First, the technical answer. A grant is a sum of money “funders” or “grant makers” provide to an “applicant” or “grant seeker” for a specific purpose. Grant funding does not have to be repaid–it is not a loan. In some cases, however, if a grant is not used as intended, the funds must be refunded to the grantmaker.

From a grantsmanship standpoint: a grant is a tool nonprofits use to address important issues within their communities. A grant proposal is actually a call to action. It’s a request that a funder join the nonprofit as a partner in achieving specific results. At its best, a grant proposal is a compelling  and well-supported argument for change.

There are many types of grant seekers–private nonprofit organizations, educational institutions, public nonprofits such as municipalities, Native American tribes, and even individuals and for-profit businesses. Eligibility to receive funds under a specific grant program, or to receive funds from a specific funder, vary widely. Different grant programs and funders have varying requirements for eligibility.

501(c)(3) nonprofits are charitable organizations that operate in the public interest and have been granted tax-exempt status from the federal government. 501(c)(3)s do not pay federal income tax and people who contribute to these organizations can often receive deductions on their federal income tax.

If you’re interested in starting a nonprofit organization, check out the National Council on Foundations how-to advice.