Grants and Sponsored Programs: Types of Grant Funding
Types of Grant Funding
Private Foundation: A nongovernmental, nonprofit organization with funds (usually from a single source, such as an individual, family, or corporation) and program managed by its own trustees or directors. It is established to aid social, educational, religious or other charitable activities, primarily through grantmaking.
• U.S. private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code.
• Private foundations are generally founded by an individual, a family or a group of individuals, and are organized either as a nonprofit corporation or as a charitable trust. (Examples: Weingart Foundation or Ford Foundation)
Family Foundation: One whose funds are derived from members of a single family. At least one family member must continue to serve as an officer or board member of the foundation, and is the donor. The family member plays a significant role in governing and/or managing the foundation through out its life. Most family foundations are run by family members who serve as trustees or directors on a voluntary basis – receiving no compensation. (Example: The Bill and Melinda Gates Foundation)
Corporate Foundation: a private foundation that derives its grantmaking funds primarily from the contributions of a profit-making business. (Example: Wells Fargo)
• The company-sponsored foundation often maintains close ties with the donor company, but it is a separate, legal organization, sometimes with its own endowment, and is subject to the same rules and regulations as other private foundations.
Community Foundation: A community foundation is composed primarily of permanent funds established by many separate donors for the long-term benefit of the residents of a defined geographic area. Typically, a community foundation serves an area no larger than a state. Community foundations provide services to donors who wish to establish endowed funds without incurring the administrative and legal costs of starting independent foundations. According to the Council on Foundations, there are more than 500 community foundations across the United States today.
Nonprofit organizations with tax exempt status by the IRS are the organizations typically designated to receive grants. 501 (c)(3) nonprofit organizations have agreed to follow certain stipulations in order to receive grants. The reason why foundations and governmental organizations make grants is to fulfill a need that they are incapable of fulfilling themselves. Governmental organizations and foundations have limited staff, time, resources, and expertise. But they have money. Therefore, they seek experts to do the job they value as important, but are unable to do themselves.
That is why it’s a misnomer for people to refer to Grants as “Free” money. The function and purpose of a nonprofit is to fill that gap left between Government organizations (that provide basic services to its citizens) and the for profit sector (that charges consumers for commerce and services). The nonprofit is expected to address those issues the government can’t do, and for profit won’t do. Typically these are social (Philanthropic) causes.
Federal organizations are typically considered either general support organizations or mission-oriented organizations. A general support organization is one which supports basic and applied research that contributes to the body of knowledge in a general subject field. For example, the stated purpose of the National Institute of Health is "to conduct and support biomedical research to improve the health of the nation." Other federal organizations that define their purpose in general terms include the National Science Foundation and the National Endowments for the Humanities and Arts.
Reviews of proposals sent to general support organizations are often conducted by panels of the proposal writer's peers. These reviewers are not organization staff members but university or private researchers in the field. They review the proposal in terms of its scientific merit and send their recommendations to an organization program officer. In some organizations, the program officer ranks the proposal against all other competing proposals and determines whether to fund it. In other organizations, the program officer may only recommend a final disposition to a higher body or official. In either case, the proposal must be recommended by the review panel, or it will not be considered. A proposal to a general support organization must be written for one's peers.
State and Local Organizations
State and local government organizations support research and training projects from both federal "pass-through" funds and from their own funds.
Adapted from Theresa Lu, PhD. Copyright © 2008, 2012 by Lu & Associates