In recent years there has been plenty of misinformation surrounding Federal Grants and how they’re awarded.
On any given day you are likely to see some form of false or misleading advertising that has the sole purpose of luring individuals to websites with the promise of qualifying for Federal Grants to buy homes or start up businesses.
This is not the purpose of a Federal Grant so before you waste valuable time, money and effort looking for “free money,” you should spend some time learning what Federal Grants are, who or what they are intended for and how to go about benefiting from them.
The first thing to learn is that Federal Grants are not often given to individuals or businesses in the private sector. These funds are allocated by the government for specific purposes and they are usually awarded to state and local governments to disburse of in a manner consistent with the type of grant in question.
Some Federal Grants are awarded directly to non-profit or charitable organizations or individuals in research, but these are few and far between.
Grants are most often given to states and municipalities that in turn award them to non-profit organizations and individuals. The purpose of giving federal money is to benefit the general population, not to grow businesses or for the enrichment of individuals.
Types of Federal Grants
Although there are 26 broad categories of Federal Grants, there are only 5 basic types of grants. These include block grants, project grants, formula grants, categorical grants and earmark grants.
Of those, earmark grants have come under fire during recent years because they are too often pushed through Congress by overzealous politicians to benefit some personal political agenda they may have.
- Block Grants – A large grant awarded to state and/or local governments. These are large grants that cover a broad scope and are considered ‘general purpose’ grants.
- Project Grants – Project grants are a special type which is given to fund projects such as research. If it is an individual who is applying for a project grant there are very strict qualifications which must be met before an application will even be considered. Three years is the usual length of a project grant.
- Formula Grants – Formula grants are quite complex. The ‘formula’ is dictated by law and elements of the grant must be quantifiable such as a grant to be used for a proportion of the population above a certain age or below a certain income. The quantity of aid is directly legislated based on the formula legislated.
- Categorical Grants – This particular type of grant is often thought of as a sub-type of formula grants simply because 33% of category grants fall within the broader scope of formula grants. It is interesting to note that approximately 90% of the federal funds allocated to grants are allocated to categorical grants.
- Earmark Grants – Earmark grants are specifically appropriated in Congress and are not awarded competitively. As mentioned, they have become extremely controversial because too many politicians have used them for their own political agendas when working with lobbyists.
In all, there are more than 900 different grants available through 26 different federal agencies. There are 21 categories which fall within the broader scope of the above types of Federal Grants listed above.
Key Points of Information
Since there is so much misinformation and so many misconceptions on what grants are all about, there are some key points you should be aware of. First of all, even though Federal Grants provide wonderful opportunities to do something for the greater good, keep in mind there is no such thing as “free money.” Grants are not intended for individuals or businesses that are looking for investment capital.
US federal grants are generally given based on the "greater-good" and are intended to benefit society as a whole.
Grants, especially Federal Grants, provide funds which are intended to benefit society on the whole or a sub-group of the general population. If you are looking for start-up capital for a company or business endeavor, you should consider a small business loan.
However, another point to keep in mind is that some grants necessitate matching funds. For instance, if you are looking for a million dollar grant you may need to match that amount in order to qualify for the grant.
Also, grants don’t come freely. As the recipient of a grant you have very specific obligations which must be met after receiving the funds. You are expected to follow the stipulations precisely and if you don’t there could be significant ramifications. Not only can you lose your grant but you could also be subject to legal penalties.
The grantor, in this instance, the federal government, will not take misappropriation of funds lightly – once you’ve acquired your grant, make sure you understand the stipulations involved with your agreement.
Applying for Federal Grants
Before applying for Federal Grants it is imperative that you do your homework. Whether you are looking for funding for a government agency or are an individual working on a research project, there may be funds available. Take the time to thoroughly research what grants are available and whether or not you meet the criterion before making an application.
Each Federal Grant will detail specific requirements which must be met in order to qualify and if you don’t meet them, there is no reason to waste your time applying.
Even so, there are other grants available which may better suit your needs. Federal Grants follow very specific guidelines which must be adhered to before, during and after receiving funds.
When searching for Federal Grants, the best place to find all the information you need on the government grant portal. This information is about as complete as you will find and you will not be given any false hopes as you commonly find in all those ‘free money’ advertisements.
Don’t be discouraged if you have a legitimate reason for needing money to fund your project – the key is to be persistent because there are a number of grants and money is available. You just need to know where to look.
By: Bradley Barks
About Brad
Brad is our lead researcher and editor - he enjoys business, meditation, being active and always learning - his goal is to successfully help you research, find, secure, and enjoy grants and scholarships.
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