“Not-for-Profit” vs. “Nonprofit” – What is the Difference When it Comes to Grants?

“Not-for-Profit” vs. “Nonprofit” – What is the Difference When it Comes to Grants?


These terms are used every day interchangeably but, there can be some subtle and legal distinctions that can make a difference in grant eligibility. 

Technically, in most cases, there is no significant difference between these two terms. Most State corporation statutes use both terms within the same statute. However, the IRS uses the term “not-for-profit” as an activity, such as, a hobby (like crafting). The term Nonprofit is used to describe a nonprofit corporation that has been established for purposes other than making a profit, not necessarily a charitable organization, and has been granted tax-exempt status.  

As a non-profit organization (NPO), you will be eligible to apply for a variety of grants. In most cases, you will need to have a 501(c)(3) status to be considered for grant funding. Some funding organizations will require your organization to be established as a tax-exempt nonprofit for at least 3 years before they will accept grant proposals. 

If you have not obtained your tax-exempt status as a nonprofit yet, and your organization wants to pursue grants, you should begin this process immediately.  

Tools & Resources:

You can find the Application for Recognition of Exemption and its instructions here. You will find a wealth of information from the IRS on charities and other nonprofits here.

The Foundation Center offers a searchable tool for nonprofit startup resources by state. You can access it here.

Once you become a tax-exempt nonprofit, you will want to take a look at GuideStar. We will provide you with more information about the way GuideStar can impact your success in a future post!

Thank you for visiting today.  Get Grants, Do Good!

This Post Has 2 Comments

  1. Great list, very interesting especially the one on the Manifesto which sparked something. Thanks for the good advices.

  2. Those are great ideas; I use two or three already – esp. the one about encouragement – but I will try a couple of the others.

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