Truth About Federal Grants
Contrary to what a very popular book and TV ad say, the U.S. government is not giving away "free grant" money. A grant is not a Christmas present. According to American Government & 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 there is obligations. Getting a government grant will get you loads of them and not fulfilling them will grant you a load of legal troubles.

Most federal grants are awarded to organizations planning major projects of benefit to their community. For example:

• A neighborhood street paving project
• A state-wide program to re-train displaced workers
• A project to attract new businesses to a depressed downtown area
• A regional water conservation program
• A county-wide flood control project

In addition, organizations that get  government grants are required to meet strict oversight performance standards during the duration of the project. 

All project expenditures must be strictly accounted for and detailed audits are conducted by the government at least annually. All granted funds must be spent. Any money not spent goes back to the Treasury. Detailed program goals must be developed, approved and carried out exactly as specified in the grant application. Any project changes must be approved by the government. All project phases must be completed on time. And, of course, the project must be successfully completed. 

Failure on the part of the grantee to perform under the requirements of the grant can result in penalties ranging from economic sanctions to prison in cases of improper use or theft of public funds.

By far, most government grants are applied for and awarded to other federal agencies, states, cities, colleges and universities, and research organizations. Few individuals have the money or expertise necessary to prepare adequate applications for federal grants. Most active grant-seekers, in fact, employ full time staffs to do nothing but apply for and administer federal grants.

The plain truth 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 guarantee of success.

If applying for a grant no longer sounds too good to you, jump to the Non-Grant Sources of Assistance section of this article. Otherwise, if you do have a good idea for a project that will benefit your community, keep reading to find out more about how the federal grant process works.

Next page The Process - Finding and Applying for Grants >Page 1, 2, 3