Governments and governmental agencies don’t just provide financial support to businesses through grants—they utilize a variety of other means as well including cooperative agreements, contracts, tax incentives, rebates and more. The focus of this book however is grants and cooperative agreements as these two are very similar to one another. The world of government contracts is so complex that an entire industry has developed to support small businesses in their efforts to obtain contracts with governments and governmental agencies. Although I’ve worked extensively in government contracts and have experience in the other ways that governments support businesses as well, the purpose of this book is to share with you my knowledge of grants and cooperative agreements.
In this section of the book you will learn about the ways in which grants and cooperative agreements differ from one another as well as the different types of opportunities that are published each year.
Definition of a grant
According to federal government regulations, “An executive agency shall use a grant agreement as the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when—
- The principal purpose of the relationship is to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and
- Substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.”
The Federal government uses a variety of differing grant mechanisms to distribute funds to states and communities. Each of these mechanisms is designed to serve a particular purpose and each one comes along with its own unique set of rules, requirements and obligations. It is important to understand the various types of funding mechanisms because this knowledge can help you develop an appropriate strategy to access funding. The major types of Federal grant funding sources are shown below.
Entitlement programs guarantee that all parties that meet certain eligibility criteria are served. Some federal entitlement funds flow directly to state agencies, which are responsible for operating the particular program or turning the funds over to local agencies to operate the program; in other states, city or county governments run the program. Sometimes states use federal entitlement funds to contract with private nonprofit agencies to perform specific activities that are part of the state plan.
In an upcoming post I will talk about other types of Federal grants including Formula (Block) Grants, Discretionary Grants and Competitive Grants.