Lesson 1 – What is a Government Grant?

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Do you know you have already begun the process of writing government grant proposals? How is that? Because you took the first step and are reading lesson one. The first step is always the hardest, but you did it and I commend you. Congratulations on fulfilling your first requirement to get a grant – taking that first step.

The first point you need to know about government grants is that there are three primary levels: local, state, and federal. Most levels make grants to non-profit organizations so the organizations can carry out programs that benefit the community in some way. These government grants also are used to support research and/or development in nearly every area and artistic endeavor.

The process of applying for a government grant can differ depending on the grant-making agency. For example, some agencies require you to write a detailed narrative proposal, while others only require you to fill out one or more standardized forms. Additionally, the government grant application process can differ dramatically from the process of applying for grants from institutions such as foundations or corporations, which often request less in-depth proposals that require you to condense the details of your program. Some corporations and foundations now provide forms that you complete and submit online from their websites.

Federal government grants typically fall into two categories: project grants and formula grants. Project grants are awarded to non profits and other eligible applicants for the purpose of conducting specific activities or “projects” (hence, the name). Such grants are competitive, meaning your proposal will be judged against all other proposals submitted. Unlike project grants, only state and local governments, or recognized units thereof, are eligible to apply for formula grants, which are often awarded using a “formula” that takes into account a variety of factors that can include the size and demographics of the eligible area’s population. Depending on the objective of the formula grant, the recipient state or local government might make funds it receives from such grants available on a competitive basis to nonprofits or others within the area to conduct specific activities.

Government grants sometimes require that you “match” the grant dollars you receive, meaning that for every one dollar of government funds you receive, you must contribute a pre-determined percentage of that government dollar. For example, if the grant requires a 100% match, you will have to contribute one dollar for every government dollar received. Using this example, if the total project budget is $75,000, you would provide a matching contribution of $37,500, and the government would contribute $37,500 ($37,500 ÷ $37,500 = 1.0, or 100% if expressed as a percentage). If your grant requires a 50% match, you will be expected to contribute 50 cents for every one government dollar you receive. A total project budget of $75,000 would therefore consist of a $25,000 matching contribution plus $50,000 from the government ($25,000 ÷ $50,000 = .50, or 50%). The formula to calculate the required match is as follows:

Step 1: (Total project budget) · (1.0 + the match percentage expressed as a decimal) = amount of the government grant

Step 2: (Total project budget) – (amount of the government grant) = amount of the required match

Substituting the amounts in the second example above (50% match), the calculation would be as follows:

Step 1: $75,000 (total project budget) · 1.5 (1.0 + .50) = $50,000 (government grant amount)

Step 2: $75,000 (total project budget) – $50,000 (government grant amount) = $25,000 (required match)

In most cases, matching funds cannot originate from another government source. For example, if you receive a grant from Government Agency A and another grant from Government Agency B, you cannot use the funds from one to meet the matching requirements for the other. This means that the match must come from a non-governmental source, such as a corporation, foundation or individual donors. (There are some rare exceptions in which grants from one government agency can be used to match other government grants. You should check with the grant-making agency to ascertain their match requirements and restrictions.) Funds used to meet matching requirements must be applied to the same project for which you received the government grant. Additionally, while it is not allowable to contribute less than the required match, you can contribute more.

Grantees are sometimes allowed to count the value of in-kind contributions (goods or services received in lieu of cash) toward part or all of their match requirement. Again, you should check with the grant-making agency to ascertain whether this is allowable, as well as any restrictions in this regard.

Most government grant applications will require basic information about your charity, including its mission, when it was founded, its tax status, and Employer Identification Number (“EIN,” unless you use your Social Security Number). You also will be required to provide specific information about the project/activity for which you are requesting funding, including the need for the proposed activity/project in your community, a description of how you intend to implement the activity/project and measure the results, and the anticipated budget.

It is important to know that there is no single standardized form that can be used to apply for all government grants. As stated above, some agencies provide a form you can download, complete and submit; however, such forms can differ by agency. Other agencies require you to submit a narrative that provides information the grant-making agency deems essential to helping them determine who is most qualified to receive funding. The type and scope of information required in such narratives can also differ by agency. The Request for Proposal (“RFP”), a document issued by the grant-making agency, will tell you precisely how to apply for a grant, including whether you will need to submit a narrative proposal, or whether there is an application form available for download. Lesson 3, “Understanding the RFP,” will discuss this document and its contents in greater detail.

Government grants often come with a number of requirements and stipulations to which you must agree. For example, you might be asked to attest that your workplace is drug-free, that it complies with the requirements described in the Americans with Disabilities Act and/or that your organization does not discriminate in its employment and client practices. Information of this nature is usually presented in the series of “Standard Forms,” which, as the name implies, are template forms that all grant applicants are required to complete and submit with their proposals. The RFP lists the Standard Forms you will be required submit.

You must also be sure that your financial records are up-to-date and in good order. Additionally, you must be sure that the expenses you have included in your budget are those that are considered “allowable,” based on the policies described in the Circulars published by the U.S. Office of Management and Budget. (Lesson 6, “How to Write the Budget Section,” will discuss the Circulars and other financial requirements in greater detail.) Grantees are subject to audits by the grant-making agency, so it is critical that you understand these policies and accountabilities before making application for grant funds.

Assignment

For this assignment you will do the following exercise:

1. Write down the purpose of your project, including who it is intended to benefit and how.

Test

Read over the following questions and provide the best answer possible.

1. A Government grant is given out by corporations?
   1. True
   2. False
2. Government grants are at the federal level only?
   1. True
   2. False
3. Most Government grants are provided to non-profits so:
   1. The organization can carry out programs that benefit the community
   2. The organization can make a profit by providing a product on the Internet
   3. The organization can start a new business venture for the purpose of making more money
   4. The organization can give large bonuses to corporate executives this way all money earned can go to employees only
4. Applying for a Government grant is the same as for a foundation or corporation?
   1. True
   2. False
5. There are two Government grant types. One is based on a formula, the other is:
   1. Purpose
   2. Product
   3. Project
   4. Procedure

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