Win funding with operating grants for nonprofit organizations

If you're in the nonprofit world, you know the struggle. You're trying to fund a specific program, but what about the unsung heroes of your budget? Things like rent, salaries, and that ancient accounting software that desperately needs an upgrade. This is where operating grants come in.

Think of them as the ultimate trust-based investment from a funder. Instead of earmarking money for a single project, operating grants provide flexible, unrestricted cash to cover your core, day-to-day costs. It's the funding that keeps your mission running smoothly.

The Strategic Power of Unrestricted Funding

General operating support isn't just about keeping the lights on—it's the fuel for your entire mission. I like to think of it as the engine of a nonprofit. While a restricted grant might pay for the gas for a specific trip (a new program), an operating grant is what keeps the engine maintained and running reliably for the long haul.

This kind of funding is a funder's way of saying, "We believe in you." It acknowledges that solid infrastructure is the bedrock of effective programs. It empowers nonprofit leaders to direct resources where they're needed most, whether that's hiring a grant writer to secure more funding, covering payroll during a tough month, or finally upgrading the team's computers.

The True Impact of Flexible Capital

Let me paint a picture for you. A small community arts organization lands a major operating grant. Their original plan was to expand their youth program, but a month later, their landlord hits them with a massive, unexpected rent hike that threatens to shut them down.

Because the grant is unrestricted, they can pivot. They cover the rent increase, securing their space and their future. With the leftover funds, they invest in a modern donor management system, which ends up boosting their individual donations by 30% over the next year. That grant didn't just solve one problem; it built long-term resilience.

This is the magic of flexible funding. It gives you the agility to navigate the unexpected and the freedom to make strategic moves that a rigid, project-based grant would never allow.

"General operating support is an investment in an organization's vision and capacity. It signals a funder’s trust in the nonprofit’s leadership and its ability to make the best decisions for its community and its future."

This stability creates a powerful ripple effect. The nonprofit sector has seen incredible growth over the past few decades, and government operating grants have been a key ingredient in that expansion. This funding doesn't just support program work; it sustains the nonprofit workforce and infrastructure that our communities rely on. The Urban Institute offers some great insights on this growth.

Operating Grants vs. Restricted Grants: What's the Difference?

Getting a handle on the distinction between operating and restricted grants is fundamental to building a smart fundraising strategy. It really boils down to one thing: flexibility. One gives you autonomy, while the other requires you to stick to a very specific script.

Here’s a quick comparison to make it crystal clear.

Operating Grants vs Restricted Grants Key Differences

Ultimately, chasing operating grants requires a different mindset. You're not just pitching a project; you're pitching your entire organization. You're making a case for your vision, your leadership, and your proven track record of making a difference. It’s about building a true partnership with funders, one based on mutual trust and a shared goal.

Where to Find Operating Grant Opportunities

Hunting for operating grants is a different beast than searching for program funding. You're not just looking for a funder who likes your type of work—you're looking for one who trusts your entire organization. This is a search for a true partner, someone who values stability and long-term impact over the next shiny new initiative.

Your search often starts with the big grant databases, but you have to use a very specific lens. Don't just browse funders in your sector. You need to actively filter for the magic words: "general operating support." This is what unlocks the door to that coveted flexible funding.

Mastering Grant Databases

Tools like Candid's Foundation Directory and Grants.gov are incredibly powerful, but only if you dig into their advanced search functions. Just typing in your mission area will swamp you with thousands of results, and most of them will be for restricted, project-based grants.

Here's how to cut through the noise:

• Filter by Support Strategy: This is the most critical step. Look for a filter option labeled "Support Strategy," "Grant Type," or something similar. Select "General Operating Support," "Unrestricted," or "Core Support."
• Analyze Past Giving: Don’t just take a funder's website at face value. Scrutinize their past awards. Do you see a pattern of them giving sizable, unrestricted grants to organizations similar to yours?
• Check Geographic Focus: This one is a classic rookie mistake. Many foundations, especially smaller family foundations, have a rigid geographic focus. Confirm you’re a fit before you invest hours of research.

The Power of Government Funding Streams

Beyond private foundations, don’t overlook government grants as a major source of operational revenue. For many nonprofits, this is a vital piece of the funding puzzle. In fact, at least 30% of U.S. nonprofits get some form of government funding, with over 100,000 organizations awarded a staggering $303 billion collectively each year.

The main hub for all federal opportunities is Grants.gov. It can feel a bit clunky at first, but setting up saved searches for your organization's work can put your prospecting on autopilot. And don't forget to check your state and local government portals—they’re often far less competitive.

My best tip for government grants? Look for multi-year funding opportunities. A three- or five-year operating grant from a state agency can provide a level of stability that is nearly impossible to find anywhere else.

Uncovering Hidden Opportunities

Often, the best operating grants aren't even listed on public databases. They’re found through relationships and good old-fashioned detective work. This is where you can really separate your organization from the pack.

Investigate Funder 990s
Every private foundation is required to file a Form 990-PF with the IRS, and it’s a public document. This form is a goldmine. It lists every single grant the foundation awarded that year—who got it, how much it was for, and often a brief note on the grant's purpose.

By digging into a potential funder's 990s from the last few years, you get the unvarnished truth. You can see exactly who is getting their unrestricted money. This is far more reliable than the polished mission statement on their website.

Engage with Community Foundations
Your local community foundation should be one of your closest allies. They exist specifically to support the region they serve and are usually more open to providing general operating support than large, national foundations. Get to know their program officers. Show up at their events. Treat them like a long-term partner, not just a potential ATM. Building that strong local reputation can lead to consistent, flexible funding for years.

For more ideas, you can check out our guide on available grants for nonprofit organizations.

Set Up Strategic Alerts
Finally, let technology do some of the legwork. Set up some highly specific Google Alerts to catch opportunities as they pop up.

Try creating alerts for phrases like these:

• "[Your City] community foundation grants"
• "[Your State] unrestricted funding for nonprofits"
• "general operating support grants" + "[your mission area]"

This simple, automated strategy delivers fresh leads right to your inbox. It's a low-effort, high-reward tactic that ensures a potential funding stream never slips through the cracks.

Building a Compelling Case for Your Mission

An operating grant proposal is a different beast entirely from a project-based request. You’re not just asking a funder to back a single program; you’re asking them to invest in the very core of your organization. This demands a fundamental shift in how you tell your story, moving from a narrow project lens to a broad, compelling narrative about your mission’s stability, impact, and vision for the future.

The real goal here is to prove your nonprofit is a sound, high-impact partner worthy of a significant, flexible investment. It’s about showing that your leadership is solid, your financial house is in order, and you have a clear strategic direction. This is what gives funders the confidence they need to provide the unrestricted support that fuels real, sustainable change.

Crafting a Powerful Narrative of Impact

The heart of your proposal is its narrative. Forget just listing your activities; you need to weave a story that connects your day-to-day work to your larger mission. This story must answer the funder's most critical question: "Why should we invest in your organization as a whole?"

Kick things off by clearly defining the problem you exist to solve. This is your needs statement, and it sets the stage for everything that follows. Use hard data and real-world examples to paint a vivid picture of the community you serve and the specific challenges they face. For a deeper dive, check out our guide on how to write a powerful needs statement.

From there, pivot to showcasing your organization's unique approach to tackling that problem. This is where you highlight your track record, using key metrics and testimonials to bring your impact to life. Don't just say, "We run an after-school tutoring program." Go for something much more powerful: "Last year, our targeted tutoring program helped 85% of participating students improve their reading scores by at least one grade level, giving them the foundational skills to succeed."

A compelling narrative for an operating grant doesn't just describe what you do. It illustrates how your core operations—your staff, your systems, your leadership—are the essential engine driving measurable community impact.

Justifying Your Budget as a Mission Investment

The budget section is where many nonprofits stumble. It's not enough to just hand over a spreadsheet of expenses. You have to build a budget narrative that explains why each line item is a critical investment in your mission. Think of it as telling the financial story of your organization.

Make sure your organizational budget is clear, realistic, and easy for an outsider to understand. I always recommend breaking it down into logical categories:

• Personnel Costs: All salaries and benefits, from the Executive Director down to program coordinators.
• Administrative Overhead: The necessary stuff like rent, utilities, insurance, and office supplies.
• Programmatic Expenses: The direct costs tied to actually delivering your services.
• Technology and Infrastructure: Essential costs for software, hardware, and other systems.
• Fundraising and Development: The expenses required to secure your future income.

For every category, your budget narrative must connect the dots for the funder. Explain how the Development Director’s salary is essential for raising the funds that make all your programs possible. Justify the cost of that new CRM system by showing how it will improve donor communication and ultimately increase revenue. Frame every single expense as a strategic tool for achieving your mission.

The whole grant proposal workflow, from narrative to budget to final documentation, is one unified process.

As you can see, a strong narrative provides the "why" behind your budget, and well-organized documentation validates the claims you make in both.

Assembling Your Due Diligence Package

Funders providing operating support are making a big bet on your organization's health and stability. They will absolutely conduct thorough due diligence, so having your key documents ready to go isn't just a good idea—it's non-negotiable. This shows professionalism and transparency, signaling that you are a low-risk, high-reward partner.

We're seeing a trend toward trust-based philanthropy, especially with MacKenzie Scott distributing over $2 billion in unrestricted grants in 2024 with minimal reporting. But that trust is earned through a demonstrated track record of stability. Even with this shift, the U.S. charitable sector's record-breaking $592.5 billion in giving, with 71% staying local, shows that funders are still meticulously vetting their partners.

Get your due diligence package organized and ready to send at a moment's notice.

Essential Document Checklist:

1. IRS Determination Letter: Your official proof of 501(c)(3) status.
2. Most Recent Audited Financials: An independent audit is the gold standard. If you don't have one, a professionally reviewed financial statement is the next best thing.
3. Current Organizational Budget: The same detailed budget you included in your proposal.
4. Prior Year's Actual vs. Budget: This shows you can forecast and manage your money responsibly.
5. Board of Directors List: Be sure to include their professional affiliations to showcase the expertise guiding your ship.
6. Key Staff Bios: Short biographies of your senior leaders that highlight their qualifications.
7. Strategic Plan Summary: A one- or two-page overview of your organization's goals and priorities for the next 3-5 years.

Having these documents compiled and polished before you even start writing the proposal will save you a world of stress. More importantly, it positions your organization as a professional, trustworthy, and investment-ready nonprofit from day one.

Managing the Grant Submission and Award Process

Once you’ve poured your heart and soul into the proposal, a new and equally demanding phase begins. This is where logistics, communication, and relationship-building take center stage. How you handle the final submission, the agonizing wait, and the ultimate decision says a lot about your organization—and it can shape your relationship with a funder for years, no matter the outcome.

The first big hurdle is often just getting the proposal submitted. Every funder seems to have a different online portal, and each one comes with its own quirks, frustrations, and potential for last-minute technical disasters.

Trust me on this: never, ever wait until the last day. I've seen beautifully crafted proposals get tossed out simply because a website crashed an hour before the deadline. Give yourself a 48-hour buffer, at a minimum, to get everything uploaded and submitted. That way, you have time to troubleshoot without a full-blown panic.

Staying Organized Across Multiple Applications

Juggling several grant applications at once feels like a high-wire act. One missed deadline, and a potential funding opportunity vanishes. To prevent this, a central tracking system isn't a "nice-to-have"—it's absolutely essential.

While a detailed spreadsheet can do the trick, dedicated grant management software can be a true lifesaver. Whatever you use, make sure you're tracking these core details:

• Funder Name: The full name of the foundation or agency.
• Grant Opportunity: The specific name of the grant (e.g., "FY25 Community Impact Grant").
• Submission Deadline: The non-negotiable date and time, including the time zone!
• Status: A simple dropdown menu is great here. Think: "Researching," "Drafting," "Submitted," "Awaiting Decision," "Awarded," or "Declined."
• Next Action: What is the very next thing you need to do for this application?
• Funder Contact: The program officer’s name and email, if you have it.

This isn't just about managing deadlines. A good system gives you a bird's-eye view of your entire funding pipeline, which is the cornerstone of all grant management best practices.

Navigating the Award Decision

After weeks or even months of waiting, the email you've been looking for finally lands in your inbox. Whether it’s a yes or a no, your response is another chance to demonstrate your organization's professionalism.

If You Receive the Grant
Pop the sparkling cider—you earned it! But the work doesn't stop here. A thoughtful stewardship plan should kick into gear immediately. Your very first move should be a prompt and personal acknowledgment that goes way beyond a generic, automated thank-you.

A handwritten note from your Executive Director or a board member can make a huge impact. It’s a small touch that shows genuine appreciation and helps you stand out from the hundreds of other grantees firing off a quick email.

Your ongoing stewardship plan should also map out:

• A timeline for key communications and updates during the grant period.
• Invitations to special events or a personal site visit.
• Sharing success stories and impact data as they happen, not just waiting for the final report.

This kind of proactive communication turns a transactional funder into a genuine partner invested in your mission.

If Your Proposal Is Declined
Rejection stings, there's no way around it. But it's also an incredible learning opportunity. So many nonprofits make the mistake of just shrugging and moving on. The most strategic ones, however, see this as a chance to get invaluable feedback.

Give it a week or two, then send a brief, polite email to the program officer. The key is to avoid sounding defensive or questioning their judgment. Instead, you're simply asking for guidance so you can submit a stronger application next time.

Here's a simple template you can adapt:

Subject: Feedback on [Your Organization's Name] Proposal - [Grant Program Name]

Dear [Program Officer Name],

Thank you again for the opportunity to apply for the [Grant Program Name]. While we were disappointed to learn our proposal was not selected for funding this cycle, we deeply respect your team's decision-making process.

If your time allows, would you be open to sharing any brief feedback that could help us strengthen our proposals in the future? We are always looking to improve and would be grateful for any insights you could provide.

Thank you for your consideration.

Sincerely,
[Your Name]

This kind of professional follow-up keeps the door open and shows you're serious about your work. More often than not, the feedback you get will be the exact insight you need to land that operating grant on your next try.

Reporting Your Impact and Securing That Next Check

Winning an operating grant feels like a massive victory, and it is. But the real work starts the moment that first check clears. The final report you’ll eventually submit isn't the finish line; it’s the launchpad for your next grant. The goal is to turn a one-time transaction into a long-term partnership, which means you need to be strategic about showing your impact from day one.

Unlike project grants with neat, tidy deliverables, reporting on unrestricted funds is a different beast. You can't just list the number of workshops you held. You have to tell a story—a compelling one—about your organization's health, its newfound resilience, and how this funding supercharged your mission. This is your chance to show the funder how their investment in your core created a ripple effect across everything you do.

Showing the True Value of Core Support

Your report needs to connect the dots between the funder’s money and real, tangible improvements in your organization’s capacity. It’s time to think beyond simple program metrics and focus on the operational muscle you've built.

A knockout report on an operating grant will highlight progress in a few key areas:

• Financial Stability: Show how the grant helped you build a cash reserve or finally diversify your revenue. A great example would be: "This grant allowed us to hire a dedicated development associate, which directly led to a 22% increase in individual donations this year."
• Smarter Operations: Did you use the funds to upgrade ancient technology? Talk about it! "Our new CRM system, funded by this grant, cut our administrative time by 15 hours per week, freeing up staff to focus on client outreach."
• Investing in Your People: Frame salary support as an investment in your most critical asset. You can report on a lower staff turnover rate or new professional development opportunities that have boosted team morale and skills.
• Deeper Mission Impact: Always tie the operational support back to your mission. For instance, "By covering our rent increase, this grant ensured we could keep our doors open in the community, allowing us to serve 500 additional clients without interruption."

This reframes so-called "overhead" costs into what they really are: strategic investments that fuel your impact.

The most effective grant reports show how flexible funding allowed you to become stronger and more resilient. You're not just reporting on activities; you're building a narrative about stability and growth, proving that an investment in your core mission pays the highest dividends.

A Year-Round Strategy for Grant Renewal

Don't wait until a month before your final report is due to start thinking about renewal. Securing that next operating grant is a continuous process of relationship-building that starts the day you get the award letter. Think of your program officer as a partner, not just a person you send reports to.

A thoughtful stewardship plan keeps your organization on their radar and builds a powerful case for continued support long before you have to ask for it.

Keep the Conversation Going:

1. The First "Thank You": Ditch the form letter. A personal, handwritten note from your Executive Director or a board member makes a lasting impression.
2. The Mid-Grant Check-in: Be proactive. Send a brief, informal update three to six months in. Share an early win or a powerful client story that their support made possible.
3. Share Your Public Wins: Did you get a great piece of press in the local paper or release an annual report you're proud of? Forward it to your program officer with a quick note. It keeps them connected to your success.
4. Extend a Real Invitation: Ask them to come for a site visit or invite them to your annual gala as a guest, not as a donor. Let them see their investment in action, firsthand.

This steady drumbeat of positive communication does more than just check a box. It builds genuine trust. When it’s finally time to talk about renewal, the conversation isn’t about if you’re a worthy partner—you've spent the whole year proving you are. Now, you’re just discussing the next chapter of a successful collaboration.

Common Questions About Operating Grants

Diving into the world of operating grants often brings up a whole different set of questions than you'd have for project-based funding. You're not just pitching a program; you're making a case for your entire organization's health and vision, which can feel a little abstract. Let's tackle some of the most frequent questions I hear from nonprofits.

How Do We Win an Operating Grant if Our Organization Is New?

This is a classic chicken-and-egg problem, but it's far from impossible. When you're new, you can't lean on a long track record, so you have to sell the funder on your potential. Your proposal needs to be all about your vision, the expertise of your team, and the urgent, documented need you're meeting.

Instead of presenting years of impact data, you need to show them you're a smart, responsible investment. You do that with a rock-solid strategic plan and a budget so detailed and realistic it screams competence.

Here’s how to build that case:

• Gather powerful letters of support from community partners who can vouch for your mission and your team.
• Include biographies of your leadership that don't just list jobs but highlight the specific experience that makes them the right people for this work.
• Showcase any early successes, even small ones. Did you secure some seed funding? Run a successful pilot? Put it in there.

Think of it as asking for foundational, capacity-building support. You need to show the funder exactly how their money will create the strong operational base you need to launch and grow effectively.

What Is the Biggest Mistake to Avoid When Applying?

Hands down, the most common pitfall I see is when an organization takes an old project proposal, does a quick find-and-replace, and tries to pass it off as a request for "operating support." It never works.

Funders offering unrestricted grants are looking to invest in your entire mission, not a single program. They need to understand your organization's stability, your strategy for the next 3-5 years, and why you're essential.

A weak application gets lost in the weeds of a single program's details. A strong one tells a compelling story about your organization’s leadership, financial health, and its indispensable role in the community. This is a proposal for your whole organization, not just a piece of it.

Can We Include Staff Salaries in an Operating Grant Budget?

Yes, absolutely. In fact, that's one of the best and most critical uses of operating grants for nonprofit organizations. Your core staff—from your Executive Director to your development team and admin support—is the infrastructure that makes every single bit of your work possible.

When you're writing the budget narrative, don't just list positions and salaries. Justify them as strategic investments. For example, the Development Director’s salary isn't just an expense; it’s the investment that leverages the funder’s grant to secure more funding down the line. You have to frame these costs as the engine, not the overhead.

Fundsprout is an AI-powered platform designed to help your nonprofit find the right funding, write winning proposals, and manage your grants from submission to renewal. Discover relevant opportunities and craft compelling narratives with tools built for mission-driven success. Learn more at the Fundsprout website.