Community-based hybrid nonprofits, defined as organizations that combine social services with organizing or advocacy, play a crucial role at the neighborhood level. Considering their nonconformity to conventional organizational forms, they face specific challenges and advantages in achieving their combined advocacy and service mission. Using neo-institutional theory to provide context to our data, this qualitative study of 18 nonprofits working in one neighborhood examines how hybrid nonprofits are categorized as well as processes for legitimacy for these organizations. We find that at the neighborhood level, hybrid nonprofits are identified as “grassroots” by both hybrids and non-hybrids alike and draw on this “grassroots” identity to achieve legitimacy. We examine the settings for this “grassroots” legitimacy and its challenges and conditions. Through cultivating a better understanding of community-based hybrid nonprofits, this study adds to the literature on how nonprofits provide services and organize at the neighborhood level.