GRANTS
Grants are funds given to tax-exempt nonprofit organizations or local governments by foundations, corporations, governments, small business and individuals. Most grants are made to fund a specific project and require some level of reporting. The process involves an applicant submitting a proposal to a potential funder, either on the applicant's own initiative or in response to a Request for Proposals from the funder. Other grants can be given to individuals, such as victims of natural disasters or individuals who seek to open a small business.

Purpose
Other grants include intergovernmental grants which facilitate:
-Tiered funding to other levels of government (state, local government) from various taxes collected at federal and state levels. These grants provide the main source of general revenue for lower levels of government. Examples include the US, Australia and Kenya.
- Program related funding (e.g. federal education funding for activities administered by state governments). These are often recurring grants, providing the main source of revenue for programs.
- Project related funding (e.g. combined federal and state funding for a freeway). Very large grants are negotiated at policy levels. However smaller grants may be provided by a government agency (e.g. municipal government) applying for grant funding for a local project (e.g. a new library) from a federal or state government program.Project related funding to governments, business, communities and individuals is often arranged by application via an online website.

Types of Grants
- Project grants are grants given by the government in order to fund a research projects such as a research project for medical purposes. An individual must acquire certain qualifications before applying for such a grant and the normal duration for project grants is 3 years.(answers.com)
- Formula Grants provide funds as dictated by a law. See: Aid to Families with Dependent Children, Job Training Partnership Act, Work Incentive Program.
Categorical grants may be spent only for narrowly defined purposes and recipients often must match a portion of the federal funds. 33% of categorical grants are considered to be formula grants. See: Head Start, Urban Forestry Assistance, Asbestos School Hazards Abatement. About 90% of federal aid dollars are spent for categorical grants.
-Block grants combine categorical grants into a single program. See: Community Development Block Grant, Alcohol, Drug Abuse, and Mental Health Services Block Grant. Recipients of block grants have more leeway in using funds than recipients of individual categorical grants. All block grants are considered to be formula grants.
- Earmark grants are explicitly specified in appropriations of the U.S. Congress. They are not competitively awarded and have become highly controversial because of the heavy involvement of paid political lobbyists used in securing them. In FY1996 appropriations, the Congressional Research Service found 3,023 earmarks totalling $19.5 billion, while in FY2006 it found 12,852 earmarks totalling $64 billion.[1]

Federal and State grants frequently receive criticism due to what are perceived to be excessive regulations and not include opportunities for small business. These criticisms include problems of overlap, duplication, excessive categorization, insufficient information, varying requirements, arbitrary federal decision-making, and grantsmanship (a funding bias towards entities most familiar with how to exploit the system, rather than to those most in need.(1)




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