Grants 101: What Are Federal Grants? |

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Grants 101: What Are Federal Grants?

You have likely heard of federal grants before. However, did you know what they are and why they work and who they are awarded to? Did you know that federal grants come in many shapes and sizes and for many different practical reasons?

What Are Federal Grants?

A federal grant is basically a monetary or economic award made by the US government. They are made from monies available in the general federal revenue. The funds might be in the form of a loan, a percentage of the cost of a project or organization, or a full funding of a project, research, or other endeavor. Although the government alone offers nearly 1,000 different grant programs to qualified companies and organizations, dispersed by 26 grant-specific agencies and divided into 21 separate categories, grants are available from both the government and outside sources including foundations, non-profit charities, and non-profit corporations.

The categories are diverse and serve a certain demand or direction of growth. Individuals or corporations seeking grants must choose the area that best suits their unique needs. Some of these specific needs include the arts, trade and commerce, disaster assistance, housing, the humanities, technology and science, and education.

Who Are They Awarded To?

All awards are separated into two categories when it comes to obtaining funds: direct grants and pass-through grants. First up is the direct grant. A direct grant is one in which the beneficiary receives funds directly from the federal government, with no middleman.

These funds are advantageous since they need no additional red tape. They only need a single application and subsequent agreement with the federal government. After that, the money is awarded and able to be spent as the parties see fit.

The second category of grants is called pass-through. The federal government awards a pass-through grant to the state, which then distributes the cash to local applicants. This essentially means that applicants have fewer grant competitors, only other organizations or potential recipients in their state, and that applicants only need to visit their state capital for in-person clarification, appearances, or any other communications that would benefit from personal contact.

What Are The Specific Guidelines?

But even within those two categories, there are more specific guidelines that determine how to qualify and describe a federal grant.

A Project Grant is a sum of money given by the government to a certain “project” or study topic. Members of the research, education, and technology communities are frequently awarded project funds, providing they qualify and satisfy a few basic criteria. Generally, an applicant must meet certain criteria or requirements prior to applying for a grant (which is specified in detail for the specific grant sought), and project awards usually have a deadline when financing ends. A project award usually lasts three years on average.

A Categorical Grant is a little more particular, and it may only be utilized for specified, stated objectives. Grant recipients are frequently required to “match” the cash granted by the government, or at the very least contribute a percentage of the total cost. Categorical grants are the most frequent type of award, accounting for approximately 90% of all grants issued by the US government.

Of course, there is much more to federal grants than just that but that is a good primer and basic summary of how – and why – federal grants work.