Weigh the benefits and limitations of three common grant types: program support, general operating support, and capital support.
1. Fund something specific or pilot a new project with program support grants.
Funding programs and projects is popular with funders because of the direct correlation of their dollars to impacting the ultimate constituents of an organization. Program grants support a specific project and are tied to project-based outcomes. They require a specific budget to which grantees must adhere. Whether the program is scholarships for students, a food bank for hungry families, or youth mentorship, funders like that they can measure direct impact with program grants.
Program grants can feel more innovative and exciting compared to other types of grants, and they tend to allow more funder control. Funders can get involved with new pilot programs to test an idea and even take part in the program development process. As a result, funders can have more influence over how a grantee spends program funds. This is especially true if they are the project’s sole funder. The danger of this, however, is that this can create dependency on the funder to continue running a particular program.
2. Provide flexibility with general operating grants.
General operating grants support overall activities at an organization, including operating expenses and overhead. They can additionally include capital purchases (the third type of grant, which is described next). When one organization’s grantees described best practices in the field that help them to do their work better, they reported a need for multi-year, general operating support. This is echoed time and time again by nonprofit leaders: flexible, multi-year support, where organizations define their own funding priorities is most needed and most effective.
Funders often avoid general operating support because measuring success against these grants is harder to track. It may also be seen as less original or interesting than programmatic work. But the majority of nonprofit organizations prefer general operating support for the flexibility it provides, especially in constantly changing environments.
3. Help an organization grow with capital support grants.
Capital support grants are the most finite in terms of timeline and can be more clear cut than a program grant. Equipment is purchased or a building is built or renovated, and the capital project is complete. Capital support is essential for organizations to grow to reach their mission. A building is needed to house programs and office equipment supports daily operations. Both ensure programs are effective. For example, an organization developing gardens for communities may need agricultural equipment to fulfill its mission.
In spite of this, capital support can be much harder for organizations to find than program support, because these projects are sometimes seen as less innovative. Capital support grants may also be perceived as not directly impacting constituents, though they very much do. The direct impact can just be more difficult to define.
Capital funding can be categorized under program support, operating support, or even on its own (as we see with capital campaigns). As a program, a capital project could involve constructing a building for youth to spend time after school, where youth mentorship programs or other services are provided. However, capital support can also come in the form of furniture and computer equipment for an organization’s office space purchased with general operating funds. In this second case, the organization itself, not the funder, drives the purchase decision.
Capital support should be reinforced by a larger program plan. For example, building a school playground for children with special needs is just one component of a program for children with special needs. Teachers need to be trained to use the play equipment, the administration must plan how and when children and the community will use the playground, and funds are needed for future upkeep. Ultimately, capital funding provides stability and sustainability for grantees to carry out their mission and serve their constituents. The key is to tightly weave the capital project to broader programmatic or organizational goals.