What is a government grant and how to get one

Nonprofits, small businesses, and individuals often rely on government grants to further their beneficial and impactful missions. Without these grants, they might struggle to achieve their goals or provide essential services due to limited financial resources.

What is a government grant? Unlike loans, grants offer financial support without repayment burdens, making them an attractive option for those who want to bring positive change to their communities. Being awarded a grant eliminates financial barriers, helping drive progress, access, and innovation throughout various sectors. 

Government grants are especially crucial for nonprofits because they’re commonly reserved for supporting public service goals. These grants allow these organizations to amplify their impacts on education, health, and community development. Similarly, small businesses can leverage government funding programs to scale their operations, while individuals may use them to pursue educational or research opportunities.

Understanding how to apply for and secure a grant can unlock transformative possibilities. It can enable organizations and individuals to bring their visions to life without being constrained by a lack of funds. 

What is a government grant?

A government grant is a non-repayable financial award provided by federal, state, or local governments to support initiatives that benefit communities, drive advancements, or address societal needs. 

It’s important to distinguish public sector grants from other funding options like loans or private grants. While a loan from a lender must be repaid, government grants don’t require repayment; private grants don’t require repayment but are funded by corporations or private foundations, not the government.

Examples of government grants include:

• Federal research funding
• State education grants
• Local community development programs

These grants enable nonprofits, businesses, and individuals to thrive and make an impact. Federal grant programs advance the mission of not-for-profits, which rely on various outside funding sources.

One example might be a nonprofit that aims to develop affordable housing for lower-income groups. Whether securing the land or building supplies, the organization will require considerable financial resources. Grants can help make that happen with minimal ongoing burden.

Some of the benefits of government grants include:

• Funding with no expectation of repayment
• Positive social change and community support
• Enhanced credibility for the recipients
• Increased business development, innovation, and growth

Types of government grants

Government grant programs take various forms, each serving a different purpose and recipient. They are offered at the federal, state, and local levels to fund projects, services, and initiatives that benefit the public. 

Below are the main types of government grants:

• Project grants: These are awarded for specific projects or initiatives and often come with detailed guidelines and requirements. They are typically competitive and only given to those organizations or individuals working on targeted efforts like research, community development, or environmental projects.
• Formula grants: This type of government funding is distributed based on a set formula determined by legislation. The formula typically considers factors like population size or poverty rates to allocate the funding. Grant programs for education and healthcare are often determined by formulas and awarded to states or local governments.
• Categorical grants: These are particular grants designed for specific purposes, often accompanied by strict requirements for using the funds. Categorical grants are generally given to state and local governments or respective organizations to support designated programs, such as transportation or education.
• Block grants: A block grant allows for more flexibility in how the funds can be used. These grants are awarded for broad purposes, like health or community development, enabling the recipients to determine their specific needs and allocate the funds accordingly. Grantees typically use block grants for large-scale programs with varying local needs. 

Purpose of government grants

Government grants support different sectors and initiatives. Depending on the recipient's needs, grants can be directed toward research, education, infrastructure, or economic development. 

Below are some of the primary areas that public sector grants cover:

• Research support: Government grants often fund scientific, medical, and technological research. They help universities, research institutions, and individuals achieve groundbreaking discoveries—ranging from medical advancements to environmental innovations. These grants often focus on areas with high societal impact, including disease prevention and climate change.
• Infrastructure projects: The government frequently funds public works through grants, including transportation, utilities, and public buildings. These grants are typically given to state and local governments to improve the infrastructure that supports communities, driving growth and improving quality of life.
• Educational support: Educational grants help schools, colleges, and nonprofits provide core services, strengthen programs, and improve academic outcomes. These grant funding opportunities often support initiatives related to STEM programs, scholarships, and teacher training, guaranteeing wider access to quality education.
• Economic development: This type of government financial assistance promotes growth in local economies by supporting small businesses, job creation, and community revitalization. Governments offer economic development grants to help stimulate innovation, create new markets, and boost regional and national economies. 

How government grants work

The overview below will benefit organizations and individuals preparing to write grants for the first time. Understanding the nuances and complexities of government grants before starting the process is critical to securing funds and furthering the organizational mission.  

Eligibility criteria 

Eligibility for government grants varies based on the type of grant and recipient. Typically, nonprofits, businesses, and individuals can apply for government grants, but eligibility is influenced by factors like:

• Organization type
• Project alignment with government priorities
• Geographic location

Interested parties should review the grant’s guidelines to determine if they meet the eligibility criteria for that specific program.

It’s commonly assumed that only large organizations will qualify. In reality, small businesses, community groups, and individuals with impactful projects often receive grants. In addition, government funding helps many different industries, including:

• Healthcare
• Education
• Environmental conservation
• Technology

Application process

The first step in the government grant application process is to research various programs to find one that matches the organization’s or individual’s needs. Next, applicants should carefully read the guidelines to confirm their eligibility before proceeding with the application process.

A well-crafted grant proposal is key. It should be clear, align with the grant’s objectives, and emphasize the project’s potential impact. Additionally, it’s imperative that the grant-seeker strictly adhere to deadlines and other submission instructions; parties that don’t prioritize grant compliance will likely find themselves disqualified.

Organizations can obtain grant writing tips, help, and more information from the following sources:

• Professional grant writers
• Nonprofit consultants
• Government grant resources
• Workshops by organizations like the Grant Professionals Association (GPA)
• Books, online courses, and community networks

Conducting thorough research, paying attention to detail, and presenting a compelling case can significantly increase applicants' chances of securing funding.

Grant approval and award

Next is the grant approval and award process, which begins with a government agency thoroughly reviewing submitted applications to ensure they meet eligibility requirements and match the grant’s objectives. Review panels evaluate the proposals based on impact, feasibility, and budget criteria. 

Approved applicants are notified (generally within a few weeks to several months) and sent formal documentation outlining the funding terms and conditions. Once accepted, the government disburses the funds to the recipient according to the agreed-upon schedule. 

Reporting and compliance requirements

The government requires recipients to abide by strict reporting and compliance requirements to ensure the appropriate usage of funds. Grantees who manage nonprofit grants and community grants, among others, must provide detailed reports on project progress, expenses, and outcomes, usually according to the federal or state government’s fiscal year. 

Best practices for managing awarded grant funds include:

• Maintaining accurate records
• Using grant management software
• Adhering closely to deadlines

Recipients should also strive to communicate clearly and keep their information well-organized to effectively comply with all requirements. 

Challenges of government grants

Although government grants offer valuable funding opportunities, they also come with unique challenges that applicants and recipients must navigate, such as:

• A complex application process: The federal government and other agencies often require detailed, lengthy, and time-consuming applications that many can find overwhelming.
• High competition and limited funding pools: Limited resources mean nonprofits and businesses face stiff competition for available grants.
• Legal and compliance considerations: Grant management for nonprofits and other entities involves complying with complex legal rules, including expense and outcomes reporting.
• Strict reporting requirements: Granting organizations, particularly at the federal level, enforce rigid guidelines on tracking and reporting expenses, outcomes, and the use of grant-funded assets, often requiring meticulous record-keeping.

Manage your government grants with Foundant

Nonprofits, small businesses, and ambitious individuals often rely on government funding to help them fulfill their core missions. However, securing and later managing government grants—especially multiple ones—can be challenging, given the complex rules, requirements, and deadlines associated with them.

Fortunately, there’s good news—Foundant makes it easier than ever for nonprofits and others to navigate every step of the process. From tracking grant opportunities and organizing applications to generating accurate reporting, the company’s cloud-based grant management software meets all the unique needs of grantseekers in today’s fast-moving digital world.

By streamlining the grant management process, Foundant empowers nonprofits so their teams save time, stay compliant, and remain focused on their mission. With intuitive tools and dedicated customer support, Foundant helps organizations and individuals maximize their funding opportunities and achieve a greater impact. 

Ready to simplify your grant management journey? Explore how Foundant can help your nonprofit with grant management today.