Government Grants

What you need to know before applying for a grant

There’s a persistent myth that grants are available to pay for all sorts of things and that just about anybody can get one. That’s not surprising since the media are full of misleading ads promising nirvana once you get your “free money” from the government.

While it’s true that grants never have to be repaid, they are only approved for very specific purposes. They provide an efficient means for the government to invest in targeted areas of the economy.

While grants are a great deal if you can get one, the devil is in the details. They are rarely given to individuals, and most often they support an objective that benefits the general public. So, it’s not likely that you’ll receive a new grant to start or expand a private business. The most common grants are for development of public facilities, infrastructure, education improvements, and certain research projects.


Background

The U. S. government grant program has existed for over fifty years. The funding is appropriated by Congress as part of the annual budget. The approved programs are listed in the Federal Register and the Catalog of Domestic Federal Assistance (CDFA). Cabinet-level departments administer the grants, including Health and Human Services, Agriculture, Housing and Urban Development, Education, Transportation, and Homeland Security.

The information contained in the grant listings includes the program summary, title, application deadline, administrative contact, budget, and sponsoring government department.

Qualification

Most grants are awarded to nonprofit organizations, academia, and state and local government organizations. Public, private, and independent educational providers are all eligible, as are legitimate research institutions.

An individual or small business can secure a grant if you benefit the general welfare and the service you provide is unique or not currently available. If the primary reason for the grant is to grow your business or enrich yourself, you won’t succeed. Your chances are much higher if the business is nonprofit and advances existing government goals that aren’t currently being satisfied.

Contrary to what you may have read or heard through the media, grants aren’t awarded to help people or businesses experiencing financial difficulties. The Small Business Administration may be an alternative source of assistance.

Types

Grants are funded in several categories including: agriculture, food & nutrition, business & commerce, employment & training, education, transportation, energy, science & technology, natural resources, environment, consumer protection, legal services, cultural affairs, social services, disaster prevention & relief, housing, health, and regional & community development.

Grants emphasize the goal of promoting the public good. This can be short or long-term, but you must be able to demonstrate reasonably achievable results. Common examples are a program to upgrade local streets and a program to help the unemployed retrain for new careers. On a larger scale, the goal could be to revitalize a depressed area in order to attract and stimulate new business development and construction.

Application

Getting a grant is not easy. The application process is so complex that most organizations hire professional writers who have the training and experience to construct successful proposals. The proposal specifications and requirements are very detailed, so careful research and adequate planning are necessary to ensure full compliance. Unless you possess the right skills, it’s worth it in the long run to pay someone to do it right the first time.

Allow plenty of time to draft and review the proposal. Start by reviewing the CDFA which contains an abundance of information to guide you. It’s important to understand the entire process before you start, as well as all the performance and reporting requirements. You should also check the website of the government agency that will sponsor your proposed grant. From there you can establish direct contact with the department that will process your application.

Advantages
  • Excellent source of financing during tough economic times
  • Doesn’t have to be repaid
  • Credit rating is irrelevant
  • Grant is essentially a gift and carries no tax consequences
  • No limit to how many grants you can apply for
  • Large amounts of funding are available for the right projects
  • An approved grant gives an organization credibility and exposure, and may help it to raise private funding
Disadvantages
  • Depending on the purpose, it may be difficult to qualify for
  • Application process is complex and very time-consuming
  • Comprehensive business plan is required that includes a schedule, budget, and performance goals
  • Must follow strict spending rules and accounting regulations
  • Recipient is subject to regular audits and government oversight
  • Progress and financial reports must be submitted that may require the assistance of an accountant or financial expert
  • In some instances you may have to fund your operating expenses and then obtain reimbursement from the government
Pitfalls

Don’t be fooled by the ads that say anyone can get a grant. There are also unscrupulous companies that will prepare your application and promise you that it will be approved. Once you pay their bill, you’ll probably never hear from them again. No one can guarantee positive results.

With the national debt increasing at an exponential rate, the government is looking for ways to reduce the rate of spending growth. With many demands vying for a smaller slice of the overall budget, the competition for grant money is intense. It’s likely that grant funding could shrink as politicians look for ways to offset the huge increases in federal spending.

Summary

If you are serious about getting a grant, consider hiring a professional to assist you. You need to submit an application that meets all the criteria and grabs the attention of the reviewing authorities. You want yours on the top of the pile.

Also remember a grant is not a benefit or entitlement, and it comes with a lot of strings attached. It’s a quid pro quo arrangement that requires you to perform your obligations in exchange for the money. The government wants a verifiable return on its investment, and you could be subject to legal action if you don’t hold up your end of the bargain.

Related Links

Government Grants
Federal Register
Catalog of Federal Domestic Assistance

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Michael Sanibel is a professional writer and communications consultant specializing in business, marketing, personal finance, law, science, aviation, sports, automobiles, entertainment, travel, and political analysis. He graduated from the United States Air Force Academy and is also licensed to practice law in California, New Hampshire, and the U. S. Supreme Court. Michael wrote this feature article exclusively for Debbie May.com (http://www.debbiemay.com/), an organization dedicated to helping small businesses succeed.