How a Government Grant Works, How to Apply, With an Example

What Is a Government Grant?

A government grant is a financial award given by a federal, state, or local government authority for a beneficial project. It is effectively a transfer payment. A grant does not include technical assistance or other financial assistance, such as a loan or loan guarantee, an interest rate subsidy, direct appropriation, or revenue sharing. The grantee is not expected to repay the money but is expected to use the funds from the grant for their stated purpose, which typically serves some larger good.

In certain cases, there may also be revenue-sharing agreements with the government—for instance, in the case of a discovery that leads to a profit-generating patent.

Twenty-six federal agencies administer more than 1,000 grant programs annually to provide funding for the arts, the sciences, and educational institutions. Government grants help fund ideas and projects providing public services and stimulating the economy. For example, an economics program may be designed to strengthen empirical and theoretical economic analysis, as well as the methods for rigorous research on economic behavior.

Grants may also support critical recovery initiatives, agricultural projects, and innovative research in all sorts of fields.

How a Government Grant Works

Government grants aren't just bestowed: they must be applied for. Getting a government grant is an extremely competitive process. The paperwork is complex and applicants must describe how the awarded funds will benefit the local community or the public at large. Crafting a convincing proposal is so challenging that applicants often hire professional help. Some freelance writers specialize in writing grant proposals.

Grants from the federal government are authorized and appropriated through bills passed by Congress and signed by the president. Grant authority varies among agencies. For example, the Small Business Administration (SBA) may distribute grants to nonprofit organizations in many of its counseling and training programs.

Receiving a Government Grant

Government grants have no hidden costs or fees: they are outright gifts, not loans. However, because government grants are funded by tax dollars, they include stringent compliance and reporting measures to ensure the money is well-spent.

After receiving a check, the grantee must submit detailed reports accounting for how the money is disbursed. If the funds are received in stages, these reports must continue during the grant period. Any accomplishments or failures also must be documented and submitted to the sponsoring agency according to various deadlines.

Receiving a government grant is a prestigious event, a sign an individual or nonprofit organization has a significant, positive impact on a community or in a field of study or industrial sector. Often, it puts a project on the donor map, attracting other providers of funding, both nonprofit and profit. It also might lend the grantee some influence with, or attention from, the sponsoring agency.

Applying for a Government Grant

Grants.gov is a free online source for researching and applying for more than 1,000 federal grant programs with access to approximately $500 billion in awards annually. A grant proposal writer may register by completing a standard business profile on behalf of an individual, a nonprofit organization, a research institution, or a similar entity.

The writer also submits an authorized organization representative application, supplies an e-business point of contact, and completes a detailed application. The writer then has access to finding federal grant opportunities, applying for and tracking grants, and receiving grant email alerts, webinar schedules, and tips from grantors.

Example of a Government Grant

The performing arts is one popular category for many government agencies awarding grants. For example, in early 2019 the U.S. Embassy’s Public Affairs Section in Moscow sought grant applications to identify and select American artists and performers to bring to Russia for short-term programs in the fields of music, dance, theater, film and television acting, and culinary arts.

Eligible applicants could include nonprofits, small businesses, and public or private universities; grantees could receive up to $650,000 to produce performances in Russia. The goals of the grant included strengthening "people-to-people ties" between the U.S. and Russia and "showcasing American values by presenting the full range of American creativity and innovation."