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Grants are non-repayable funds or products disbursed or gifted by one party (grant makers), often a government department, corporation, foundation or trust, to a recipient, often (but not always) a nonprofit entity, educational institution, business or an individual. In order to receive a grant, some form of “Grant Writing” often referred to as either a proposal or an application is required.

Most grants are made to fund a specific project and require some level of compliance and reporting. The grant writing process involves an applicant submitting a proposal (or submission) to a potential funder, either on the applicant’s own initiative or in response to a Request for Proposal from the funder. Other grants can be given to individuals, such as victims of natural disasters or individuals who seek to open a small business. Sometimes grant makers require grant seekers to have some form of tax-exempt status, be a registered nonprofit organization or a local government.

For example, tiered funding for a freeway are very large grants negotiated at government policy level. However smaller grants may be provided by a government agency (e.g. municipal government).

Project-related funding involving business, communities, and individuals is often arranged by application either in writing or online.

A grant is an amount of money that a government or other institution gives to an individual or to an organization for a particular purpose such as education or home improvements.

A grant is an amount of money given especially by the government to aperson or organization for a special purpose: a student/research grant a local authority/government grants.

A grant is a quantity of money given by a government, organization, person or family for a specific purpose. Unlike a loan, you do not have to pay back the grant money – in some cases, study grants have to be paid back if the person abandons the course. A grant may come in the form of money for a student to study, for a team to carry out research, money to improve the insulation in your house, expand a community project, or funds to set up a business.

 Private Foundation: A nongovernmental, nonprofit organization with funds (usually from a single source, such as an individual,  family, or corporation) and program managed by its own trustees or directors. It is established to aid social, educational, religious or other charitable activities, primarily through grantmaking.

  • U.S. private foundations are tax-exempt under Section 501(c)(3) of the Internal Revenue Code.
  • Private foundations are generally founded by an individual, a family or a group of individuals, and are organized either as a nonprofit corporation or as a charitable trust. i.e. Weingart Foundation or Ford Foundation

Family Foundation: One whose funds are derived from members of a single family. At least one family member must continue to serve as an officer or board member of the foundation, and is the donor. The family member plays a significant role in governing and/or managing the foundation through out its life. Most family foundations are run by family members who serve as trustees or directors on a voluntary basis – receiving no compensation.

  • i.e. The Bill and Melinda Gates Foundation: $29 billion endowment, 5% of the assets must be used per year.
  • The number of family foundations has increased 60% in the past 6 years.

 Corporate Foundation: A private foundation that derives its grantmaking funds primarily from the contributions of a profit-making business.

  • i.e. Wells Fargo
  • The company-sponsored foundation often maintains close ties with the donor company, but it is a separate, legal  organization, sometimes with its own endowment, and is subject to the same rules and regulations as other private foundations.

Community Foundation: A community foundation is composed primarily of permanent funds established by many separate donors for the long-term benefit of the residents of a defined geographic area. Typically, a community  foundation serves an area no larger than a state. Community foundations provide services to donors who wish to  establish endowed funds without incurring the administrative and legal costs of starting independent foundations. According to the Council on Foundations, there are more than 500 community foundations across the United States today.

  • i.e. California Community Foundation, Orange County Community Foundation Government Grants: Funding from city,  county, state, and federal government.

Nonprofit organizations with tax exempt status by the IRS are the organizations typically designated to receive grants. 501 (c)(3) nonprofit organizations have agreed to follow certain stipulations in order to receive grants. The reason why foundations and governmental organizations make grants is to fulfill a need that they are incapable of fulfilling  themselves. Governmental organizations and foundations have limited staff, time, resources, and expertise. But they have money. Therefore, they seek experts to do the job they value as important, but are unable to do themselves.

That is why it’s a misnomer for people to refer to Grants as “Free” money. The function and purpose of a nonprofit is to fill that gap left between Government organizations (that provide basic services to its citizens) and the for profit sector (that charges consumers forcommerce and services). The nonprofit is expected to address those issues the government can’t do, and for profit won’t do. Typically these are social (Philanthropic) causes.

 Federal Agencies

Federal organizations are typically considered either general support organizations or mission-oriented organizations. A general support organization is one which supports basic and applied research that contributes to the body of knowledge in a general subject field. For example, the stated purpose of the National Institute of Health is “to conduct and support biomedical research to improve the health of the nation.” Other federal organizations that define their purpose in general terms include the National Science Foundation and the National Endowments for the Humanities and Arts.

Reviews of proposals sent to general support organizations are often conducted by panels of the proposal writer’s peers. These reviewers are not organization staff members but university or private researchers in the field. They review the proposal in terms of its scientific merit and send their recommendations to an organization program officer. In some organizations, the program officer ranks the proposal against all other competing proposals and determines whether to fund it. In other organizations, the program officer may only recommend a final disposition to a higher body or official. In either case, the proposal must be recommended by the review panel, or it will not be considered. A proposal to a general support organization must be written for one’s peers.

State and Local Organizations

State and local government organizations support research and training projects from both federal “pass-through” funds and from their own funds.

Kinds of Grants from Federal Government:

The Federal government uses two kinds of grants:

  • Grants given by an agency of the Federal government (also known as “discretionary” grants) — for instance, a homeless assistance grant given out by the Department of Health and Human Services to a homeless shelter.
  • Grants that put Federal money in the hands of States, cities, or counties for them to distribute to community groups, charities, and other social service providers, usually under their own rules and regulations (also known as “formula” or “block” grants).

You can apply directly to the Federal government or you can apply for funds from an agency/organization that distributes money it receives from the Federal government. More money is available from programs administered by States and localities than from the Federal government directly.

Government Grants: For up-to-the-minute information on new grant opportunities, check the bottom of each page on this site often for daily updated information. For information on all available government grants, go online to Federal agencies now typically announce grant opportunities online. Go to the Government Funding section to find links to federal grant programs and opportunities.

State Grants: Individual states also offer a wide variety of grants, including some for individuals and often hard to find grants in the arts. You can do an internet search to find out if your state has a website devoted to this purpose. If you live in Florida, Illinois, New York, Texas, California or Tennessee, go directly to our articles on Grants in Florida, Grants in IllinoisGrants In New YorkGrants in CaliforniaGrants in Tennessee and Grants In Texas to discover opportunities there. New York stands out in terms of its grant programs for the Arts and Humanities, worth checking out if you live there (or would like to!).

Pell Grants: Pell Grants are awarded by the Federal Government based on financial need. Criteria are evaluated based on the applicant’s completed Free Application for Federal Student Aid (FAFSA). Learn more on the Pell Grantspage.

Project Grants are what you typically think of when you talk about competing for grants. They are awarded based on the applications of those seeking funds, and they exist in a wide variety of areas including health and medical research, science and technology, education, the humanities, social services, the arts,and community development.

Other Grants: Identifying available grants from Foundations and Corporations is a bit more involved as there is not a single central listing agency. If you are a teacher – or know one who could use some financial support – definitely see our article about grants for teachers. One worthwhile approach is to find the “Foundation Center Cooperating Collection nearest you.”

There are some corporations that are very active in support of their communities. They give grants to effective non-profits that are making a difference locally. For interest, Walmart isa great example. Last year their foundation gave out $1.4 billion in cash grants and “in kind” donations in the U.S. and around the world. Check out theurwebsite to see the grants they offer an ongoing basis.

A great way for non-profit organizations to find available grants is by learning more about the Common Grant Application and its web site. According to that site, grantseekers who can use their services include Non-profit organizations, Non-governmental organizations, Charities, Churches, Libraries, Schools, Government agencies, Individuals, Groups, and associations, coalitions, and alliances of grantseekers. Also see our latest article on Grants for Nonprofits.

Trusts and Corporations can also be found through subscription-based directories such as the Foundation Center Directory. The most basic subscription is about $240 per year, providing fairly limited search capabilities. More functional versions begin at $480 for one year.

Grant Database Services: In addition to the resources noted above, there are many consultants who can help you. A potentially less expensive route is to investigate some of the many grant-related software programs that can help you find grants, prepare to write grants, and apply for grants.

Types of Grants:

There are two main types of grants available through the federal government:

1) Categorical and

2) Block Grants (also include Project, Formula and Matching Grants.)

Categorical grants are provided for specific programs and include requirements. Highway programs and education grants are Categorical grants

Block grants provide funding for eligible activities identified in authorizing legislation. Community development, education, health service and crime controls are some examples of Block grants.  Large block grants include Community Development Block Grant (CDBG)* and Local Law Enforcement Block Grant (LLEBG).

Community Development Block Grant’s (CDBG) must fall within one of the approximately 25 categories, including: Historic preservation; real property acquisition, demolition, site preparation and disposition; economic development and job creation; housing assistance; public service activities; assistance to nonprofit entities.

Project grants are similar to categorical grants and fund specific projects and services.

Formula grants are allocated based on a decision rule, such as x dollars per public school pupil.  The purpose is to allocate funding based on quantifiable variables.

Matching grants require that the recipient contribute something towards the project costs.  Some block grants also have a match requirement.


There are a variety of types of grants the federal government provides. They can be mandatory or discretionary in nature.  Mandatory grants may be further classified into block grants, open ended, or close ended. Direct grants may be mandatory or discretionary.

Mandatory Grants

In a mandatory grant program, Congress directs awards in specific amounts to one or more classes of prospective recipients that meet specific criteria for eligibility. These grants are usually awarded on the basis of formulas prescribed by statute or regulation rather than on the basis of an individual project review. In other words, “mandatory” means just that – applicants need not compete for funds but instead need only demonstrate that they meet the relevant eligibility criteria to establish their entitlement to funding.

Mandatory grants are typically awarded to state governments and sometimes to other entities. Mandatory grants include block, open-ended, and close-ended grants.

Block Grants

  • Unlike direct grants, block grants are programs for which the federal government gives states, localities, or regional entities a fixed amount of funds that they, in turn, distribute to other entities for the purposes of performing program services. Block grants are designed to offer grantees flexibility in designing programs, targeting resources, and devising administrative mechanisms to provide services to meet specific needs.
  • “Block grantees” have substantial discretion in decisions relating to supported activities, with relatively minimal federal oversight or administrative restrictions. After the federal government has given funds to the block grantee, the grantee takes on primary responsibility for setting up procedures for the disbursement of funds to eligible entities for the purpose of implementing the federal program goals.
  • Typically regarded as mandatory grants to states, some block grants consist of what had been several smaller, specific-purpose grants consolidated into one “block.” Block grants usually provide greater flexibility of use of the provided funds and place fewer federal administrative restrictions on the recipients.

Open-Ended Grants

  • An open-ended grant is a type of mandatory grant where the legislation authorizes appropriation of funds sufficient to pay a set portion of the recipient’s (normally state’s) total cost without an upper limit, hence “open-ended.” Open-ended grants are sometimes referred to as “open-ended entitlement grants,” due to the entitlement of individual citizens to funds under the awards.

Close-Ended Grants:

  • A close-ended grant is a type of mandatory grant where the award constitutes an upper limit on the amount of funds the federal government may pay for the activities, hence “close-ended.”

Discretionary Grants

A discretionary grant is awarded on the basis of a competitive process. The federal government uses discretionary grants to fund program activities when it is appropriate and essential for the government to identify the best possible projects to achieve particular program objectives.

Discretionary grants are awards that permit the Federal government, according to specific legislation, to exercise judgment (discretion) in selecting the project or proposal to be supported and selecting the recipient organization through a competitive process. The award amount is determined either through a negotiation agreement between the recipient and the grants office/program office or on a formula basis. Discretionary grants are also referred to as “project” grants. Additionally, the funds for these programs are appropriated annually at the discretion of the Congress. Discretionary rants and cooperative agreements are used to support demonstration, research, training, service, construction, and conference projects.

Features of grants

There are a number of features common to all federal grant programs.

First, grantees are not by virtue of receiving grants arms, agents, or agencies of the United States. They are independent entities. Grantee operations are subject to federal legal and regulatory requirements only;

  • as specified in the terms and conditions of the grant award, and
  • to the extent that they would be were no federal funds involved.

Grantees are not bound by the same rules applicable to the Federal government in matters of employment, contracting, and administration. By the same token, grantees do not enjoy many of the protections that Federal agencies enjoy.

Second, all Federal grant programs have been subject to a common foundation of governing rules found primarily in “circulars” promulgated by the White House Office of Management and Budget (OMB). At the end of 2013, the OMB began to change the Circular framework, moving from a system with different circulars and different grants administration requirements for different types of entities to a streamlined, one-size-fits-all Supercircular (also called the “Omnicircular”) that sets forth grants administration systems, Cost Principles, and Audit Requirements.

 Third, there is a common foundation of legal principles announced in federal judicial decisions over the past few decades. For example, courts have held that grant conditions and obligations must be explicit and cannot attach “by implication,” that changes in substantive requirements for a federal grant program generally cannot attach retrospectively and that a grantor agency may not impose “unconstitutional conditions” on a grantee’s access to federal funds.

 Key Actors in the Federal Grants

Key actors in the Federal Grants world include the Grants Officer, the Program Officer, the Cognizant Agency, the Office of Inspector General (OIG), and the Government Accountability Office (GAO).

Grants Officer

The individual designated to serve as the agency official responsible for the business management aspects of a particular grant(s) or cooperative agreement(s). The Grants Officer serves as the counterpart to the business officer of the recipient organization. In this capacity, the Grants Officer is responsible for all business management matters associated with the review, negotiation, award, and administration of grants and interprets grants administration policies and provisions. He/she works closely with the program or project officer who is responsible for the scientific, technical, and programmatic aspects of the grant.

Program Officer

Sometimes referred to as the Project Official, the Program Officer is the individual designated as the official responsible for the programmatic, scientific, and/or technical aspects of agency programs. He/she serves as the counterpart to the agency’s Grants Officer who is responsible for all business management aspects of a grant.

Cognizant Agency and the Division of Cost Allocation Officer

The individual responsible for negotiating and approving rate(s) that should be used to determine amounts of indirect, fringe benefit and other types of costs to be included on a federal award. The approval is formalized by issuance of a Rate Agreement signed by the cognizant agency and an authorized representative of the organization.

Office of Inspector General

The OIG is an independent office that keeps the agency head and the Congress fully and currently informed about problems and deficiencies relating to the administration of agency programs and operations and the necessity for and progress of corrective action.  The OIG conducts and supervises audits and investigations relating to the programs and operations of the federal agency it serves. The OIG also provides leadership and coordination and recommends policies for activities designed to (a) promote economy, efficiency, and effectiveness in the administration of the agency, and (b) to prevent and detect fraud and abuse in agency programs and operations.

The OIGs conduct audits and investigations of not only grantees, but also of grantor agencies. OIG auditors make findings and recommendations, but do not implement program recommendations. Auditors are trained to identify fraud and will refer possible fraud situations to the Office of Investigations.

Government Accountability Office and Comptroller General

The Comptroller General heads the GAO and is appointed by the President with the advice and consent of the Senate for a 15-year term. The GAO evaluates federal programs, audits federal expenditures, and issues legal opinions on all matters related to the receipt, disbursement, and use of public money; analyzes executive agency expenditures to help Congress determine whether money is expended economically and efficiently; and issues Government Auditing Standards also known as the “Yellow Book.”

Grants are one of the most common revenue sources for nonprofit organizations. Charities use grants to fund many types of projects and initiatives as part of an overall development strategy including individual, corporate and annual donations. Grant funding can be categorized by two different primary criteria: source and purpose.

Grant Source

Charitable grants can be categorized by the source of the grant funding. The three principal sources of grants are traditional foundations, family foundations and businesses. Traditional foundations are grant-making organizations that make awards according to detailed criteria and a standardized application process. Family foundations are generally more liberal in their grant-making criteria and often take the interests and relationships of the founding family into consideration when making awards. Businesses make grants through corporate foundations that often consider the goals of the supporting business when making grant awards.

 Grant Purpose

Grant awards may be segmented by the purpose for which the grant is awarded. The most common grant purpose types are project support and operating support. Project support grants are awarded to help a nonprofit organization carry out a specific project’s activities. Such projects generally have mutually agreed upon outcomes and deadlines. Operating support grants are less common and are awarded to fund a nonprofit’s general overhead and administrative costs. Often, this type of grant is awarded to a new nonprofit or one that is expanding its programs and offerings.

 In-Kind Grants

Some foundations offer in-kind grants to nonprofit organizations. Through these grants, the foundation offers a nonprofit goods and services to support its mission instead of a monetary gift. Common types of in-kind grants include back office services, where a foundation provides accounting, human resources, legal and other types of administrative support free of charge to small charitable organizations, and marketing grants, where a newspaper, television station or website designs and runs advertisements for a nonprofit at no cost to the organization.

Donor-Directed Grants

Donor-directed foundation grants are a cross between foundation grants and individual gifts. Foundations operating under this model hold funds donated by families and wealthy individuals, who then direct where some or all of that money should be granted. While the funds granted come from the donor-directed foundation, the gift is directed by an individual or group of individuals. For that reason, nonprofits normally cultivate these grants under individual giving.

Kinds of Grants:

Federal Grants

  • Federal Pell Grantsare available to undergraduate financial aid applicants who have not yet received a baccalaureate degree.
  • Supplemental Education Opportunity Grants(SEOG) are need-based grants provided to low-income undergraduate students to promote access to postsecondary education. Priority is given to students with exceptional financial need.

Cal Grants

Cal Grants are offered by the State of California to residents of California who are U.S. citizens or qualify under the California Dream Act. The California Student Aid Commission (CSAC) determines eligibility for grants, which are based on academic achievement and financial need. Students must meet GPA requirements and family income and asset requirements. If the student is eligible for a Cal Grant and a different institution is listed on their award notification, the student must submit a Grant Record Change form (G-10). If the student is eligible for a Cal Grant at UC Merced, the award will transfer and the student will receive an updated communication from CSAC.

  • Cal Grant Ais available to entering and continuing students who are enrolled at least half time and is awarded based on financial need and GPA. You must be a California resident, undergraduate student with a minimum GPA of 3.0, and meet the family income and asset requirements of the program. Awards cover system wide fees.
  • Cal Grant Bis initially awarded to low-income students who are enrolled at least half time. First-year awards are usually limited to non-fee costs: subsistence stipends for books, supplies and living expenses. A Cal Grant B may also cover system wide fees when renewed. You must be a California resident, undergraduate student with a minimum GPA of 2.0, and meet the family income, asset and disadvantaged background requirements of the program.

Bobcat Grants

Bobcat Grants are available for eligible undergraduate students with funding provided by the Regents of the University of California and the State of California. Award amounts are determined based on a student’s Cost of Attendance, family income and financial need and are impacted by the amount of a student’s federal and state grant eligibility, waivers, scholarships, and expected parent contribution.  To qualify, students must meet the Financial Aid Application priority deadline of March 2 prior to the award year and all relevant document deadlines. Students must also otherwise qualify for student financial aid

What is a ‘Government Grant’

A government grant is a financial award given by the federal, state or local government to an eligible grantee. Government grants are not expected to be repaid and do not include technical assistance or other financial assistance, such as a loan or loan guarantee, an interest rate subsidy, direct appropriation, or revenue sharing. Over 26 federal agencies administer more than 1,000 grant programs annually to provide funding for the arts, educational institutions, agricultural projects and more.

BREAKING DOWN ‘Government Grant’

Government grants help fund ideas and projects providing public services and stimulating the economy. Grants support critical recovery initiatives, innovative research and other programs listed in the Catalog of Federal Domestic Assistance (CFDA).

Because government grants are funded by tax dollars, they require stringent compliance and reporting measures for ensuring the money is well-spent. Grants from the federal government are authorized and appropriated through bills passed by Congress and signed by the president. Grant authority varies among agencies. For example, the Small Business Administration (SBA) may distribute grants to nonprofit organizations in many of its counseling and training programs. is a free online source for researching and applying for over 1,000 federal grant programs with access to approximately $500 billion in awards annually. A grant proposal writer may register by completing a standard business profile on behalf of an individual, a nonprofit organization, a research institution or a similar entity. The writer also submits an authorized organization representative (AOR) application, supplies an e-business point of contact (POC) and completes a detailed application. The writer then has access to finding federal grant opportunities, applying for and tracking grants, and receiving grant email alerts, webinar schedules and tips from grantors.

Applying for a Government Grant

Government grants are extremely competitive. The paperwork is complex, and applicants must describe how being awarded money will benefit the community. Crafting a convincing proposal is so challenging that some freelance writers specialize in writing grant proposals.

Being Awarded a Government Grant

Receiving a government grant is a sign an individual or nonprofit organization has a significant, positive impact on the community. Other grantors view this as a sign they should provide grants for the project as well. When a nonprofit organization receives a government grant, the government is more likely to listen to views of the people involved with the organization and potentially help those people network with others in the same field or help with related issues.

After receiving a check for a government grant, detailed reports accounting for how the money is spent during the grant period and what accomplishments or failures occur must be documented and submitted according to various deadlines.

 Pros and cons of grants

Applying for and receiving a grant has three main advantages:

  1. You will not have to pay back the grant money or pay interest on it. In some cases, students who do not attend the minimum number of lessons or abandon a course might have to pay the money back.
  2. You will not lose any control over your company or organization.
  3. In most cases your credit history will not affect your chances of being considered and/or receiving the funds.

The disadvantages to receiving a grant include:

  1. You need to find a grant that suits your specific needs – this might not be easy.
  2. Many people, companies and organisations apply for grants – there is a lot of competition.
  3. Grants do not usually cover the whole cost of a project – you will need to use your own money to fund some of it.
  4. Grants are not generally awarded for projects that have already begun, but just for proposed ones.
  5. Applying for a grant can be time-consuming.


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