Federal Grants In Aid – What is the Difference Between Grant and Grant-in-Aid?

Have you heard about grants before? If you have been following our website you will know that there are different types of grants in our society, which have been a lot of help to small business owners, students, individuals, etc. So in this article, I will tell you all you need to know about Federal Grants in Aid. But before let’s know what is Grant.

Federal Grants In Aid
Federal Grants In Aid

What is Grant

A grant is a fund given by an end entity grant often a public body, charitable foundation, or a specialized grant-making institution to an individual, students, or small business owners for a specific purpose linked to public benefit. Unlike loans, grants are not to be paid back.

Federal Grants In Aid

What are Federal Grants in Aid? Federal Grants in Aid is money coming from a federal government for a specific project by the state governments, nonprofits, and other entities by providing funding.  A grant-in-aid has funds allocated by one level of government to another level of government that are to be used for specific purposes.

These grants are not loans; therefore, no repayment is required, but funds must be spent according to the federal government’s guidelines for that particular grant.

Types of Grants in Aid

The three major types of federal grants to state and local governments are; categorical grants, block grants, and general revenue sharing.

Categorical Grants ; A categorical grant is a money granted by the federal government to state and local governments, with strict limitations on how it is to be spent. The money can only be received if the state or local government complies with certain regulations. Categorical Grants have two types which are

  • Project grant : Project grants are awarded on a competitive basis by the administering agency, generally following the review of a grant application
  • Formula grants: The Congress decides how much it wants to spend overall on a project, and then the money is distributed to all states according to a formula.

Block Grant’s ; A block grant is an annual sum of money that is awarded by the federal government to a state or local government body to help fund a specific project or program.

General Revenue Grants ; General revenue sharing (GRS) is an unconditional federal grants to state and local governments. These grants are intended to provide state and local governments with spending flexibility.

Alternative to Federal Grants in Aid

Grants-in-aid are alternatives to other types of federal financial assistance, like;

Loans: This type of loan are issued by the government for a specific purpose, like helping students pay for school. Unlike grants-in-aid, loans must be repaid.

Direct appropriations: Direct delivery of specific federal funds budgeted for a particular purpose, often only available for a limited period of time.

Food commodities: This includes fresh foods, shelf-stable products, and prepared meals that the federal government distributes to eligible individuals.

Loan guarantees: Loan guarantees are like contracts that the government enters into with private lenders in order to encourage lenders to make financing available in situations where lenders may otherwise be unwilling to do so. The government agrees to protect the lender against losses in the event of borrower default, therefore sharing the risk of the loan.

Cooperative agreements: These are legal instruments used to transfer something of value from the federal government to a non federal entity for purposes of carrying out a public purpose.

What is the Difference Between Grant and Grant-in-Aid?

The difference between a grant and a grant in aid is that A grant is used for financing a specific and agreed activity for a voluntary or community organization. While grants in aid are used by the central government to fund bodies such as national museums.

Why are Federal Grants-in-aid Important?

The purpose of grants is to stimulate the economy or serve the public by funding ideas that are beneficial to the public, such as research or public health programs. Many different government agencies can issue federal grants-in-aid with the goal of fulfilling these objectives.

I hope the information given above will be useful, so if you are interested in taking the grant hurry up and do so now.

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