A Definitive Guide to Government Grants Everything you need to know in order to get a government grant.

By Geoffrey Michael

Opinions expressed by Entrepreneur contributors are their own.

What is a Grant?
The U. S. government has been issuing grants for more than 50 years. A grant is a sum of money that never has to be paid back. Grants are not considered benefits or entitlements and are typically awarded to organizations whose goal is to support a specific public purpose. Such grants provide a mechanism for the government to provide investments in selected areas of the economy, including improvements in the education system and targeted development of public facilities and infrastructure. Grants may not be used as a funding source for the purchase of property for the government's benefit.

Grant funding is appropriated annually by Congress, and the programs are listed in the Catalog of Domestic Federal Assistance and the Federal Register. Each grant must include information on sponsoring government department, program title, total budget, application deadline, administrative contact and program summary. Grants are administered by several cabinet-level agencies, including the departments of Housing and Urban Development, Health and Human Services, Education, Transportation and Homeland Security.

Who can qualify?
Most grants are awarded to government organizations at the state and local level, nonprofit organizations and academia. Both public and private educational providers are eligible, as are independent school systems and research institutions. It's difficult, though not impossible, for an individual citizen to secure a government grant. The chances of success are greater if you have a small business engaged in activities that benefit the general public, and if your services fill a void not being filled in some other way. Nonprofits seeking funding to directly advance important government goals have an even greater chance of receiving grants.

Grants are also used as a method for funding research and development of technology-based products and services for the federal government. If you can't qualify for a grant, the Small Business Administration is a possible source of financial assistance to business owners looking to create or expand their businesses. These grants carry eligibility criteria that may specifically exclude certain organizations in order to target the funding approved by Congress. Contrary to popular rumor and questionable advertising, grants are not awarded for personal financial assistance to those who have fallen on hard times.

How do you apply?
While it's tempting to think of grants as "free money," securing a grant is a complex process that requires significant time and expertise. Grants also require a commitment to fulfill certain obligations in exchange for the money, and failure to do so on schedule may result in legal penalties. This quid pro quo arrangement is designed to ensure that the government gets a substantial return on its investment.

The place to start is to review the CDFA, which provides an abundance of information on how to apply and how the money can be used. It explains the application review and award process, as well as the reporting and performance requirements associated with different programs. You can also initiate direct contact with the government department that sponsors the specific type of grant you are interested in securing. These agencies all have websites for quick access to such information.

Types of grants
Most grants are used to promote the public good directly, either immediately or over the long term. This includes retraining programs to aid those who lost their jobs, local street improvement projects and programs to attract business development to depressed sections of a city or town.

Funding is available in a variety of categories that include the following: science and technology, energy, transportation, health, agriculture, food and nutrition, environment, natural resources, housing, regional and community development, business and commerce, social services, education, legal services, cultural affairs, employment and training, consumer protection, and disaster prevention and relief.

Advantages and disadvantages of grants
Since a grant is not a loan that requires repayment, good credit is not needed. It is a form of gift that imposes no interest or tax implications on the recipient. If large sums of money are needed for a specific project, grants may be one of few available sources of financing, especially during challenging economic times. For organizations trying to raise money from other sources, an approved grant can provide an enhanced level of exposure and credibility that will aid their private fundraising efforts. There is no limit to the number of grants you can apply for in a given year. However, in some cases you may be required to fund the project from your own resources before the government provides reimbursement for your expenses.

The preparation of a grant request is a complex undertaking often left to professional proposal writers with relevant training and experience. The completion of a successful proposal involves planning, research and the ability to navigate through a maze of detailed requirements and specifications. While the money may be "free," grants come with strings attached that obligate the recipient to perform in accordance with strict spending and accounting rules and regulations. Additionally, grants are subject to comprehensive government oversight and audits conducted at least once per year. All grants require the presentation of a business plan that includes a budget, scheduled milestones and project goals that must be completed within the established parameters. It's common for those who receive grants to hire an accountant or business professional to assist with preparation of the financial reports.

Why grants may not be approved
There's no shortage of promotional hype suggesting that grant money is easily obtained by anyone who wants it. The fact is that competition for a small slice of the budget pie is intense. Furthermore, most individuals don't have the expertise or resources necessary to produce a bulletproof application that meets all the selection criteria. If your application doesn't stand out from the others, it may get buried under the avalanche of submissions. The current economic climate will also have an effect on the amount of funding available and will make the process even more competitive.

Beware of ads by companies offering to prepare your grant and promise you positive results. If it sounds too good to be true, it probably is. No one can guarantee success, so you should thoroughly investigate such companies before signing a contract for their services. Do your homework and seek the advice of an expert if you are serious about securing a grant award.

Helpful Links
Catalog of Federal Domestic Assistance

Government Grants

Federal Register

Government Benefits

USA.gov Government Benefits, Grants, and Financial Aid

Small Business Administration

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