How do you get free money from the government? There are some options for getting federal grant money. However, in most cases, you will need to own an organization or small business or be planning a project that will benefit society.
There are no federal government grants available that will directly help you start your own business or that will provide you with free money. However, there are federal grants to help with college tuition and home buying. There is also grant funding provided to cities and states to help individuals. Here we will give you an overview of grants and offer tips that can help you apply for federal funding.
Who Can Qualify for Federal Grants?
The federal government is not just handing out money to anyone who wants it. With the U.S. federal government budget deficit tracking to reach nearly $1 trillion by the end of 2019, the government strictly monitors the federal budget. Despite that, there are specific categories of people who can apply to qualify for federal government grants; nearly all of them are corporations or organizations. Here is a list of different types that receive grant funding:
State and Local Governments
Funding provided for a wide range of things, such as health care, income security, job training, education, social services, community development, transportation, and environmental protection
Funding provided to state and local educational agencies of higher education, community, and faith-based organizations, and other educational entities.
Funding provided for researchers in areas such as health, disease control and prevention, food and drugs, and science.
Funding provided to support law enforcement, public safety activities, and training and technical assistance; to conduct research; and to implement programs that improve court systems for state and local government agencies.
Funding opportunities provided mostly for non-profit organizations that have community support. There are also grants available to for-profit organizations and small businesses.
Institutions With Projects That Will Benefit the Population
Grant funds to governmental agencies, schools, and other types of local organizations. You must use the money for specialized programs to create growth or change within an area.
Federal grants that help low-income and no-income people with college tuition
Federal grants that assist first-time homebuyers who fit specific criteria.
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What Exactly Is a Grant?
A grant is funding provided to an organization or individual (the grantee) by the government or some other type of organization (the grantor). Most grants are conditional, which means that the grantee must meet specific criteria to be eligible. In many cases, multiple agencies are competing for the same grant money.
A federal grant is a grant provided by the federal government. There are billions of dollars available each year for programs and projects that benefit the general public. Congress assigns the money to the federal agencies and passes it through as legislation. The President then issues guidance for implementing the law, and the grant-making agencies develop administrative policies based on the advice.
Four Main Types of Grants
Below are some key characteristics for each of the four types of grants. The government provides most federal funding through either competitive funding grants or formula funding grants. I have provided links for more information on continuation funding grants and pass-through grants since we won’t talk much about them here.
Competitive Funding Grants
- Recipients are not predetermined.
- They are based on the merits of the application.
- The decision for funding is discretionary.
- They are very competitive.
- Experts and governmental agents select the proposals.
- Proposals go through a team of reviewers.
Formula Funding Grants
- They are given to predetermined recipients
- These are non-competitive awards.
- They are usually allocated to eligible entities according to demographic information (population, census criteria).
- All applicants who meet the minimum requirements are entitled to receive money.
Continuation Funding Grants
- These are renewable grants offered to current recipients.
- Some programs restrict proposals to existing grantees only.
- Other programs invite applications from new applicants as well.
- New applicants can enter into a partnership with a current applicant for consideration.
Pass-Through Funding Grants
- These grants are given to states for further distribution to local governments.
- States can disburse to eligible local jurisdictions using formula allocations.
Grant Money That Helps Individuals
Although in most cases, individuals cannot directly receive grants from the federal government, there are a few ways that grants are designed to help the general public.
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Grants to States and Counties
Many state and county assistance programs are funded by federal grant money to provide financial assistance for people who face economic hardships. The two types of grants that provide this type of government funding are competitive grants and formula grants.
The government provides competitive grants, sometimes called discretionary grants, based on merit and eligibility. As such, the review process is rigorous. Grant applications are first peer-reviewed by experts in the field of the specific grant. Then, personnel from the federal agency review the grant applications using the results from the peer review.
The final funding decision is then made based on how well the applicant completed the request and on the expected contribution of the program’s mission. An example of a discretionary grant would be a non-profit organization that applies for a grant to build a homeless shelter to help with the homeless population in a city.
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Formula grants also referred to as form grants or block grants, are awarded based on statistical criteria and for specific types of work. They are called formula grants because a formula set by legislation and governmental regulations determines how they are provided. The federal government awards them to states, cities, and counties that then contribute them to community groups, charities, and other social service providers to help the community.
While individuals do not receive money directly from the federal government, there is money available for the specific groups funded by grant awards. The people benefit from the services provided through that funding. Examples of these programs include SNAP, Medicaid, and TANF.
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Grants for College
Some federal grants can help students pay for their college education. If you cannot qualify for any grant money, there are other ways to pay for college. To be eligible for the grant opportunities, you must qualify for one of the grant programs below.
- Federal Pell Grants: awarded to undergraduate students with exceptional financial need.
- Federal Supplemental Educational Opportunity Grants (FSEOG): an additional grant for students with exceptional financial need. The government gives those who qualify for the federal Pell grant priority.
- TEACH grants: grants provided to students who intend to teach.
- Iraq and Afghanistan Service Grants: grants provided to students whose parents or guardians died in Iraq or Afghanistan while serving in the Armed Forces
First-Time Homebuyer Grants
A first-time homebuyer can receive money towards the down payment on their first home. These grants are only available to lower-income families and you must use them for a primary residence. If you would like to learn more about first-time homebuyer grants, Timothy Hansen does a great job of explaining them more in-depth.
Grant Money for Organizations
There are billions of dollars in federal grant money available to organizations. The process for applying is very competitive, and you will need a convincing grant proposal. There are great sites that can help you search for available grants for your non-profit. You will need to be patient, dedicated, and educated on what it takes.
However, here are a few tips to help get you started:
- Ask yourself: Who? What? When? How? You will need to be very specific about whom your project will benefit. You will need to decide what you need to reach your goal, why your project matters, how you intend to reach your goal, and how much funding you need to reach your goal.
- Know your keywords: You will need to narrow down your grant search by using keywords specific for your grant need. Use terms that align well with your purpose and don’t be afraid to try synonyms for words that aren’t returning the right responses.
- Know where to look: The U.S. government has a search page for federal grants. The site provides search boxes for terms, eligibility, assistance type, and the location ZIP code.
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How Do You Apply for a Federal Grant?
Applying for federal grants can be time-consuming depending on the type of grant you need. Remember, grant applications for organizations can be very competitive. Educational grants and homebuyer grants are given based on eligibility requirements. Follow the steps below to get started.
- Go to the General Services Administration’s search site.
- Find grants that match your project.
- Determine if you are eligible.
- Apply based on the guidelines for the grant you would like to receive.
- Go to the Department of Housing and Urban Development (HUD) site.
- Click the “Resources” tab for a wealth of information.
- There is a “State” tab that will allow you to see what is available in your state.
Don’t Get Scammed
Finally, beware: there are many government grant scams out there that promise that if you follow a few steps, you can access free federal grant money. If it sounds too good to be true, it probably is. If someone contacts you to tell you that you are eligible to receive a free government grant, don’t believe them. Contact a governmental agency and report the fraud. You can call the Federal Trade Commission at 1-877-FTC-HELP or the Health and Human Services Fraud Hotline at 1-800-447-8477.
Have you applied for a grant? Have you been successful? Share your experience in the comments below.