Does anyone know of rails hosting companies that will offer a free plan for non-profits to get up and running. I am sure it would only be free to a certain point (bandwidth, disk, etc.) but would like to explore the options.
Check out Heroku. They don't provide custom plans for No-Profits, however their base plan is free.
The 5 MB storage at Heroku is the database, only. For actual hosting of assets (files, videos, ...), they recommend using S3 (see http://docs.heroku.com/constraints#large-static-assets).
You can always upgrade the database itself when you run into limits. The first paid plan is 50 MB for $15 / month, see http://heroku.com/pricing
Also, even though Heroku does not offer a "non-profit-plan", I'm pretty sure they would be willing to negotiate some kind of link/free database upgrade-exchange when you get in touch with them directly.
If you are based in the US, dreamhost will provide free hosting for non-profits: http://wiki.dreamhost.com/index.php/Non-profit_Discount
and they have a good guide for setting up rails here: http://wiki.dreamhost.com/Getting_Started_with_Ruby_on_Rails