What Is a Government Grant?

A government grant is a financial award given by the federal, state, or local government authority for a beneficial project of some sort. It is effectively a gift: It does not include technical assistance or other financial assistance, such as a loan or loan guarantee, an interest rate subsidy, direct appropriation, or revenue sharing. The grantee is not expected to repay the money.

Over 26 federal agencies administer more than 1,000 grant programs annually to provide funding for the arts, the sciences, and educational institutions. Government grants help fund ideas and projects providing public services and stimulating the economy. For example, an economics program may be designed to strengthen empirical and theoretical economic analysis, as well as the methods for rigorous research on economic behavior. Grants also support critical recovery initiatives, agricultural projects, and innovative research in all sorts of fields.

How a Government Grant Works

Government grants aren't just bestowed: They have to be applied for. Getting a government grant is an extremely competitive process. The paperwork is complex, and applicants must describe how the awarded funds will benefit the local community or the public at large. Crafting a convincing proposal is so challenging that applicants often hire professional help. Some freelance writers specialize in writing grant proposals.

The Catalog of Federal Domestic Assistance (CFDA), published annually, offers a list of available grants and grant programs, and the agencies sponsoring them. 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.

Key Takeaways

  • A government grant is a financial award given by the federal, state or local government to fund some type of beneficial project.
  • Because government grants are funded by tax dollars, they include stringent compliance and reporting measures to ensure the money is well-spent.
  • Receiving a government grant is highly prestigious and often brings an individual or entity to the attention of other donors or sources of revenue.
  • The Catalog of Federal Domestic Assistance (CFDA) and the website grants.gov list currently available grants.

Receiving a Government Grant

Government grants have no hidden costs or fees: They are outright gifts, not loans. However, because government grants are funded by tax dollars, they include stringent compliance and reporting measures to ensure the money is well-spent. After receiving a check, the grantee must submit detailed reports accounting for how the money is disbursed; if the funds are received in stages, these reports must continue during the grant period. Any accomplishments or failures also must be documented and submitted to the sponsoring agency according to various deadlines.

Receiving a government grant is a prestigious event, a sign an individual or nonprofit organization has a significant, positive impact on a community or in a field of study or industrial sector. Often it puts a project on the donor map, attracting other providers of funding, both nonprofit and profit. It also might lend the grantee some influence with, or attention from, the sponsoring agency.

Applying for a Government Grant

Grants.gov is a free online source for researching and applying for more than 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.

Government grants come with no strings, and that includes the application process; so, if you are asked to submit a fee to apply or to learn more about a grant, there’s a good chance it is a scam.

Example of a Government Grant

For example, Grants.gov lists a grant whose application period ran from Feb. 15 to June 17, 2019. Entitled "FY 2019 Cultural Programming Support," it was an invitation from the U.S. Embassy’s Public Affairs Section in Moscow for applications to identify and select American artists and performers to bring to Russia for short-term programs in the fields of music, dance, theater and film/television acting, and culinary arts. Eligible applicants include nonprofits, small businesses, and public or private universities; grantees can receive up to $650,000 to produce performances in Russia. The goals of the grant include strengthening "people-to-people ties" between the U.S. and Russia and "showcasing American values by presenting the full range of American creativity and innovation."