# Federal Grants-in-Aid: Overview and Examples

![Government official filling out paperwork related to a federal grant-in-aid](https://www.investopedia.com/thmb/1MdI86FI7OHG8-G5HT4umSx-tw8=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/GettyImages-1395496646-23b4b1e7771f42f6b1b1084ca59e9524.jpg)

*— Edwin Tan / GettyImages*

> **Definition**
>
> Federal grants-in-aid support the projects and programs of state and local governments, organizations, and educational institutions.

## What Are Federal Grants-in-Aid?

A federal grant is financial aid awarded to fund a specific project or program. Recipients include state, local, and municipal governments as well as organizations. Federal grants-in-aid are funded with money from [income tax](https://www.investopedia.com/terms/i/incometax.asp) revenues. These grants aren't loans; therefore, no repayment is required, but funds must be spent according to the federal government's guidelines for that particular grant.

### Key Takeaways

*   A federal grant-in-aid is federal money granted to a recipient to fund a project or program.
*   Federal grants-in-aid aren't loans and therefore require no repayment.
*   Federal grants can be awarded to university faculty members to pursue a particular line of research.
*   Parts of a state government may procure and earmark grants to support nonprofits that provide aid to its constituents.

## How Federal Grants-in-Aid Work

A federal grant-in-aid allows the government to publicly fund a project and still operate independently from the state. The funds come with standards and requirements. Entities that offer grants might divide the resources across one or more periods annually; furthermore, they might divide the funds among potential recipients. This can make the pursuit of such grant funding a competitive effort among applicants.

### Over $500 billion

The amount the United States government awards annually in Federal Assistance Agreements, consisting mostly of grants.

Grants-in-aid can be awarded to university faculty members to pursue a particular line of [research](https://www.investopedia.com/terms/r/randd.asp); however, there are restrictions on how the money can be used. For example, a permitted use of the funds might be to pay undergraduate students to assist with the research, while a non-permitted use might be the payment of university utility bills.

The recipient will also have to meet certain requirements to qualify for the aid. For example, an individual recipient might be required to meet certain citizenship and/or residency requirements.

## Types of Federal Grants

Federal grants can take on a variety of forms and have different requirements. For instance, a university might make a federal grant-in-aid to support a program that lowers the tuition rate to make it more affordable for military veterans and their spouses. A university might also make this type of funding available to support conferences that have a particular subject matter or area of study at its core.

In the case of research efforts that receive a grant-in-aid, it may be stipulated that the funding is not intended to cover all expenses for the project. Furthermore, the grant may be given with the intent of encouraging and attracting other, more substantial funding to the project. This makes the federal grant-in-aid a sort of [seed funding](https://www.investopedia.com/terms/s/seedcapital.asp) that lends some credibility to the endeavor. 

Foundations and professional associations might offer federal grants as a form of financial assistance to graduate students who are developing a thesis focused on specific topics that are relevant to the organization.

Parts of a state government, such as its legislative body, might procure and earmark federal grants to support nonprofit organizations that provide aid to its constituents. The money, however, is often stipulated as a supplemental (rather than primary) source of funding.

## How Can I Find Available Federal Grants-in-Aid?

Grants.gov maintains a search feature that allows organizations to search for eligible grants by specific criteria. You can also navigate to other grant databases that may include funding from private sources from the site.

## Can I Get a Federal Grant as an Individual?

Typically no. Most federal grants are awarded to local or state governments, nonprofit organizations, and businesses. You may receive a grant funded by a federal grant from the organization that received it.

## Can I Use a Federal Grant for Any Use?

Most federal grants are earmarked for specific uses, such as research, community building, or funding programs. If you are awarded a federal grant, there will likely be stipulations on how the money is used. For example, a research grant might be eligible for staffing costs but not covering utilities on the research facility.

## Do Grants-in-Aid Have to Be Paid Back?

No, grants-in-aid don't have to be paid back, as they're a form of financial aid. While loans can also be considered financial aid (e.g., student loans), these do have to be repaid because the borrower is taking on debt. Grants-in-aid, meanwhile, are more like gifts.

## The Bottom Line

Federal grants-in-aid are valuable to those that qualify since they don't have to be repaid. However, applying for grants can be time-consuming, and they're typically only available for businesses, organizations, and state or local governments. If you're an individual, government loans will likely be a more accessible option.  

> **Article Sources**
>
> 1.  USA.gov. "[How to Get a Government Grant or Loan](https://www.usa.gov/government-loan)."
>     
> 2.  USA.gov. "[Government Grants and Loans](https://www.usa.gov/government-grants-and-loans)."
>     
> 3.  Grants.gov. "[Grant Fraud Responsibilities](https://www.grants.gov/learn-grants/grant-fraud/grant-fraud-responsibilities.html)."
>     
> 4.  Grants.gov. "[Grant Programs](https://grants.gov/learn-grants/grant-programs)."