If you are undertaking a project that will benefit the public and help stimulate the economy, you can apply for a government grant. A government grant is a financial reward by the federal, state, or local government. It could be for supporting research, infrastructure building, or any activity that will aid society. This article briefly explains various aspects of government grants: what they are, how they work, their types, and the eligibility criteria.

What are government grants?
A government grant is an amount gifted by the government to an individual, institution, or business working on a project that will help the community. It could be money for an agricultural project, public services, research in the healthcare sector, or anything that could benefit the people, as mentioned under the Catalog of Federal Domestic Assistance (CFDA). You can find the exhaustive list on the Grants.gov website. It, however, does not include any form of technical assistance and comes with stringent eligibility criteria.

The best thing about government grants is that applicants do not have to repay the money like a traditional loan. Neither do they need to pay interest or fees. However, the government monitors the project’s progress to ensure the applicant fulfills their stated purpose, which will serve a larger good to the people and the nation. In rare cases, the funds could be approved on a cost-sharing basis.

What are the types of government grants?
There are four main types of government grants:

Block grants : Block grants are typically awarded to state or territory governments by the federal government. Some are also given directly to local governments on a formula basis, such as the Community Development Block Grant (CDBG) Entitlement Program. Block grants offer autonomy and flexibility to states to decide how to run a project or program. They may allocate the money to local organizations to provide services in their region as long as the defined purpose is met.

Discretionary grants : Discretionary grants are given by a federal agency to an individual based on merit. One needs to meet the eligibility criteria and apply on the official government website. The applications are sent for review, assessment, and evaluation, making it highly competitive.

Mandatory grants : Mandatory grants are given by federal agencies to all eligible applicants, especially government entities, if they fulfill the criteria defined by law. Mandatory grants differ from discretionary grants in that the latter is sanctioned on a competitive basis.

Formula grants : A type of mandatory grant, formula grants are awarded based on the statistical requirement for certain types of work; for instance, Medicaid. The criteria and amount to be disbursed are defined by authorizing legislations.

Besides federal grants, one may come across cooperative agreements when looking for funding. In cooperative agreements, the federal agency that awards the money is also partly involved in the project’s implementation.

What does the application process look like?
Government grants are not awarded without an application. It is a tedious and competitive process involving extensive paperwork describing how the funds will benefit society. Thankfully, professional help is available if you find it challenging. Dedicated agencies and writers specialize in drafting the proposal. If the application is accepted, federal government grants are authorized and appropriated through law and signed by the president.

There is no hidden cost or fees to get a government grant. But since they are funded by tax, government grants have strict compliance and measures to ensure the money is being well spent. After receiving a grant, you must submit detailed accounts on how the money is being used. Accomplishments or failures must be documented and submitted to the sponsoring agency, and deadlines must be kept.

Who is eligible for government grants?
Knowing if you are eligible for a government grant before applying can save time and resources. To determine eligibility, you or your organization must meet the criteria mentioned on Grants.gov. Government organizations eligible for grants include state governments, county governments, city or township governments, and special district governments. Independent school districts, certain types of higher education institutions, and public housing authorities are also eligible. Further, profit and non-profit organizations and small businesses meeting the size standards established by the Small Business Administration (SBA) may apply too.

As mentioned, even individuals may receive grants if they qualify and are carrying out a project independently. However, authorizing legislation and agency policies will determine the eligibility for foreign applications. So, before applying, it is advisable to browse the IRS website and read the latest guidelines on Aliens and International Taxpayers.