DEFINITION of 'Grant-in-Aid'

A grant-in-aid is the 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.

BREAKING DOWN 'Grant-in-Aid'

Grants-in-aid can be awarded to university faculty members 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.

Types of Grants-in-Aid

Grants-in-aid can take on a variety of forms. For instance, a university might make a grant-in-aid to support a program that lowers the tuition rate to make it more affordable for military veterans and their spouses. A university might also make this type of funding available to support conferences that have a particular subject matter or area of study at its core.

In the case of research efforts that receive a grant-in-aid, it may be stipulated that the funding is not intended to cover all expenses for the project. Furthermore, the grant may be given with the intent of encouraging and attracting other, more substantial funding to the project. This makes the grant-in-aid a sort of seed funding that lends some credibility to the endeavor. Entities that offer support through grants-in-aid might divide the resources up for multiple awards across one or more periods of time each year, and further divided among a set number of potential recipients. This can make the pursuit of such grant funding a competitive effort among the applicants.

Foundations and professional associations might offer grants-in-aid as a form of financial assistance to graduate students who are developing theses focused on specific topics that are relevant to the organization.

Parts of a state government, such as its legislative body, might procure and earmark grants-in-aid to support nonprofit organizations that provide aid to its constituents. The money, however, is often stipulated as a supplemental rather than primary source of funding.

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