How Does Grant Money Work?
Financial barriers prevent people from partaking in all kinds of worthwhile activities such as going to college, starting a business and conducting research. Individuals are often forced to choose between pursuing their goals and taking on burdensome levels of debt. Grants are awards of money that can provide some or all of the funding necessary to pursue a new project.
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What Is a Grant?
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A grant is a gift of money given for a specific purpose that typically advances the gift-giver's goals in some way. All kinds of organizations such as governments, nonprofit organizations, corporations and colleges can give grants. For example, the U.S. Department of Energy might offer grants to scientists interested in researching renewable energy, since such research could ultimately benefit the country if it leads to new, more efficient energy sources. According to Grants.gov, the U.S. government offers more than 1,000 grant programs for all kinds of projects from agriculture and business to the arts and education.
Benefits
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Grant money is beneficial to the recipient because it never has to be repaid. This allows recipients to pursue projects that they would not be able to pursue otherwise or that would require them to take on debt. Grants allow recipients to focus more upon the project itself and less upon financing the project. For example, a student who receives a full-ride scholarship -- an education grant that pays for 100 percent of tuition -- can focus more on studying than a student who has to take on loans and work part-time while in school to cover expenses.
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Getting a Grant
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Grants can be difficult to secure, since many parties might apply for the same grant. Applicants may be required to write essays, go through interviews or make presentations as a part of the application process with no guarantee that they will be selected to receive grant money. Specific application requirements will vary from one grant to another, and the decision of who ultimately receives a grant may be subjective.
Considerations
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Some grants are simply one-time lump gifts, but others may recur over a period of time. For instance, a scholarship might provide $5,000 a year for four years of college. Recurring grants may require the recipient to adhere to certain rules or achieve certain results to retain funding. For example, a scholarship recipient might be required to maintain high grades or to participate in a certain extracurricular activity to keep his grant.
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