as the mythical unicorn of funding. These unrestricted funds let you cover whatever your organization needs to thrive, from paying the Executive Director to keeping the lights on.
Unfortunately, these grants are as rare as finding your inbox at zero. But when you land one, it’s a game-changer.
5. Restricted vs. Unrestricted Funding
To keep things simple:
Restricted funding comes with strings attached. You must spend it on specific programs, projects, or costs outlined by the funder.
Unrestricted funding gives you the freedom to address your organization’s most pressing needs, like salaries, rent, or finally fixing that printer that jams every third page.
6. Core Mission Expense
Let’s address the elephant in the room: overhead. It’s the word that makes funders cringe and nonprofits sweat. But here’s the thing—it’s essential.
We’re advocating for reducing the stigma around overhead by reframing it as core mission expense. These are the key costs that keep your nonprofit running, including:
Staff salaries (beyond program-specific roles and allocations).
Technology and infrastructure.
Professional development.
Fundraising and donor engagement.
Compliance and reporting.
Dan Pallotta has been shouting this from the rooftops: overhead is not a dirty word. Without these expenses, your programs wouldn’t exist. Want to learn more? Check out the Uncharitable documentary.
7. Program vs. Institutional Budgets
A program/project budget differs from your institutional budget, which provides an overview of your organization’s total revenue and expenses for a fiscal year.
Key difference:
While the institutional budget shows your overall financial health, the program/project budget demonstrates the feasibility and funding needs of specific initiatives over specific periods of time (not necessarily your fiscal year).
8. Matching Funds and In-Kind Contributions
Some funders like to see you’ve got a little extra skin in the game.
Matching funds: Your organization contributes a percentage of the total project cost, either in cash or through in-kind contributions.
In-kind contributions: Non-cash resources, like donated goods or volunteer hours. Anything your organization is doing or offering for free can be valued and used as in-kind support.
9. How Long Is the Grant Pipeline?
Grant funding isn’t exactly a speed race—it’s more of a marathon. Patience (and good coffee) is key.
Here’s the typical timeline:
Submission: Wait 1-9 months for a decision.
Award Notification: If successful, your project usually starts immediately or within three months.
Grant Period: Could last months or even years.
Final Report: If required, is typically due 30-90 days after the grant period ends.
10. Grant Management
Winning a grant is like adopting a puppy. It’s exciting, but the work doesn’t stop there.
Grant management includes:
Tracking expenses.
Monitoring project progress.
Submitting reports on time.
Keeping funders happy and willing to fund you again.
A good grant management system ensures you’re compliant, on budget, and ready to deliver that glowing final report.
At Coastal Nonprofit Consulting, our grant management services are included in our retainer packages, ensuring you’re supported at every stage of the grant pipeline—from submission to final reporting.
Grants may not be as vocal about their needs as our puppy Jester, but they still demand consistent care and attention to thrive.
