Grant

Grant
A grant is a type of financial aid commonly provided by governments and philanthropic foundations. Unlike a loan, you don’t have to pay it back.

What is a Grant?

A grant is money given to a person, business, government, or other organization for a specific purpose. It does not need to be repaid.

The U.S. federal government is one of the largest grant-giving institutions in the world. To receive a grant, you usually need to submit an application that details how the money will be used and why you believe you deserve to receive it. Grants can be used for a number of different purposes, including student aid.

Non-government grants are offered through other institutions such as corporations and foundations. Unlike government grants, private grants can be made for things that concern only the institution making them. Educational institutions often offer tuition grants, or scholarships, to draw in promising students or athletes.1

What are the different types of Grants?

There are several different types of grants. Each grant is awarded and implemented differently:

  • Block Grant: This refers to grant programs that provide federal assistance for broadly defined functions, such as community development or social services.
  • Discretionary Grant: A federal agency selects the grant recipient based on merit and eligibility through review, which will vary for each program and federal agency.
  • Mandatory Grant: Awarded to each eligible applicant, the mandatory grant is based on the conditions defined in the authorizing statute.
  • Formula Grant: This is a type of mandatory grant that is awarded based on statistical criteria for specific types of work.2

The Catalog of Federal Domestic Assistance lists the top five issuing agencies for grants:

  1. Department of Health and Human Services – 39 percent.
  2. Department of the Interior – 22 percent.
  3. Department of Agriculture – 20 percent.
  4. Department of Justice – 11 percent.
  5. Department of Education – 9 percent.3

The federal government offers grants to fund education, county, and city governmental organizations. It also funds Native American tribal governments, public housing organizations, nonprofit organizations, small businesses, and sometimes individuals. Knowing where to look and how to apply are key in finding an appropriate grant for your needs.

What is a student Grant?

Grants for student financial aid are often referred to as “gift aid” because they are free money—they don’t have to be repaid. While scholarships are merit-based, grants end up being need-based. For student financial aid, grants can come from the federal government, your state government, your college or career school, or a private or nonprofit organization.

The U.S. Department of Education has a variety of federal grants for students attending four-year colleges or universities, community colleges, and career schools. The different grants for financial aid include:

  • Federal Pell Grants – These grants are typically awarded to undergraduate students who have not earned a bachelor’s or a professional degree. The amount you receive will depend on your financial need, cost of attendance, status as a full-time or part-time student, and your plans to attend school for a full academic year or less.
  • Federal Supplemental Educational Opportunity Grants (FSEOG) – You must fill out a Free Application for Federal Student Aid (FAFSA) to find out how much financial need you have. Students who receive the Federal Pell Grant and have the most financial need will receive this grant first.
  • Teacher Education Assistance for College and Higher Education (TEACH) Grants – This type of grant is different from the rest because you are required to take specific classes to qualify. On top of the classes, you are required to be a teacher to keep the grant from turning into a loan.
  • Iraq and Afghanistan Service Grants – To qualify for this grant you cannot be eligible for a Federal Pell Grant based on your expected family contribution. You must meet the remaining eligibility requirements and in addition to this, your parent or guardian must have been a member of the U.S. Armed Forces and died because of military services performed in Iraq or Afghanistan after 9/11. You must also must have been under 24 years old or enrolled in college at least part time when your parent or guardian passed away.4

To become eligible for a grant to cover financial aid in college, you will first need to complete the Free Application for Student Aid (FAFSA). This application will be used to find out your financial need—what you can and cannot afford.

Who is eligible for a Grant?

Determining if you are eligible for a grant is very important. If you are not legally eligible for a specific funding opportunity, filling out the application could be a waste of time and money. To receive a grant, you will need to apply with a grant proposal that details why you or your organization is worthy of the funds. Grants are extremely competitive, the paperwork is complex, and applicants must describe how being awarded the money will benefit them. Crafting a convincing proposal can be difficult and challenging, but there is help for writing grants.5

It is rare for a small business to receive a grant. Typically, the federal government will not award a grant to start a business, pay off debt or cover operational expenses of a small business—you must be in financial need. But, if you do receive a grant, you will receive the check, detailed reports accounting for how the money will be spent during the grant period, and what accomplishments or failures must be documented and submitted based on the different deadlines.

Bottom Line

Grants are competitive, but they’re a great way to receive funding.

References:

1 “How Does a Grant Work?” Sapling, https://www.sapling.com/4649780/a-grant-work. Accessed March 8, 2017.

2 “What is a Grant?” Grants.Gov, https://blog.grants.gov/2017/02/07/new-series-what-is-a-grant/#more-190. Accessed March 8, 2017.

3 “CFDA Statistics: Programs at a Glance.” Catalog of Federal Domestic Assistance, https://www.cfda.gov/. Accessed March 8, 2017.

4 “Grants and Scholarships.” Federal Student Aid, https://studentaid.ed.gov/sa/types/grants-scholarships. Accessed March 8, 2017.

5 “What is a Government Grant?” Investopedia, http://www.investopedia.com/terms/g/government-grant.asp. Accessed March 8, 2017.