Long-term community work requires more than a strong program. Organizations also need capable staff, effective governance, appropriate facilities and technology, community relationships, sound financial systems, and adequate resources.
Government funding can be one important part of that resource base.
Federal, state, tribal, territorial, regional, county, municipal, and other public entities may support community work through grants, cooperative agreements, contracts, formula or pass-through funding, reimbursement programs, appropriations, and other mechanisms.
Public funding can provide substantial resources, but it should not be treated as permanently stable or as the only path to sustainability.
Appropriations, policies, leadership, economic conditions, program performance, eligibility rules, and community priorities can change. Public awards may also create significant administrative, reporting, financial, data, procurement, and compliance responsibilities.
Organizations should therefore evaluate public funding according to both the resources it provides and the obligations it creates.
What is public funding?
Public funding refers broadly to resources provided through government revenues or government-administered programs for authorized public purposes.
Public funding may originate at one level of government and be administered at another.
For example, federal funds may be awarded directly to an organization or may flow through:
- States
- Tribal or territorial governments
- Counties or municipalities
- Universities
- Health systems
- School systems
- Other pass-through entities
Federal funding
Federal funding may include:
- Discretionary grants
- Formula grants
- Cooperative agreements
- Contracts
- Reimbursement programs
- Other forms of federal assistance
Some federal opportunities are available directly to nonprofit and community organizations. Others are limited to states, tribal governments, local governments, educational institutions, health entities, or other specified applicants.
Eligibility must be determined from the particular funding opportunity.
State, tribal, territorial, and regional funding
These governments and public entities may distribute resources derived from:
- Federal awards
- State or territorial revenues
- Fees
- Dedicated taxes
- Legislative appropriations
- Other authorized public revenues
Some federal money becomes a subaward or other pass-through funding rather than a direct federal award. The organization should know whether it is a recipient, subrecipient, contractor, or another type of funded entity because different requirements may apply.
Local funding
Counties, municipalities, school districts, public-health departments, housing authorities, libraries, and other local public bodies may provide funding or purchase services.
Opportunities may take the form of:
- Community grants
- Human-service contracts
- Public-health agreements
- Arts or cultural funding
- Housing and community-development funding
- Youth or education programs
- Other locally authorized initiatives
Grants, cooperative agreements, contracts, and subawards are not the same
Organizations should understand what type of relationship they are entering.
Grants
Grants generally provide financial assistance to carry out an authorized public purpose.
The recipient remains responsible for carrying out the approved project and complying with the terms and conditions of the award.
Cooperative agreements
Cooperative agreements are also forms of financial assistance, but they generally anticipate substantial involvement by the federal awarding agency in carrying out the funded activity.
Contracts
Government contracts are procurement arrangements through which a public entity acquires goods or services for its use or to fulfill governmental responsibilities.
Procurement opportunities can involve different solicitation processes, performance standards, pricing structures, and legal requirements from financial-assistance awards.
Subawards
An organization may also receive federal funds indirectly from a state, local government, university, nonprofit organization, or another pass-through entity.
Determine whether the relationship is a subaward or a procurement contract according to the substance of the arrangement rather than simply the terminology used by the parties.
What are the potential advantages of public funding?
Substantial resources
Government programs can provide resources at a scale that may be difficult to obtain through individual donations or small private grants.
Some awards can support:
- Personnel
- Benefits
- Facilities
- Equipment
- Technology
- Evaluation
- Training
- Administration
- Other allowable costs
Potential for multiyear or recurring support
Some public programs provide multiple years of funding, continuation awards, recurring contracts, formula allocations, or other comparatively predictable support.
Recurring does not mean guaranteed.
Funding can change because of:
- Appropriations
- Revenue changes
- Program performance
- Policy changes
- Eligibility changes
- Legislative action
- Contract competition
- Award termination or nonrenewal
Funding aligned with established public priorities
Government funding programs may already be authorized for services related to:
- Public health
- Behavioral health
- Substance use disorder prevention and treatment
- Education
- Housing
- Workforce development
- Transportation
- Youth development
- Environmental protection
- Community development
This can create a strong fit when an organization's existing mission and program model align with the authorized public purpose.
Opportunities to strengthen organizational systems
Preparing for government funding may encourage stronger:
- Financial controls
- Budgeting
- Procurement
- Program evaluation
- Records management
- Accessibility
- Data security
- Grant management
Receiving an award does not by itself prove that an organization is effective, but successful administration can demonstrate organizational capacity and responsible stewardship.
What are the potential disadvantages and risks?
Significant application workload
Government applications may require substantial preparation.
Requirements may include:
- Program narratives
- Detailed budgets
- Budget narratives
- Logic models
- Evaluation plans
- Staffing information
- Organizational documents
- Certifications
- Data
- Partnership commitments
Estimate the probability of success and the organizational effort required before committing significant staff time.
Administrative and compliance requirements
An award may require:
- Detailed financial tracking
- Performance reporting
- Procurement procedures
- Subrecipient monitoring
- Records retention
- Civil-rights compliance
- Accessibility
- Data protection
- Audit or monitoring
- Prior approval for specified changes
Include these administrative costs when determining whether an award adequately supports the proposed work.
Cash-flow risk
Public awards may use:
- Advance payments
- Reimbursement
- Milestone payments
- Fixed amounts
- Other payment arrangements
Understand the payment structure before accepting an award.
If payment follows expenditure, an organization may need sufficient working capital to pay salaries and other costs before reimbursement arrives.
Mission drift
A large funding opportunity can encourage an organization to expand into work that is only loosely related to its purpose.
Before applying, ask:
- Does this work advance our mission?
- Does the community need it?
- Do we have appropriate expertise?
- Can we perform it at the required quality?
- What happens when the award ends?
Do not create a program solely because funding is available.
Funding concentration risk
A large government award can create dependence on one program, agency, or contract.
Consider what would happen if the award:
- Ended
- Was reduced
- Was recompeted
- Changed eligibility rules
- Was temporarily delayed
How do you find public funding opportunities?
Federal grants and cooperative agreements
Grants.gov is the primary federal portal for searching and applying for many federal grant and cooperative-agreement opportunities.
Federal funding notices may be called:
- Notices of Funding Opportunity (NOFOs)
- Funding Opportunity Announcements
- Requests for Applications
- Program announcements
- Other agency-specific names
Do not assume that every funding opportunity is an RFP.
Federal assistance programs
SAM.gov's Assistance Listings provide descriptions of federal assistance programs.
Assistance Listings can help organizations identify federal programs that may relate to their mission, while Grants.gov identifies current grant opportunities for which applications may be submitted.
Federal contracts
Federal procurement opportunities are available through SAM.gov.
Contracts differ from grants and cooperative agreements, so organizations pursuing federal procurement should understand applicable acquisition requirements and the solicitation process.
State and local opportunities
States and local governments use different systems.
Monitor:
- Official grant portals
- Procurement systems
- Agency websites
- Public notices
- Funding newsletters or alerts
- Relevant public meetings
Do not rely on a single annual funding season
Opportunities can be announced throughout the year.
The federal fiscal year runs from October 1 through September 30, but individual federal programs have different competition schedules.
State and local fiscal years vary.
Maintain an ongoing opportunity-tracking system rather than assuming that most funding will appear in a particular month.
The Federal Register
The Federal Register remains an important source of federal rules, notices, proposed rules, and other official information and is published each federal working day.
For organizations primarily searching for federal grant opportunities, Grants.gov is generally a more direct starting point.
Prepare your organization before an opportunity appears
Maintain required federal registrations
Organizations applying for federal grants through Grants.gov generally must first register as an entity in SAM.gov.
SAM.gov provides the organization with a Unique Entity ID (UEI).
SAM registration must be maintained and renewed annually.
Registration can take time, so do not wait until an application deadline.
Maintain organizational records
Keep current:
- Legal name
- UEI
- Employer Identification Number where applicable
- Governing documents
- Board information
- Financial statements
- Audit reports where applicable
- Insurance
- Policies
- Staff résumés or qualifications
- Program data
Build financial-management capacity
Organizations receiving government funds need systems capable of:
- Tracking award revenue and expenses
- Allocating shared costs appropriately
- Documenting payroll and personnel costs
- Managing procurement
- Monitoring subawards where applicable
- Managing cash
- Producing financial reports
- Retaining required documentation
Understand current federal audit requirements
The former A-133 threshold described in older guidance is obsolete.
Under the current federal Uniform Guidance, a nonfederal entity that expends $1,000,000 or more in federal awards during its fiscal year generally must obtain a Single Audit or an allowable program-specific audit for that year.
Organizations below that threshold are still responsible for maintaining records and making them available for appropriate review.
State, local, contractual, or other audit requirements may impose additional obligations.
Plan for indirect costs
Publicly funded programs consume administrative and organizational resources in addition to direct program expenses.
Federal recipients and subrecipients that do not have a current federally negotiated indirect cost rate may generally elect a de minimis indirect cost rate of up to 15 percent of modified total direct costs under current Uniform Guidance, subject to applicable award requirements.
Do not automatically exclude legitimate indirect costs in an effort to make an application appear less expensive.
Strengthen accessibility and civil-rights compliance
Government-funded programs may be subject to requirements involving:
- Disability access
- Nondiscrimination
- Language access
- Equal opportunity
- Other program-specific civil-rights requirements
Strengthen data and cybersecurity practices
Before accepting an award that involves participant, student, patient, employee, research, financial, or other sensitive information, determine:
- What data must be collected
- What information must be reported
- Who owns or controls the information
- Who may access it
- How it must be secured
- How long it must be retained
- What incident-reporting requirements apply
Build appropriate relationships with public agencies and policymakers
Professional relationships can help organizations understand public priorities and funding systems.
Appropriate activities may include:
- Attending public meetings
- Participating in coalitions
- Joining relevant professional networks
- Attending agency webinars or technical-assistance sessions
- Meeting with policymakers to educate them about community conditions
- Participating in lawful public-policy advocacy
These relationships should not be used to obtain preferential treatment in a competitive application.
Agency employees should not be expected to overlook requirements, privately improve an application, or treat a known organization more favorably than other applicants.
Understand lobbying rules
Nonprofit organizations can participate in public-policy discussions, but organizations should distinguish education from lobbying and understand the rules that apply to their tax status and funding.
For section 501(c)(3) organizations, some attempts to influence legislation constitute lobbying and are subject to applicable limits.
Action by Congress, state legislatures, local councils, and similar legislative bodies can fall within the definition of legislation for this purpose.
Government award funds may also carry restrictions on lobbying expenditures.
Track and fund advocacy appropriately rather than assuming public-award funds can be used for all advocacy activities.
How do you decide whether to apply?
Read the entire funding notice first
Determine:
- Purpose
- Eligibility
- Available funding
- Period of performance
- Cost-sharing requirements
- Allowable and unallowable costs
- Evaluation criteria
- Reporting requirements
- Data requirements
- Submission method
- Deadline
Conduct a go/no-go review
Ask:
- Are we eligible?
- Does this advance our mission?
- Does the proposed service respond to a demonstrated community need?
- Can we meet the required outcomes?
- Can we recruit or retain the necessary staff?
- Does the budget cover the true cost?
- Can we meet reporting and compliance requirements?
- Can we manage the cash flow?
- Is the probability of success worth the application effort?
Do not apply solely because a large amount of money is available.
Evaluate sustainability before promising expansion
A three-year award may create positions, leases, technology systems, or participant expectations that continue beyond the funding period.
Decide before applying what is likely to happen when the award ends.
How do you apply?
1. Follow the funding notice exactly
Use:
- Required forms
- Required headings
- Character or page limits
- Budget formats
- Attachment requirements
- File formats
- Naming conventions
An otherwise strong proposal can become nonresponsive if it fails mandatory requirements.
2. Use official questions-and-answers channels
If instructions are unclear, use the process identified in the funding notice.
Depending on the opportunity, this may include:
- An agency point of contact
- A pre-application webinar
- A formal question period
- Published FAQs
- An amendment to the notice
Significant clarifications may apply to every applicant, so monitor the official opportunity for updates.
3. Design the program before writing persuasive language
Define:
- Need
- Goals
- Activities
- Staffing
- Timeline
- Participants
- Partnerships
- Outputs
- Outcomes
- Evaluation
- Budget
Program, finance, evaluation, leadership, and compliance staff should be involved when their responsibilities are affected.
4. Build the budget from the program design
Include the resources actually required to perform the work.
Consider:
- Salaries
- Benefits
- Travel
- Equipment
- Supplies
- Contractual services
- Subawards
- Participant support when allowable
- Evaluation
- Data systems
- Indirect costs
Do not commit to a scope of work that cannot be performed with the available funding.
5. Write to the evaluation criteria
Explain directly:
- What problem or opportunity is being addressed
- What the organization will do
- Why the approach is appropriate
- Who will perform the work
- How implementation will be monitored
- How outcomes will be evaluated
- Why the budget is reasonable
A grant application is not simply a sales pitch. It is a proposal for carrying out funded work under specified requirements and evaluation criteria.
6. Support claims with appropriate evidence
Use:
- Current community data
- Program results
- Relevant research
- Participant and community input
- Organizational experience
Do not exaggerate need, effectiveness, reach, or outcomes to strengthen an application.
7. Coordinate partner commitments early
If partners will provide services, data, staff, referrals, facilities, or cost sharing, define those commitments before submission.
Do not request letters of support that imply responsibilities the partner has not actually agreed to perform.
8. Review numbers carefully
Confirm:
- Budget totals
- Staffing calculations
- Cost-sharing amounts
- Participant counts
- Cost per participant
- Timelines
- Narrative-budget consistency
9. Use secure document and version control
Complex applications may involve several contributors.
Establish:
- File naming
- Version control
- Editing responsibility
- Secure shared storage
- Backup procedures
- Final approval authority
10. Submit early enough to address technical problems
Federal applications are commonly submitted electronically through Grants.gov or another authorized system identified by the agency.
Do not plan to upload for the first time immediately before the deadline.
Verify:
- Active registration
- Authorized submitter
- File format
- Successful validation
- Submission timestamp
- Confirmation or tracking number
Retain the complete submitted application and submission confirmation.
What should you do if you receive an award?
Review the award before accepting it
Compare the final award with the application.
Review:
- Award amount
- Scope of work
- Performance period
- Payment method
- Reporting
- Cost sharing
- Special conditions
- Data requirements
- Intellectual property
- Termination provisions
Do not assume the final award contains everything requested in the application.
Assess cash flow
Understand:
- When funds may be drawn or invoiced
- Whether payment is advanced or reimbursed
- Required documentation
- Anticipated payment timing
- Working-capital needs
An award can create a financial problem if the organization lacks enough cash to operate while awaiting reimbursement.
Establish award-specific financial tracking
Financial records should allow the organization to demonstrate how award funds were used.
Establish appropriate:
- Account codes
- Cost centers
- Timekeeping or personnel documentation
- Cost-allocation methods
- Procurement records
- Supporting documentation
Spend according to the award, not simply to exhaust the budget
Do not make unnecessary purchases merely because an award period is ending.
Costs should comply with the award and applicable requirements and should be properly supported.
Determine what happens to unspent or unobligated balances according to the specific award rather than assuming they can or must be spent.
Manage budget and program changes correctly
Some changes may be made within the recipient's authority. Others require prior written approval.
Under federal Uniform Guidance, specified program and budget changes require prior approval from the federal agency or pass-through entity.
Do not rely on a generic rule such as "10 percent can always be moved between budget categories."
Monitor performance and reporting
Establish responsibility and deadlines for:
- Financial reports
- Performance reports
- Outcome data
- Subaward reporting
- Programmatic deliverables
- Other required certifications or reports
Collect only information necessary for legitimate program, evaluation, compliance, and reporting purposes and protect sensitive information appropriately.
Manage subrecipients and contractors appropriately
If another organization will carry out part of the funded program, determine whether the relationship is a subaward or a procurement contract.
Pass-through entities may have substantial responsibilities for:
- Subaward terms
- Risk assessment
- Monitoring
- Financial and performance review
- Corrective action
- Closeout
Use appropriate procurement procedures
When purchasing goods or services with award funds, follow the procurement requirements applicable to the award and organization.
Maintain safeguards against conflicts of interest and document procurement decisions as required.
Prepare for monitoring and audit
Government funders or pass-through entities may review:
- Financial records
- Program performance
- Procurement
- Personnel costs
- Subawards
- Participant records
- Compliance with award conditions
Treat documentation as part of program administration rather than something assembled only when an auditor arrives.
Close out the award properly
The end of program activity is not necessarily the end of award responsibilities.
Closeout may require:
- Final performance reports
- Final financial reports
- Liquidation of obligations
- Equipment or property disposition
- Final subaward actions
- Records retention
- Refund of amounts owed
Under current federal Uniform Guidance, a recipient generally has 120 calendar days after the end of the period of performance to liquidate financial obligations, while subrecipients generally have 90 days unless an earlier date is established by the pass-through entity.
Follow the specific award and agency instructions.
Maintain professional relationships with funding agencies
Good communication remains important after an award is made.
Maintain clear contacts for:
- Program questions
- Financial questions
- Reporting
- Prior approvals
- Amendments
- Technical assistance
Document significant guidance and approvals in writing.
Professional relationships should make communication clearer, not create exceptions from applicable requirements.
Continue evaluating the award
During implementation, monitor:
- Program quality
- Outcomes
- Equity
- Participant experience
- Staff workload
- Administrative cost
- Cash flow
- Financial performance
- Compliance
- Mission alignment
An award that creates chronic deficits, unsustainable workload, serious access barriers, or substantial mission conflict may need to be renegotiated where possible or not pursued again.
Diversify funding
Public funding can be a major component of an organization's finances, but dependence on one agency, appropriation, contract, or government program creates risk.
Depending on the organization, a diversified resource strategy may include:
- Federal awards
- State or local funding
- Foundation grants
- Individual contributions
- Corporate support
- Fee-for-service revenue
- Third-party reimbursement
- Institutional partnerships
- Other appropriate revenue
Diversification should be evaluated by risk, flexibility, timing, restrictions, concentration, and sustainability rather than simply by counting the number of funding sources.
In Summary
Public funding can provide substantial resources for community organizations and can support programs that advance important public purposes.
Government funding may take the form of grants, cooperative agreements, contracts, formula or pass-through funding, reimbursements, appropriations, or other arrangements. Each has its own eligibility, administrative, financial, and compliance requirements.
Public funding should not be treated as permanently secure. Appropriations, policies, eligibility, economic conditions, competition, performance, and community priorities can change.
Use current official systems to find opportunities. Federal grant opportunities are commonly available through Grants.gov, federal assistance programs can be researched through SAM.gov Assistance Listings, and federal procurement opportunities are available through SAM.gov.
Prepare before an application appears. Maintain required registrations, financial systems, organizational records, staff capacity, data protections, accessibility, and grant-management processes.
For federal grant applications submitted through Grants.gov, organizational applicants generally need an active SAM.gov registration and a Unique Entity ID. Keep the registration current and begin renewal early enough to prevent application or award problems.
Evaluate every opportunity for mission fit and full financial cost before applying. An award that does not adequately support required staffing, administration, evaluation, reporting, and compliance can weaken rather than strengthen an organization.
Follow the funding notice exactly, use official clarification channels, build the program and budget together, support claims with evidence, and submit through the required system with enough time to resolve technical problems.
Once funded, treat award management as an organizational responsibility. Maintain effective financial controls, meet reporting and performance requirements, manage procurement and subawards appropriately, protect sensitive information, obtain prior approvals when required, and prepare for monitoring, audit, and closeout.
Finally, continue evaluating whether public funding advances the mission. Sustainable financing is not simply the ability to obtain government money. It is the ability to use resources responsibly to provide effective, equitable, and enduring community benefit without allowing funding requirements to replace the purpose the organization exists to serve.