Nonprofit Characteristics Foundations Seek Before Making Grants

Foundations also look to see that nonprofits are incorporated and have their IRS 501(c)(3) tax-exempt status, that their programs and services are headed by a strong executive director, and that operational concerns — finances, employee benefits, etc. — are accounted for. Herbert suggested looking into joining state associations for health benefits and more, offering the National Council of Nonprofits as a resource to find the appropriate state associations for your organization.

Fundraising planning
It’s vital to diversity your funding sources, Herbert said. Possible funding sources include:

• Government/public funding.
• Earn income (membership dues, product/service fees) — “It’s a misconception in our sector that nonprofit means you can’t earn any profit,” Herbert said. “That’s actually not true. You can earn money, charge for services; however all the money has to be put right back into the mission. You can charge people on a sliding scale to come to an interview prep workshop, rent out space to other organizations, sell products. There are many ways to generate income. Set yourself up with a membership program — though that can be troublesome because there must be benefits for being a member.
• Private giving — institutional philanthropy (foundations/corporations) and individual gifts (donors/bequests).
• Fundraising events.

The best way for fundraisers stand out to foundations and other grantmakers is to ensure their organizations have as many of these characteristics as possible before applying for any grants.