07 Apr
Government Grants – What you need to know
What are government grants?
Government grants refer to an award of a financial nature given to an eligible grantee or grantees by the government. Government grants are given without the expectation that they will be repaid. They also do not include any assistance of a technical or financial nature such as loans or loan guarantees, direct appropriation, an interest rate subsidy, or revenue sharing. Government grants are provided through programs annually for projects of varying natures such as art programs, educational institutions, agricultural projects and so on.
Grants must usually contain information on the sponsoring government department, program title, total budget, application deadline, administrative contact, and program summary.
Who can apply for a government grant?
Many people incorrectly think of government grants as “free money”. However, grants are anything but free money. Securing a grant isn’t a simple process and involves plenty of expertise as well as a lot of time. Grants also come with the understanding that the person or people receiving the grant are committing to fulfil various obligations in exchange for the money. If you fail to fulfil your end of the bargain, you can even end up with legal penalties. Grants are designed in this way so that the government can see a return on its investment.
Grants are usually awarded to government organizations at the local as well as state level. Nonprofit organizations and academia usually receive government grants. Public, as well as private, education providers, are eligible for grants. Even independent schools and research institutions are eligible for government grants.
While individual citizens are also eligible to receive government grants, it’s quite difficult. However, it isn’t impossible. Individuals who own small businesses which regularly engage in activities which benefit the public have a much higher chance of securing a government grant. In addition to this, businesses which perform services that fill an area that isn’t being served in another way have a much higher chance of receiving a government grant. Speak to your professional adviser or an Accountant in London to see if your businesses might be eligible for any government grants.
A common misconception about government grants is that they’re awarded as financial assistance for people who have fallen on hard times. Government grants aren’t meant to be used for personal financial support. To find government grants click here.
Types of Grants
There are many types of grants offered by the government. Grants are usually offered to promote the public good directly for a varying period of time. They can be awarded to promote the public good over the long term or immediately. Grants are granted for many programs including retraining programs to help people who’ve lost their jobs, street improvement programs, programs to stimulate business development in underdeveloped parts of a town or city and so on.
If you look at the types of grants on a category basis, you will find grants in many categories. Some of the categories that you can find grants being offered are science and technology, transportation, energy, agriculture, health, food and nutrition, natural resources, environment, natural resources, regional and community development, housing, business and commerce, education, cultural affairs, social services, legal services, employment and training etc. You can view the governments grant register here.
Advantages of grants
Grants aren’t loans which mean that they don’t need to be repaid. In addition to this, having good credit isn’t a requirement. Grants are like gifts. The government gives them without any interest or tax implications.
Specific projects require large sums of money which make grants one of the few sources available to secure funding. Another benefit of grants is that grants can give organizations exposure as well as credibility which will do wonders to help their private fundraising efforts. You aren’t limited to the number of grants you can apply for in a year. However, there are cases where you might be required to fund a project from your resources before you can receive reimbursement from the government for your expenses.
Disadvantages of grants
It isn’t all sunshine and rainbows when it comes to grants. Preparing a grant request comes with its own set of complexities which are sometimes left to professional proposal writers who possess training and experience. To draft a successful proposal, plenty of planning, research as well as the ability to go through lots of detailed requirements and specifications is required.
Nothing in life is truly free, and grants aren’t an exception. As already mentioned, they come without any responsibility to pay the money back. However, there are specific strings attached which require the recipient to act according to strict guidelines for spending.
In addition to the above, grants come with strict government oversight as well as audits which are conducted at least once a year. A business plan which includes a budget, scheduled milestones and project goals which have to be finished within highlighted parameters must be presented. Hiring an accountant or similar is common practice for people who receive grants so that they prepare their financial reports correctly.
Another disadvantage of government grants is that they are usually short term. Once you run out of money, new funding sources need to be found. This is why it’s crucial to use the money given to you smartly which will let you make the most out of your grant.
Why are grants denied?
Plenty of promotional material fools people into thinking that everyone can easily obtain grants. However, the reality is that the grant money available is being competed for by many people. The competition is huge.
In addition to the above, many people still do not possess the resources as well as the expertise required to produce an application which meets all the stringent requirements. As already mentioned, there’s no shortage of people competing for grants. Many grant applications are denied because there’s nothing they do differently when compared to the swath of applications being looked at. Sometimes, grant applications get buried under the sheer avalanche of submissions when they look generic.
Furthermore, economic conditions play a huge role in how much funding is available which makes the process that much more competitive. There are many ads by companies which promise stellar results while doing all the heavy lifting for you. Most likely if an ad sounds too good to be true, it usually is. There is no guarantee of success when it comes to applying for a grant. A thorough investigation of these companies is required before signing a contract for their services.
Example of a government grant
As already mentioned, grants fund a variety of different things. A grant can support an economic program with the primary aim of researching the improvement of the understanding of the processes and institutions of the U.K. economy and the rest of the world.
Grants can also be used to research streamlining accountant processes to see common pressure points accountants in London or business accountants face. Accountants of different fields face different problems. A grant could be used to research how to alleviate these problems.
Conclusion
When you look at the whole picture, the benefits of government grants far outweigh the negatives associated with them. People willing to invest the time and effort to secure funding should do so without a second thought. An important thing to remember while applying for a grant is to be prepared for rejection. Perseverance pays off. With each rejection, approach the grant from a different angle or ask for a different grant.
Jinesh is a Senior Business Accountant, with a masters in Finance from Westminster University, and specializes in tax and accounting for small to medium businesses with a turnover less than £ 3 Million.
He specialises in helping creative businesses understand and manage their accounting and tax needs and obligations.
As accounting ecosystems evolve, their potential to add value also grows. This has increased the focus on digital solutions to tackle complex business problems. Jinesh helps businesses see the opportunity in this and helps businesses become more efficient and increase performance, using the right solutions.
Some of the key things he focuses on are:
- Helping businesses gain insights from their business data
- Providing complex tax and accounting solutions
- Helping businesses prepare for complex industry developments and changes
You Might Also Want to Read: