DEFINITION of 'Grant-In-Aid'

A transfer of money from the federal government to a state government, local government or individual person for the purposes of funding a specific project or program. The federal government gets this money from income tax revenues. Grant money is not a loan, and does not have to be repaid, but it does have to be spent according to the federal government's guidelines for that particular grant.


Grant-in-aid can be awarded to a university faculty member to pursue a particular line of research, but there will be restrictions, which will vary by grant, on how the money can be used. For example, a permitted use of the funds might be to pay undergraduate students to assist with the research; a non-permitted use might be the payment of university utility bills.

The recipient will also have to meet certain requirements to qualify for the aid. An individual recipient might be required to meet certain citizenship and/or residency requirements, for example.