How can microgrants work for nonprofits?
You have probably heard about microgrants being used in the United States and abroad to help eliminate poverty. So how do microgrants work and what role do nonprofits play in their success? Here's what you need to know about nonprofits and microgrants.
What are microgrants?
Microgrants are small, one-time only, cash awards given to an individual or an organization for a short-term community project. Unlike loans, microgrants aren't repayable. The idea is to provide financing to help people in poverty solve their own local problems and generate accomplishments that inspire pride.
There are three primary types of microgrants. These small grants are given to:
- An individual to start an income-generating project. This type of microgrant is typically given to a person living in extreme poverty to help him or her develop a sustainable livelihood.
- A community to fund an impact-oriented project. Examples of projects might include building a school, health center or farm.
- An individual to use for any cause he or she chooses. An example might include education or professional development.
How can microgrants benefit individuals and communities?
Some larger nonprofits offer microgrants to assist hard-to-reach beneficiaries in a community. In these situations, money is given to groups such as neighborhood organizations or parent-teacher associations, which tend to have access to more people than many government organizations. Microgrants can also serve as a way to help grassroots organizations that may not be eligible for traditional grants.
For the most part, however, nonprofits work in cooperation with grantors to help in the referral or selection of individual applicants, such as a mother in need of money to pay for job training. After microgrants are awarded, nonprofits might be asked to mentor recipients, oversee their use of the grants and report results back to the grantor. The nonprofit can evaluate how well the microgrant program worked, whether the community benefits justified the amount of funding and what changes might make the program more successful.
Nonprofits can also receive microgrants for expenses such as staff training or the purchase of equipment. Because small amounts of money are at stake, larger nonprofits might not bother to apply—giving smaller organizations better odds of winning the awards.
How are microgrants awarded?
While specific rules vary from grant to grant, microgrants are typically awarded on a competitive basis. The organization sponsoring the microgrant will review proposals and choose the application that best meets its guidelines and is most deserving of funding.
When should a nonprofit consider applying for a microgrant?
Any nonprofit could benefit from a microgrant. Needs such as purchasing equipment or paying for staff development, however, are perhaps most appropriate for microgrants.
What are ways to learn about available microgrants?
An online search for microgrants in your region or the area of development you are looking to fund is a great first step.
Microgrants offer many possibilities to nonprofits. Your organization might be able to provide microgrants, help connect grantors with recipients in need of microgrants or take advantage of microgrants to further your own mission. Do your homework to find out how microgrants might benefit you.
The Community Tool Box: Establishing micro-grant programs by Eric Wadud
MicroGrants: Partnering with people with potential
Forbes: Saving the world on a shoestring: Spark MicroGrants by Susan Adams (2011)
Spark MicroGrants: The Spark approach