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How to Figure Out Differences among Types of Federal Grants

You can apply for federal funding for your organization in a variety of ways. Federal government grant monies are available in two forms: direct grants and pass-through grants.

  • Direct grants: With direct grants, you apply directly to the federal government.

  • Pass-through grants: With pass-through grants, your state applies to the federal government for a grant. After receiving the grant, the state then passes the federal monies on to applicants. (Remember that pass-through monies are still considered federal monies, even though they’re distributed by state agencies.)

Whether in the form of direct or pass-through grants, federal monies are also classified as either competitive or formula:

  • Competitive grants: To win a competitive grant, you must compete with other grant applicants for a limited amount of money. A team of peer reviewers (experts and laypeople who apply to read and score grant applications) looks at your application and decides how many points you’ll receive for each narrative section in the body of the grant request. The applications with the highest scores are recommended for funding.

  • Formula grants: A formula grant is money that’s disbursed by a state agency to a grant applicant based on some kind of a preset standard or formula.

The pros and cons of direct grants

The advantages to applying for a direct grant award, which comes straight from the federal government, include the following:

  • Direct grants have no middlemen and no extra layers of red tape. You apply directly to the feds for a grant in response to their announcement of the availability of funds.

  • You communicate directly with a program officer in a division of a federal agency. So, you get one-on-one attention. Review the application guidelines thoroughly, and then compile all your questions. You can e-mail or call the grant-making agency’s contact person for clarification and answers. Do this upfront so that you can clear the way for the topic research and grant or cooperative agreement writing process.

The one major disadvantage to applying for a direct grant award is that they’re tough to win. You compete with other grant applicants from the 50 states and all the U.S. territories. If the feds are planning to award money to only five grant applicants, your chances are slim — even with an award-winning funding request.

The pros and cons of pass-through grants

Applying for pass-through grant funds, which are first won from the federal government by states and are then passed on to individual organizations, has two advantages:

  • You compete against only other grant applicants in your state. You encounter considerably less competition than at the federal, direct grant–seeking level.

  • You can relatively easily drive to your state capital to make a personal appearance before state agency program staff. While you’re there, get the insider’s perspective by asking for a list of grants funded previously. Make sure the list contains the grant recipients and award amounts.

    Ask for a copy of a successful grant application from a previous competition. Knowing how winners write can boost your chances!

The major disadvantage to applying for pass-through grants is that your grant award will be a lot smaller than if you applied directly for a federal grant and received an award. Larger pots of money wait at the direct level, but the heavy competition reduces the odds of your getting those big awards.

Pass-through grant awards are significantly smaller than direct grant awards because the state takes money off the top of each federal grant to cover administrative costs. Then the amount that’s left must be divided geographically and politically. For example, grants go to certain areas of a state because those areas haven’t won many grant awards recently. They go to other areas because the state senator or representative has a lot of power and influence with a state agency.

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