Foundation Government Grants

Foundations and governments routinely work together to serve communities.  Governments provide the infrastructure and basic services to residents while foundations help fund programs and services that address additional needs in the community.  The partnership is particularly effective because they can share resources by providing grants to one another to support specific projects and outcomes.

Foundation government grants are typically awarded to help governments continue providing basic services such as parks and youth activities.  These services are usually the first to be cut when governments face budget deficits. Foundations can award cities grants to keep these services going.

Governments also have grant programs that some foundations are eligible to participate in.  Only foundations with the appropriate IRS designation can apply for and receive government foundation grants.  Otherwise, they risk losing their tax-exempt status granted by the IRS.  Foundations receive tax breaks based on their IRS designation.

Government foundation grants can be used by foundations to implement community-wide projects that address a specific issue.  Funds are generally not for foundation operations.  The requirements for these grants are similar to other government grants.  They require a clear program design that can be evaluated based on specific goals and objectives. The foundation must be fiscally responsible and will have to submit a final report detailing use of funds and project outcomes.

Foundations may be eligible for grants from all levels of government.  Federal government grant programs generally define eligibility requirements and specify the exact nonprofit tax exemptions allowed under the program.  As long as a foundation meets the exemption code, it is eligible to apply for government funds.

When foundations apply for government funding, it is for a community initiative that will likely involve other foundations in the community.  One foundation will be required to be the lead applicant for government grants. This type of collaborative project often addresses a community-wide issue such as school reform or workforce development.  If the foundation is a prominent community leader, it is reasonable to be the project lead.

Foundations that receive government grants are required to manage them in accordance with the grant agreement and program guidelines.  They must use the grant funds as detailed in their application for funding.  Budget management and reporting must be completed as dictated by the grant agreement.  Foundations have to write and submit progress reports, either monthly or quarterly, depending upon the grant program.  They are treated no different than other entities that receive federal grant awards.