What Are Federal Grants‑in‑Aid?
Federal grants‑in‑aid are funds the U.S. government awards to support specific projects, programs, or services carried out by state and local governments, tribal governments, nonprofit organizations, universities, businesses, and—less commonly—individuals. Grants are not loans: they generally do not have to be repaid, but recipients must use the money for the permitted purposes and comply with federal conditions and reporting requirements (Investopedia; USA.gov).
Key takeaways
– Federal grants support public purposes and are funded by federal revenues; recipients must follow program rules and reporting requirements (Investopedia; USA.gov).
– Most federal grants go to states, local governments, nonprofits, universities, and businesses; individuals receive federal grant money mainly when it is passed through a grantee organization (Investopedia; Grants.gov).
– Grants are usually competitive and can require matching funds, specific uses, and detailed performance and financial reporting (Grants.gov; 2 CFR Part 200).
– Grants are not repaid if used properly; misuse can trigger repayment, penalties, or legal action (USA.gov; Grants.gov).
How federal grants‑in‑aid work
– Purpose and authorization: A federal agency defines program goals and legal authority and issues a Notice of Funding Opportunity (NOFO) or similar announcement describing eligible activities, allowable costs, deadlines, and evaluation criteria (Grants.gov).
– Types of recipients: Typical recipients are state and local governments, tribes, nonprofit organizations, colleges and universities, and businesses. Individuals may receive support mostly via programs administered by these entities (Investopedia; USA.gov).
– Award types: Grants can be awarded as single-year or multi‑year assistance and may be distributed in lump sums or installments. Some awards are formula-based (automatic distribution based on a statutory formula) and others are discretionary/competitive (awarded after proposal review) (Grants.gov).
– Conditions and compliance: Federal grants come with terms—permitted uses, procurement rules, financial management standards, audits, and reporting obligations—often governed by the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (2 CFR Part 200, “Uniform Guidance”).
Scale: “Over $500 billion”
The federal government distributes hundreds of billions of dollars annually in federal assistance (grants, cooperative agreements, loans, etc.). Exact totals vary year to year by budget and appropriations; the overall magnitude of federal assistance programs is frequently reported in the hundreds of billions (Investopedia).
Types of federal grants
Common forms include:
– Formula grants: Funds allocated according to a statutory formula (e.g., population, poverty rates).
– Project (discretionary) grants: Competitive awards based on proposal quality and agency priorities.
– Block grants: Broad-purpose funds given to states/localities with flexible use within statutory limits.
– Cooperative agreements: Like grants but involve substantial agency involvement in program execution.
– Categorical grants: Funds for narrowly defined purposes and programs (education, health, housing, etc.).
– Fellowship and research grants: Awards to individuals or institutions to conduct research or scholarly work (Grants.gov; Investopedia).
How can I find available federal grants‑in‑aid? (Practical steps)
1. Determine the type of assistance you need and eligibility
– Decide whether you are a state/local government, nonprofit, university, business, or individual and confirm eligibility rules in NOFOs. Many federal grants exclude individuals except for specific scholarship/fellowship programs (Investopedia; Grants.gov).
2. Search for opportunities
– Use Grants.gov to search federal grant opportunities by agency, category, eligibility, deadlines, and keywords.
– Check agency-specific sites (e.g., NIH, NSF, Department of Education, HUD) for program announcements and guidance.
– Consult state grant offices or your municipality for pass‑through funding or local solicitations.
3. Track program notices and webinars
– Subscribe to email alerts from Grants.gov and agency listservs; attend pre‑application webinars and information sessions often described in NOFOs.
Can I get a federal grant as an individual?
– Generally no. Most federal grants are awarded to organizations and government entities. Individuals may receive federal support if they qualify for specific individual-focused programs (e.g., scholarships, fellowships, certain disaster assistance), or they may benefit indirectly when a government or nonprofit passes on services or subawards (Investopedia; USA.gov).
Can I use a federal grant for any use?
– No. Grants are typically restricted to specific, allowable uses spelled out in the NOFO and in federal rules (Uniform Guidance). Permitted costs may include salaries, supplies, equipment (if allowed), travel, and other project‑related expenses, while some items (e.g., unrelated administrative costs, utilities not tied to project) may be disallowed. Many grants require prior approval for budget changes and prohibit converting federal funds to unrelated uses (Grants.gov; 2 CFR 200).
Do grants‑in‑aid have to be paid back?
– Not in normal circumstances. Properly used grant funds do not require repayment. However, if funds are misspent, used outside allowable purposes, or if required matching funds were not provided, the federal government can demand repayment, impose penalties, or pursue legal remedies. Cooperative agreements and other arrangements can carry additional obligations (USA.gov; Grants.gov).
Practical, step‑by‑step guide to winning and managing a federal grant
Before applying
1. Read the NOFO/RFP carefully
– Note eligibility, deadlines, allowable costs, evaluation criteria, required forms, and submission format.
2. Organize your institution/organization
– Ensure you have internal capacity: a program lead, grants manager, and finance/accounting staff familiar with federal requirements.
3. Register and obtain required IDs
– Register your organization in SAM.gov and obtain a Unique Entity ID (UEI). Register on Grants.gov as an applicant organization and set up authorized organizational representatives. Start registrations early (SAM.gov and Grants.gov registrations can take several weeks). (Grants.gov; USA.gov)
4. Prepare the application
– Core documents often include: SF‑424 (application), a detailed project narrative, objectives/outcomes, a line-item budget and budget narrative, timeline, staff resumes, and letters of support. Follow page limits and formatting rules in the NOFO.
– For research grants, include methodology, preliminary data, and plans for compliance (human subjects, animal care, data management).
5. Budget and cost‑share
– Build a compliant budget. If the NOFO requires matching or cost‑share, ensure you can document and provide it. Use federal cost principles (2 CFR Part 200).
6. Review, submit, and confirm
– Have a fresh reviewer check the application for completeness and compliance. Submit early to avoid technical glitches and confirm receipt on Grants.gov.
If you win (post‑award compliance)
1. Accept the award and understand terms
– Read the award notice for reporting schedules, allowable costs, indirect cost rates, special conditions, and performance milestones.
2. Set up financial controls and project tracking
– Put in place accounting codes, timekeeping, procurement policies, and internal controls to segregate and document grant funds.
3. Monitor performance and report
– Prepare and submit financial and performance reports on schedule. Track outcomes tied to award objectives. Maintain records for audits (typically three years or longer depending on the program).
4. Manage changes and requests
– Seek prior approval from the awarding agency for major budget or scope changes. Document decisions.
5. Closeout and audit readiness
– Complete all final reports, reconcile finances, retain records, and respond to audits.
Common pitfalls and how to avoid them
– Missing eligibility or format requirements: Read NOFOs carefully; follow instructions exactly.
– Late registration: Start SAM.gov and Grants.gov registrations well before deadlines.
– Weak budget justification: Provide clear, line‑by‑line justifications tied to project outcomes.
– Insufficient capacity: Don’t apply unless your organization can meet reporting and administrative requirements. Consider partnering or subawarding to meet capacity gaps.
– Ignoring compliance rules: Train staff on allowable costs, procurement, and documentation under Uniform Guidance (2 CFR Part 200).
Fraud and responsibility
– Beware of grant scams and unscrupulous “grant writers.” Federal websites (Grants.gov, USA.gov) provide guidance on spotting fraud. Responsible management and transparent reporting are required; misuse can lead to severe consequences (Grants.gov “Grant Fraud Responsibilities”; USA.gov).
The bottom line
Federal grants‑in‑aid are a major source of public funding for programs, research, infrastructure, and services. They can provide significant non‑repayable support, but they come with strict eligibility rules, allowable uses, documentation, and reporting obligations. Most federal grants are awarded to governments, nonprofits, educational institutions, and businesses rather than to individuals. Success requires careful eligibility screening, timely registration, a competitive application, and strong post‑award financial and program management.
Primary sources and further reading
– Investopedia — Grant‑in‑Aid overview: https://www.investopedia.com/terms/g/grant-in-aid.asp
– Grants.gov — Grant Programs and Applicant Resources: https://www.grants.gov
– USA.gov — How to Get a Government Grant or Loan; Government Grants and Loans: https://www.usa.gov/grants-loans
– Code of Federal Regulations, 2 CFR Part 200 — Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards: https://www.ecfr.gov/current/title-2/subtitle-A/chapter-II/part-200
Editor’s note: The following topics are reserved for upcoming updates and will be expanded with detailed examples and datasets.