If you are part of a nonprofit's fundraising efforts, then chances are you will, at some point, seek out grant funding from a foundation that exists to dole it out. Grantmaking foundations, generally speaking, come in two main varieties: private and public.
To understand the former type, see What Is a Private Foundation?
This article will focus on public foundations (also called "public charities"). These are themselves charitable organizations, which are (like private foundations) tax-exempt under Section 501(c)(3) of the Internal Revenue Code. They must file Form 990 or 990-EZ with the IRS each year. You have the right to access these (and can do so on websites like Guidestar). Here, you'll find information about the foundation's total assets and other financial matters, as well as the names of board members and high-level employees.
Unlike private foundations, which are usually funded by a wealthy individual or one or more families or corporations, public foundations must typically forage for their own funding in order to make these grants. They may need to aggregate lots of small donations in order to fill their coffers. (Sound familiar?)
Public foundations need you, as a member of the nonprofit community, to feed them exciting new ideas that they can use to stimulate their donors’ interests.
In fact, some grant decisions, rather than being made by the foundation itself, will be based purely on donor preferences. This can add up to some serious money in the case of donor-advised funds, in which major donors pool resources and are involved in the decisions about what organizations to fund and for what purposes.
Working with public foundations can help you get around the narrow grant guidelines that otherwise plague the foundation world. Of course, you’re at a particular advantage if your nonprofit works in “fun” or “popular” fields like education, health, or the environment. Even if you don’t, however, it’s well worth courting your local community foundations’ favor. That’s because those that lack immediate grant opportunities may be intrigued enough to link you up with an interested donor later on.
Many public foundations pursue wealthy individuals who want to give away a little of their largesse but don’t have enough in the bank to form their own grantmaking entities. Foundations of this type position themselves as liaisons between philanthropists and nonprofits, helping the former learn about community needs and efficiently taking care of the administrative aspects of giving.