What Are Federal Grants In Aid?

A federal grant is financial aid awarded to fund a specific project or program. Recipients include state, local, and municipal governments, as well as individuals. Federal grants in aid are funded with money from income tax revenues. These grants are not loans; therefore, no repayment is required, but funds must be spent according to the federal government's guidelines for that particular grant.

Key Takeaways

  • A federal grant in aid is federal money granted to a recipient to fund a project or program.
  • Federal grants in aid are not loans and therefore require no repayment.
  • Federal grants can be awarded to university faculty members to pursue a particular line of research.
  • Parts of a state government may procure and earmark grants to support nonprofits that provide aid to its constituents.

Understanding Federal Grants In Aid

A federal grant in aid allows the government to publicly fund a project and still operate independently from the state. The funds come with standards and requirements. Entities that offer grants might divide the resources up across one or more periods annually; furthermore, they might divide the funds among potential recipients. This can make the pursuit of such grant funding a competitive effort among applicants.

$500 billion

The amount the US government awards annually in Federal Assistance Agreements, consisting mostly of grants.

Grants-in-aid can be awarded to university faculty members to pursue a particular line of research; however, there are restrictions on how the money can be used. For example, permitted use of the funds might be to pay undergraduate students to assist with the research, and 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. For example, an individual recipient might be required to meet certain citizenship and/or residency requirements.

Types of Federal Grants

Federal grants can take on a variety of forms and have different requirements. For instance, a university might make a federal 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 federal grant in aid a sort of seed funding that lends some credibility to the endeavor. 

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

Parts of a state government, such as its legislative body, might procure and earmark federal grants 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.