Types of Government Grants


Grants are basically financial or other assistance that has some monetary advantage disbursed by the US federal government or State government. Such grants may be given to individuals, local governments, State governments, educational institutions, charitable organizations, or other enterprises in the form of entitlements, loans, or other benefits. Usually grants are for promoting some activity, art, or service that is good for the public and nation as a whole. The amount to be disbursed is set aside in federal budget as federal aid amount.

The types of grants available in the US are broadly classified as:

a. Block grants:

Block grants are monies disbursed by federal government to either the State government, or the local bodies. These local or state governments may use their discretion for utilizing these grants.

b. Categorical grants:

Unlike the block grants, categorical grants have specific purpose. These are further classified as formula grants and project grants.

Formula grants limit the assistance that can be availed based on a predefined formula.

Project grants, on the other hand, are for research purposes such as medical research project. Therefore, these grants require the individual seeking such grants to have required qualifications. The maximum term for availing these grants is 3 years but it may vary depending upon the project. Competition for such aid is inevitable.

c. Earmark grants:

These grants are actually appropriations. Therefore, these grants are used for specific purposes in accordance with the law.

d. Grants to charitable organizations;

The works that charitable organizations do is varied. Their income sources are limited and unpredictable. But these organizations do need monies. Therefore, such bodies are eligible for some grants.

e. Grants for developing commerce and business;

These grants include assistance to small and medium sized businesses. The object is to increase gross domestic product and simultaneously generate employment.

f. Grants for improving food & nutrition, health, and environmental quality in the country;

Such grants matter because government eventually spends on the health of citizens, and that expense does not offer any returns, which is available for other social objectives.

g. Grants for improving, promoting, and assisting agriculture and agricultural activities;

Agricultural sector often gets neglected, and it needs to be promoted with such grants to keep it economically viable.

h. Grants for education institutions;

Educational institutions often spend more for the establishment than they earn from students. Since education is a necessity, government pitches in with some grants.

i. Grants for providing relief in the event of any disaster and prevention of such disasters;

These grants are self explanatory.

j. Grants for consumer protection, legal services, Law, and justice;

Such grants are necessary because these systems in any society are not self-sustaining systems. However, these systems form essential part of any society.

k. Grants for promoting and saving arts;

Such grants help the artists and art to survive. In addition, it is useful for reviving or renovating any art, which in turn improves tourism, and fetches returns in the long run.

l. Grants for energy resources, be it exploration, development, or improvement in management of such resources;

Energy resources are fast depleting. Any research or other developmental activity, including exploration, and management of energy resources is welcome. But any such activity is expensive. Therefore, government provides assistance for such activities.

m. Grants for training, employment, and labor management;

Government offers grants for training personnel for any technologies to ensure employment. Similarly, assistance is also provided to business enterprises for recruiting personnel with specific skills, who may or may not be from the country.

n. Grants for housing and home repairs;

This is a social cause and such grants may even be used by government for earning profits by charging interest on loans.

o. Grants for transportation;

Transportation is another social cause, and it needs to be subsidized to keep it viable for ordinary citizen.

p. Grants for development and/or implementation of science and technology;

Science & technology are crucial for any nation. Any new development in these fields gives the country an edge over other countries. But any such investment may also be wasted. Therefore, government encourages such studies and research with grants.

r. Grants for income security and social services;

Unemployment is a reality. At such times, citizens need help from the government. Similarly, many social services such as health care are beyond budget for many citizens. Government steps in for such cases.

s. Grants to students and single mothers to continue their education or training;

By educating and training people, government would be able to reduce dependence on social security and other grants. Such grants are short term liability unlike social security expenses that can continue for a long term. Moreover, such training and education ensures that work force with required skills is available within the country and the employer does not have to go to other countries for getting such personnel.

t. Grants for Statistics and information

Any progress and requirement can be determined with such data. But the process of generating such data is not economically profitable. Therefore, government steps in with grants so that such activities are undertaken by some bodies or individuals in the country.

Grants may be given directly or indirectly and the government may also profit from it. Therefore, government may charge interest on some loans, whereas other grants may be free government grants. A few grants are also available for assisting borrowers to pay off their debts.

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