Free Money Through Grants: Fact or Fiction?

It's posted all over the Internet. You hear it on the radio, and see it on television. The United States government is giving away free money in the form of federal grants. As it's true that the government does indeed award $400 billion per annum through its 26 federal entities, the statement of free money through the government doesn't exactly identify the explanation of a federal grant.

A grant isn't a present or a free-for-all giveaway. It also doesn't signify that if you've been awarded a grant, you've won the lottery. According to American Government and Politics by Jay M. Shafritz, a grant is "a form of gift that entails certain obligations on the part of the grantee and expectations on the part of the grantor." The key word in this definition of the word is obligations. Getting a government grant will get you an incredible amount of obligations, and not satisfying your obligations will, in turn, grant you legal problems.

The majority of federal grants that are awarded are the farthest thing from being considered free money. Grants are most frequently awarded to organizations setting up major projects to benefit a community. It could include money to be used for repaving streets in a city. A grant could also be awarded for a nonprofit organization featuring an art exhibit or musical performance. Grants are also awarded for technological research, conservation, and flood control projects. While there are other sources that are awarded grant funding, in general, the free wealth aspect is lost, and individuals, in general, are not qualified for most grants other than those used for educational purposes such as to pay tuition bills for higher education. Businesses can also tap into the federal grant program, but only by meeting strict criteria through the government agency offering the grant, such as if grant funding is available for research in a particular area that is of specialty to that business.

Once the free money is provided through the grant, the organization that has been awarded the free money must keep careful track of all project expenditures. Organizations that are awarded free money must be prepared for detailed audits, which will be conducted by the Federal government annually or more often. Any money not spent and accounted for goes back to the United States Treasury, and is not extra free money for the organization. Detailed program goals must be developed, approved, and completed by the organization exactly as specified in the grant application without exception. Any unforeseen project changes that occur along the way must receive prior approval by the government agency that awarded the grant. All project phases must be completed as planned, and even more importantly, completed successfully and on time.

The free money obtainable through a grant program can lead to financial and legal tragedy to an group that does not abide by the strict rules that the funding holds. By failing on a part of the obligation agreed upon when the grant is accepted, the organization and/or persons in charge are held responsible. Penalties can range from financial sanctions to jail in the instance of improper use or theft of this free money.

The bulk of grants, or free money, that is requested is applied for and awarded to other Federal agencies, state governments, city governments, colleges, universities, and research organizations and businesses. Few persons have the money, time, and knowledge necessary to prepare adequate applications that are awarded free money through federal grant funding. Most active grant seekers, such as universities, employ full-time grant writers to do nothing but apply for and administer Federal grant funding. A full staff of grant writers is not uncommon at a large university.

Because this free money through Federal grants is cautiously monitored, the truth is that the money isn't actually free. Applying for Federal grants takes an unbelievable amount of time. Additionally, by even unintentionally not abiding by the grant's requirements, as mentioned, an individual that is unfamiliar with the Federal government's grant programs can find themselves in a financial or legal disaster. With Federal funding cutbacks and the competition for grant fundings becoming more intense, seeking free money through a grant requires not merely time, but also cash, with no guarantee of success.

Stating it plainly, Federal grants and free money are fictitious. Often, it's more work, not to mention more time and money spent obtaining a Federal grant, than obtaining a low interest loan. Large organizations, such as universities, can benefit from grant funding much easier as they can apply for multiple grants at once, and a skilled, knowledgeable staff can monitor the grant's use carefully. A small business or organization may not see as much success in obtaining a grant due to the time needed to apply, monitor funds, and prepare materials for auditing.

The plain fact is that with federal funding cutbacks and competition for them becoming more intense, seeking a federal grant always requires a lot of time and potentially a lot of money up front with no assurance of accomplishment. Commitment is required, and is the most significant part of attempting to obtain free money through grant funding.