There are many types of grants in both the public and private sectors. Just at the federal government level, there are 26 grant-making agencies funding more than 1,000 grant programs. A “discretionary grant” exists in both public and private sectors, and refers to the power the grantor — the foundation, government or firm — has in deciding how the money will be spent.
A discretionary grant is a gift of money that is disbursed at the discretion of the grantor. A discretionary grant of money refers to a type of grant that is based on some kind of review process. The grant need not be competitive, but it is pigeonholed for a specific purpose that is spelled out in the grant guidelines. It is customary for all applicants to submit detailed plans about how the money will be spent.
Each discretionary grant has a list of specific guidelines to which a recipient must adhere in order to be eligible for the award. While some discretionary grants are not competitive, the overwhelming majority are, because the grantor wants as many options as possible. The point of this type of grant is to increase the likelihood that the money awarded will go for its intended use in the most efficient and ethical way possible. Regardless of the method of approval, those who are eligible for these grants are those who will use the money in the very specific way the grantor wants.
Reducing the likelihood of waste, incompetence and misappropriation of funds requires most grantors to use some kind of discretion in the disbursement of funds. The grantor accepts a certain number of applications. Each application describes the nature of the project applicants want funded, the nature of their own organization and their institutional history. In some cases, only the more established organizations with a large organization and a good reputation, such as the YMCA, universities, hospitals, or large political groups have any real chance of getting the money. Such larger and well known organizations have accounting departments and a track record that gives the grantor a sense of comfort.
All discretionary grants are targeted to specific purposes, but not all targeted grants are discretionary. Highway fund money is often treated as a targeted grant to state governments, but is not discretionary. An example of a discretionary grant is an amount of money the Rockefeller Foundation offers an author to write a book on an area of policy. Authors and scholars will submit proposals — summaries of the book, bibliography, publication history and resume — which will then be reviewed by a board appointed by the foundation. The board makes its decision according to guidelines that are included in the grant application description, and choose an author to engage in the project. The author must then produce the manuscript in a certain amount of time or face legal action for fraud. In some cases, authors must send rough drafts and other proof of progress as the deadline nears.