What is a Grant?

There is a multitude of misinformation and misunderstanding about federal grants on the internet. It is extremely important for you to fully understand what federal grants are before you spend valuable time searching for grant sources or looking for someone to write a grant application.

In the United States, a federal grant is a monetary award of financial assistance given to a recipient to carry out some work for a charitable public purpose or for the public good. The grantee has certain requirements and obligations, that if not fulfilled as expected, will lead to possible legal repercussions. Federal grants are awarded to state and county governments or to nonprofit agencies who have been designated as 501C3 tax-exempt organizations under the Internal Revenue Service tax code.

If this all sounds complicated, it usually is. But to make it easier for you, federal grants are not given to individuals or small businesses. There may be other avenues you can pursue when seeking federal funding or loans, such as state development agencies, but you will not qualify for a federal grant. Even if you have the best of intentions to solve a social or economic problem in your neighborhood, you have to form a 501C3 nonprofit corporation before you can apply for a federal grant.

Types of federal grants include project grants awarded for medical or other types of research, categorical grants for narrowly-defined purposes where the recipient usually has to come up with funds to match the federal money given, block grants in which the receiving agency has a little more allowance in how to use the money than with a categorical grant, and earmark grants which are congressional appropriations not competitively bid. In recent years, earmark grants have come under public criticism because of instances in which members of Congress have pushed through monetary awards in their home districts for projects which favored the personal interests of individuals or specific agencies.

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