When do new nonprofits really start receiving grants?

Introduction

Securing funding is a top priority for new nonprofits, and some might expect foundation grants to be a key revenue source from the start. But is that realistic? After analyzing grant data from newly-formed animal welfare and human service organizations, we found that the vast majority receive no grant funding, and only 10 to 25% secure grants after several years in operation.

Understanding this reality can help new nonprofits set realistic expectations and focus on other income-generating activities in the early years. While grants may eventually become part of an organization's fundraising strategy, achieving grant readiness takes time, and grants should be viewed as a long-term goal versus an immediate funding solution.

An important note: this analysis focuses on a specific subset of the nonprofit sector, animal welfare and human service organizations. While identified trends likely hold true for some other kinds of 501(c)(3) organizations, they won't apply to all nonprofits. Certain kinds of organizations, such as healthcare organizations and research institutions, often receive large grants upfront to get started. Different types of nonprofits operate in distinct ways and can have different funding models.

Analyzing grant trends for new nonprofits

For our analysis, we examined grant data for 501(c)(3) animal welfare and human service organizations formed between 2014 and 2024. Our goal was to understand when nonprofits start receiving grants (based on the number of years in operation), how foundation support changes over time (based on the average number of foundations supporting at a given age), and how grant sizes evolve.

The graphs below include 50th, 75th, and 90th percentiles to provide a clearer picture of grant funding trends. The 50th percentile represents the median, where half of the nonprofits measure below, and half measure above. The 75th percentile highlights better-supported nonprofits, and the 90th percentile shows the 10% that receive the most foundation support. In other words, the 90th percentile includes nonprofits that receive more foundation support than 90% of other nonprofits. We didn’t include lower percentiles, like the 25th, because they would show no grant activity at all, which is already reflected in the median (i.e., 50th percentile). We also didn't include higher percentiles, such as 5% or 1%, because these outliers consist of organizations receiving the highest level of grant support and aren't representative of most nonprofits.

The trend for the number of foundations supporting human service organizations is clear: most receive no foundation support in their first seven years. Additionally, only at the 90th percentile — the top 10% of organizations — do these 8-10 year-old nonprofits gain an average of one foundation supporter. There were about 4,100 human service organizations in our sample, so this is still approximately 410 organizations receiving foundation support.

We see a similar pattern looking at median grant amounts for human service organizations: the vast majority of new nonprofits (1-3 years old) receive no grant funding. At 4-7 years old, only the 90th percentile of organizations begin securing smaller grants around $600, while most still receive nothing. And at 8-10 years old, the 90th percentile of organizations reach median grant amounts of $3,300.

Shifting focus to animal welfare organizations, like human service organizations, the graph above shows they receive little to no foundation support in their first few years. At 4-7 years old, one in ten secures an average of one foundation supporter. Animal welfare nonprofits 8-10 years old fare slightly better than human service organizations of the same age, with one in ten gaining an average of two foundations supporting them.

The final graph in our series shows that within 1-3 years, 10% of animal welfare organizations receive grants of around $2,000. By 4-7 years, median grant amounts among the 90th percentile rise to $5,300. And for organizations between 8-10 years old, it’s the first time we see grants to more than just the top 10% of nonprofits. The median grant size for the top 25% of these older organizations is $837, while 10% see median grant amounts of $7,800.

Key takeaways about grant funding for new nonprofits

The data makes one thing clear: foundation grants are not a reliable funding source for most new animal welfare and human service nonprofits. Here are some insights drawn from our analysis:

It takes time to receive grants — The vast majority of animal welfare and human service nonprofits don't receive grants in their first few years.

Grants eventually come, but only for some nonprofits — Even after several years in operation, only 10-25% of organizations receive foundation support.

Most grant amounts are relatively small — Higher-percentile nonprofits in the 4-7 year range tend to receive grants of several hundred dollars, and it's not until the 8-10 year mark that larger grants start to appear (and even then, they're typically under $10,000).

Major grants still come for the top 1% – There are exceptions to the above trends. The top 1% of newly-formed animal welfare or human service organizations receives two grants of $25,000 on average. The top 1% of those 4-7 years old secure an average of four grants of $45,000.

Grants are a long-term strategy — Considering the data, it's a good idea for nonprofits to focus on alternative revenue sources during the early years.

What to do instead of relying on grants

We've shown that foundation funding can take years to materialize. So how can nonprofits fund their programs in the meantime? There are several ways to build financial stability through diversified revenue streams, such as:

• Individual donations – Cultivate relationships with donors who believe in your mission and can make recurring contributions.
• Matching gift programs — Enable your donors to have their gifts matched by employers.
• Fundraising events – Organize activities that engage and grow your community while raising funds.
• Program service revenue – Generate income through memberships, merchandise, facility rentals, or other sales activities.
• Corporate partnerships – Form collaborations with businesses to receive sponsorship support.

Laying the groundwork for future grants

While it's not always realistic to expect foundation grants early on, don't be discouraged! There's plenty nonprofits can do now to better position themselves for grant success later. The early years are a great time to build a strong foundation that will make your nonprofit more competitive and grant-ready down the road.

Here are some key areas to focus on to prepare for future grant opportunities:

• 501(c)(3) status - Most foundations require tax-exempt status with the IRS to qualify for grants.
• Defined mission and programs - Be able to clearly explain what your organization does, why it matters, and how it operates.
• Leadership and governance - Build a committed team of staff and board members to to guide and grow the organization.
• Financial management - Maintain a budget to show funders you're financially responsible.
• Fundraising history - Establish a track record of donations, however small, to show that others believe in your mission too.
• Impact reporting - Gather data and testimonials to demonstrate how your organization is making an impact in the community you serve.

Once you've built a strong base, you can start researching funders and grants that align with your mission, build relationships with foundation staff and board members, and prepare compelling grant applications.

Conclusion

Grant funding for new nonprofits takes time, and most organizations in the animal welfare and human service sectors won't receive foundation support for several years. Instead of relying on grants early on, nonprofits should focus on building diverse revenue streams and establishing a strong reputation within their community. By doing so, they'll be better positioned to secure grants in the future.