What is Capital Grant Funding?
Capital grant funding is the money that is provided by funders to assist with the acquisition, final-stage design, construction, repair, renovation, rehabilitation, or other capital improvements or deferred maintenance of facilities.
Land, facilities, and civic infrastructure are long-term assets that can transform the ability of nonprofit and community organizations to serve their respective communities. For this reason, many philanthropic organizations invest in capital projects across the USA and internationally.
Currently, there are more than 1,100 capital grants funding opportunities listed on GrantWatch. This number is a 12% increase over last year, suggesting funders see capital projects as a viable way to leverage the outcomes of their philanthropic investments.
Capital grants cover a wide range of activities and are often the most high profile of nonprofit endeavors. For example, capital grants support:
- Equipment, furnishing, and other major material purchases
- Renovations, refurbishment, remodeling, rehabilitation, etc. for outdated facilities
- Construction of new facilities
- Land purchases
- Capital campaigns (formal approaches to major construction projects)
- Matching/challenge grants for capital campaigns
It’s important to note that grants are not going to be the sole source for your project unless you find a single funder to support a small renovation project or piece of equipment. The larger the capital needs, the more types of support you must secure for it. In most cases, you’ll need to align more than one grantor (private or government), more than one sponsor, and more than a few donors to support the full cost of your project.
Five Essential Elements Of Capital Grants
After reviewing the capital grants listed on GrantWatch 5 things were apparent. Funders are eager to fund projects that include 1 or more of the following elements:
- Projects that address root problems with substantive solutions
- Projects with strong evidence of support from the community and the organization’s board
- Projects in rural communities that face greater challenges in accessing funds for capital projects
- Projects that reinforce priorities in public education, natural resources, medical enhancements, and community development
- Projects that incorporate green building and sustainable development practices
Additional research showed that projects that were successful in acquiring funding contain these essential elements.
- Grants are part of a larger, phased capital campaign.
- The capital campaign secures lead donors and board gifts before grant-seeking begins.
- The project offers potential grantmakers, and especially corporate sponsors, volunteer opportunities—both large and small.
- The campaign incorporates regular and authentic public recognition of funders through diverse communication channels.
- The campaign publication materials include a recognition policy with naming opportunities by giving level.
These elements reflect a common theme. Capital grants are especially ripe for an integrated approach to grant seeking. What is an integrated approach? It involves incorporating the best practices from fundraising, communications/marketing, and grant seeking in ways that yield a significantly more coordinated approach, more invested funders and donors, and a broader audience of supporters.
For example, the use of naming opportunities is a standard development practice. If that is so, and since grant writers are development professionals, it only makes sense to include naming opportunities in a grant proposal—especially for a capital project. Similarly, getting TV or radio coverage for the campaign is a fantastic opportunity to recognize publicly your lead funders, sponsors, and donors via mass media. It is also an opportunity for potential funders—perhaps some you have not even solicited—to buy into your project because they see their philanthropic colleagues invested in your work.
Matching and Challenge Grants
I’m sure some of you are curious, about the differences between matching and challenge grants. They sound perfect for capital projects, don’t they? But what are they? And are they really different?
- Challenge Grants —When awarding a challenge grant, a funder agrees to pay an organization a set amount of funds based on meeting a set fundraising challenge (i.e. raise X dollars from only new donors, raise X dollars from any donor in a defined period, raise X dollars from a combination of new and returning donors, etc.). Challenge grants only award funds after an applicant organization meets certain conditions; thus, the amount of money the organization receives could vary widely depending on its fundraising results.
- Matching Grants —When awarding matching grants, a funder agrees to pay an organization a specific amount of funds to match (i.e. one dollar for every one dollar raised, two dollars for every two dollars raised, etc.) what you raise in a defined period. Generally speaking, matching grants are not awarded contingent upon any set conditions and are usually awarded for a defined amount.
Challenge and matching grants are quite similar. The timing is one way to differentiate between the two. If the opportunity is at the beginning or end of the campaign, it is usually a challenge grant (unless they are used to shore up a campaign that is failing). Matching grants are more commonly an ongoing effort throughout the project. You should consider either or both of these grant opportunities for your next capital campaign.
Although there are capital grants available for your project, they cannot stand alone. Integrate your grant seeking within the broader development plan, and you will secure more grant funding for your capital project.