A strong proposal to a private foundation is less about polished prose than about fit: the right foundation, the right document at the right stage, and figures that agree everywhere. A grant proposal template for nonprofit teams gives you structure; this guide covers the work around it.
How private foundations work
A private foundation is a charity that usually gets its money from one source, such as a family, an individual or a company, and gives it away through grants.
Federal tax law sets an annual minimum distribution requirement. Under section 4942 of the Internal Revenue Code, the required "distributable amount" starts from 5% of the fair market value of the foundation's assets not used directly for charitable purposes (mostly investments) and is then adjusted under the statute. Income still undistributed at the end of the following year faces a 30% tax. That is one reason foundations make grants every year.
Each foundation still sets its own rules, and many fund only organizations they invite.
Check fit first: Form 990-PF and ProPublica
Private foundations file Form 990-PF, a public return and your best free fit check. ProPublica Nonprofit Explorer lets you search these filings at no cost. On current returns, go to Part XIV, "Supplementary Information" (IRS Instructions for Form 990-PF). Older returns used a different part number.
| Where to look | What it tells you |
|---|---|
| Part XIV, line 2 | Application information, or a checkbox showing the foundation gives only to preselected organizations and does not accept unsolicited requests |
| Part XIV, lines 3a and 3b | Grants paid during the year and grants approved for future payment, with their purpose |
| The foundation's website | Current guidelines, priorities and deadlines |
Grants to organizations like yours, not the largest grant, show a realistic request.
Letter of inquiry first, then the full proposal
Many foundations ask for a letter of inquiry (LOI) before inviting a proposal. Candid describes LOIs as short: "no more than three pages." A foundation's own limit always wins.
| Document | What Candid describes |
|---|---|
| Letter of inquiry | Six parts: an introduction that "serves as the executive summary", organization description, statement of need, methodology, other funding sources, final summary |
| Cover letter | Not an executive summary. Request your amount and introduce the project in the first sentence, refer to your latest contact, have the executive director sign it |
| Full proposal | Executive summary, narrative (statement of need, and a project description that includes evaluation and organizational information), conclusion, budget, supporting materials the funder requests |
Candid calls the executive summary "one of the most important parts of the proposal." Write it last. Lead with the foundation's priority in its own words and copy every amount from one budget. The Private Foundation Grant Kit puts the LOI, cover letter and full proposal in one Word template, with a separate budget workbook.
Attachments foundations commonly request
Candid's proposal guide names a copy of your IRS letter of determination, a full list of your board of directors and "various financial documents." Foundations also often ask for:
- your latest Form 990, 990-EZ or 990-N confirmation
- financial statements for the last completed year, audited if you have them
- your organizational budget and the project budget
- letters of support or partnership agreements
Candid advises including attachments only when the funder requests them. Follow each checklist exactly.
No 501(c)(3) of your own? Fiscal sponsorship
A foundation can fund a group that is not a public charity, but under section 4945 of the Internal Revenue Code it must then exercise "expenditure responsibility": reasonable procedures to see that the grant is spent only for its purpose, full reports from the grantee and reporting to the IRS. Expect more paperwork, or a request to use a fiscal sponsor.
The National Network of Fiscal Sponsors names two models as the most frequently used:
- Comprehensive: your project "becomes a program of the fiscal sponsor", which keeps legal and fiduciary responsibility.
- Pre-approved grant relationship: your project stays a separate entity and the sponsor regrants the funds to you.
Agree the model in writing before you apply.
The funding context
Foundations gave $117.15 billion in 2025, up 5.7% in current dollars and 3.0% after inflation (Giving USA 2026). Meanwhile, about a third of nonprofits reported at least one government funding disruption in early 2025, and 21% lost some government funding (Urban Institute, October 2025). The Center for Effective Philanthropy reported in January 2026 that 65% of nonprofit leaders saw increased demand for their services in 2025.
General information: this article is general information, not legal, tax or fundraising advice. No template can guarantee funding. Always follow each foundation's own guidelines.
The Funder File is not affiliated with, endorsed by or connected to the Internal Revenue Service, Candid, ProPublica, the National Network of Fiscal Sponsors, Giving USA, the Urban Institute or the Center for Effective Philanthropy.
Sources
- 26 U.S. Code 4942 (Cornell LII)
- 26 U.S. Code 4945 (Cornell LII)
- IRS: Instructions for Form 990-PF
- ProPublica Nonprofit Explorer
- Candid Learning: Letters of inquiry
- Candid Learning: How do I write a grant proposal?
- Candid Learning: Proposal cover letters
- National Network of Fiscal Sponsors: Models
- Giving USA 2026 release
- Urban Institute: Government funding disruptions in early 2025
- Center for Effective Philanthropy: A sector in crisis
The Funder File is not affiliated with, endorsed by or connected to any funder or government agency named on this site. All trademarks belong to their owners.