Community development funds come in many varieties — find out what works for your nonprofit.
Community development funds are provided from federal and state governments in the U.S. to communities and people in a variety of ways: housing and community development programs, decent housing, anti-poverty programs, healthy food initiatives, sustainability movements or any other development projects made to improve the overall community are potential areas for funding.
What are different types of community development funds?
Government funding comes in different forms including grants, loans, counseling, or insurance. Since federal funds are administered through local and state governments, it can sometimes be unclear what level of government the funding is coming from. In most cases, state, county or city governments will decide which organizations receive funding.
The following are different ways your nonprofit could receive community development financial funds:
- Formula grant: The distribution of these grants is based on a predetermined formula based on statistical criteria for specific types of work. These are noncompetitive and are also referred to as state-administered grant programs.
- Project grant: Project grants fund specific projects for fixed or known periods and are competitive, meaning there is an application process. Research grants, training grants, experimental and demonstration grants, technical assistance grants, construction grants, traineeships, fellowships and scholarships are all types of project grants.
- Discretionary grant: Federal funding awarded directly to nonprofits through federal agencies.
- Direct Payments for Specified Use: This form of financial assistance is provided from the federal government directly to private firms, private institutions or individuals to subsidize or encourage a specific activity by conditioning a receipt from the assisted peoples.
- Direct Payments with Unrestricted Use: This form of financial assistance is provided directly to those who meet federal eligibility requirements without restrictions on how the money is spent.
- Direct Loans: Federal assistance through lending money for a specific time frame, with a reasonable expectation for repayment which may or may not require interest fees.
- Guaranteed/Insured Loans: Programs in which the Federal government makes an arrangement to identify a lender against part or all of any defaults by those responsible for repayment of loans.
- Insurance: Financial assistance provided to assure reimbursement for losses sustained under specified conditions. Coverage may be provided directly by the Federal government or through private carriers and may or may not involve the payment of premiums.
What should my nonprofit consider?
Government financial assistance is one of the many ways your nonprofit can fund your community development initiatives. It can be an overwhelming task at first, but a rewarding one if your research and work is awarded.
Here are some things you should consider:
- The federal government requires record keeping and financial reports on a regular basis and has the right to audit federally-funded operations at any time.
- Some federal programs require cost sharing or matching, meaning your organization may be required to put up money, in-kind donations or staff-time needed for the project without federal reimbursement.
- Your organization will be evaluated on how well your program addresses the legislative intent of the law when applying for government funding.
- Government funding programs and priorities frequently change. To get the most updated information on the applications and funding guidelines, it’s a good idea to email or call the appropriate agency contact.
- Grant applications typically have very strict formatting and content guidelines. Be sure to keep this in mind and follow instructions carefully.
- State and local government funders tend to look for evidence of community support for projects. Federal funders prefer projects that could potentially serve as models for others to replicate.
Funding sources for nonprofits
Depending on what your nonprofit focuses on, there are many available government agencies that offer community development funds. Here are some sources to head start your research toward financing your nonprofit’s goals.
Grants.gov is a great resource to learn more about grants and find grants that you’re eligible for. The Search Grants tab allows you to easily narrow down your search to specify types of eligibility, funding instrument type and which agency you’d like your funding to come from. These features could save you time during your research.
Started in 1974 and administered by the Department of Housing and Urban Development, CDBG is a program that focuses on economic development, expanding economic opportunities for people and affordable housing in communities that need assistance. Funds are disbursed to communities that meet certain “entitlement” qualifications, which they then apply to different programs that promote community improvements.
CFDA is similar to Grants.gov and allows you to search for government assistance, which is found under the Programs tab. CFDA includes more than just grants however, so it is important to utilize the Assistance Types tab in the search bar.
NARC’s Grants & Opportunities page lists many community development grants with more information on deadlines and what agencies are funding the grants. Be sure to check the websites listed to see eligibility requirements.
GrantSpace offers a wealth of knowledge on everything that has to do with grants. If you’re looking into writing a grant proposal, GrantSpace training and tools to help you with the process.
MissionBox editorial content is offered as guidance only, and is not meant, nor should it be construed as, a replacement for certified, professional expertise.