Have you ever wondered ‘what is a grant?’

Whether you’re new to government grants, or keen to expand your knowledge in business grants and government funding, you’re in the right place.

In this article, I’ll cover off what grants are, discuss some of the different types, and explain some of the key terminology you should understand before you apply for a grant. 

The world of grants and government funding can be daunting if you’re not familiar with how it works, so the best place to start is with a good base of knowledge.

What are government grants? 

A government grant is funding awarded to an applicant (this may include individuals or organisations such as small businesses, companies of all sizes, or not-for-profit organisations) for the completion of specific projects. 

Projects that receive grants usually provide specific outcomes that align to a priority or set of priorities at the local, state or national government level.

Governments award grant funding for many reasons including: stimulating economic growth, supporting innovation, building and developing infrastructure, or enriching communities. 

Grants vary in size and are awarded at all levels of government; federal, state, and local. At any one time in Australia, there can be hundreds of grants open to applications, and billions of dollars in funding up for grabs. 

But grants aren’t just awarded on a whim. They are awarded only to eligible applicants who can present a strong business case that outlines exactly why they need funding, and what the funding will be used for.

Is a grant free money? 

No, a grant should never be viewed as free money. You can apply for a grant for free, but in order to be awarded a grant, your organisation will need to invest significant time and resources (which are often equivalent to a monetary investment) into your grant application and project.

Unlike a loan, income from a grant is not repayable. But income from grants is taxable, so you need to account for that when you submit a grant application.

To be awarded a grant, your organisation will need to follow a set process. This usually involves meeting a very specific set of eligibility criteria, entering a compelling business case into a competitive process, and clearly answering a set of assessment criteria. The application process is designed to ensure you can demonstrate why your project requires funding, and it also details the activities you plan to use the funding for, should you be awarded a grant. 

Grants are not discretionary income, so any funds awarded will only be for use on specific activities related to your grant project. 

So, while you can apply for free, there are always costs associated with getting a grant—from planning and administering your project, to hiring a grant writer, and meeting the aforementioned additional tax obligation.

Some grants will also require you to demonstrate your own funding co-contributions or will only provide funding up to a certain percentage of your total project cost. 

How does government funding work? How are grants awarded?

Business grants are designed to help organisations achieve specific outcomes that align to government-led economic or social priorities. 

To win a grant, an organisation must apply, and outshine other applicants. The application process is always competitive because a grant program’s total funding allocation will be capped. This means many organisations may apply, but only some will be awarded a grant. 

Applicants need to meet specific eligibility criteria to win funding (eligibility criteria could include being a certain type of organisation, e.g., a sports club, or a tech company), and clearly address a set of assessment criteria in their application responses. 

At their core, grants are about supporting initiatives that help to build and maintain a prosperous nation. Grants can be awarded to stimulate innovation in manufacturing, develop new products, revitalise struggling communities, or support cutting edge research in science, technology, defence, space, and other technical sectors.

Grants are usually awarded to projects that:

• Create jobs
• Build or improve infrastructure
• Provide further training or upskilling opportunities to employees
• Help to reduce waste or energy usage
• Develop Australian imports and exports 
• Accelerate business growth
• Enable the purchase of new equipment
• Upgrade, restore or fit out buildings

Governments also award grants to aid communities in recovery after a disaster, or to provide support for specific economic sectors in times of crisis.

For example, in response to the COVID-19 pandemic, the Australian Government launched the Restart Investment to Sustain and Expand (RISE) Fund to support the reactivation of Australia’s arts and entertainment industry after the pandemic forced many businesses to choose between closing their doors, or radically changing their daily operations in order to survive.

Co-contributions and in-kind contributions

Grants often require the applicant to display either co-contributions or in-kind contributions to receive funding. 

Co-contributions are monetary contributions made by the applicant. This might come from the organisation’s own funds, a loan, equity investors, or another source of funding separate to the grant. For example, a government grant might fund only up to 50% of the total expenditure of a project, with the other 50% to be funded by the applicant.

In-kind contributions are goods and services; they are non-monetary contributions. These could include labour, donated items, or essential services required to facilitate the grant project.

The different types of government grants

Grants vary greatly in size, complexity, and competitiveness. Let’s look at some of the most common types of government grants in Australia.

Federal grants

Federal grants are awarded by the Australian Government to organisations across the nation. Federal grants are usually large, with a complex and competitive application process. They are designed to support priorities set by the Australian Government, or boost Australia’s standing in the global economy.

State grants

Each of Australia’s state governments also issue their own grants. State grants support state-level priorities and offer metropolitan and regional organisations the chance to invest in projects that require building of new infrastructure, development of new products, creation of jobs, delivery of events, and more.

Community grants, local government, and council funding

Grants are also awarded by local councils and governing bodies for social and community enrichment, or to support or sponsor local organisations in need of funding. 

Wage subsidies

Some grants are awarded to subsidise wages and support the hiring of employees in specific or underrepresented demographics. This could include people under the age of 25, or over the age of 45, or Aboriginal and/or Torres Strait Islander people, or people with disabilities.

How grant funding is delivered

Grant funding can also be delivered in different ways. Here are a couple of the most common ways organisations receive funding.

Direct funding

Direct grants are cash sums. These are usually awarded for a grant project that meets eligibility criteria, has set start and end dates, and details how the project will achieve specific outcomes that align to the funding body’s priority areas. Applicants may need to submit reports that detail how funding has been used after it is awarded.

Tax incentives

Some grants are awarded as tax incentives, allowing businesses to engage in specific activities, or make investments in supplies and infrastructure that can be offset at tax time. This type of grant is often awarded on an annual basis.

What is a grant proposal?

Every grant requires an application. This is commonly known as a grant proposal or grant submission. Like any proposal in business, a grant proposal is written for a specific audience and is intended to achieve a specific outcome. 

Grant proposals must convince the grant assessors (who review submissions on behalf of the grantor—the funding body) that the grantee (the applicant seeking funding) has a strong case for investment.

What makes a good grant application?

Grant assessors will check many applications during the review process, so to win, your grant submission needs to stand out from the crowd.

Your grant proposal should present a compelling business case that convinces the reader that your organisation needs funding, is eligible, and is capable of using the funds in the desired way—to promote a valuable cause. 

A good grant proposal must be clearly written and answer all the assessment questions in full, exactly as they are asked. Always pay attention to the details in the grant guidelines, as omitting a vital piece of information or specific detail could lead to your application missing out on funding.

A strong grant submission will clearly document your plans and a timeline for delivery of your project, a budget, and outline the resources that you need to bring the project to life. Most grants require supporting documentation to be provided, including financial and staff records.

What to do before applying for a grant

Before you apply for a grant, you must always read the grant guidelines thoroughly. Each grant comes with a unique set of eligibility criteria, and to be awarded funding, your organisation must meet all of them.

Funding is often only available to certain sectors of industry (e.g., manufacturing businesses), and may be provided for use on specific activities or types of projects only. These rules are critical, and you should familiarise yourself with them before you start preparing your application to ensure your organisation has a genuine chance of being awarded funding.

Wrapping up

Understanding government grants can be challenging—every grant is different—but hopefully, you now have a grasp of how the grants process works. This is knowledge that you can leverage in working on your organisation’s next grant project or submission.

Final Thoughts

Our Insights showcase some of the grant-winning methods we employ at GrantHelper, and they will help you create a stronger grant application. But no matter how well prepared you are, winning grants takes time—something we know many business owners and directors just don’t have. And that’s why we’re here to help.

Granthelper can assist your organisation’s next grant application, no matter what stage of the funding journey you’re at.

I need help applying for grants

Check out our How to Prepare Before You Apply insight to help you reduce the stress levels when you apply for a grant.

Check out our How to write a successful grant application to learn some time-saving tips to make the grant writing process easier.

Our in-depth eBook is the single most valuable resource you will find that helps organisations to truly understand how to win government grants.

 

Is your business eligible for this government grant? Or perhaps you’re not sure and want to know more?

GrantHelper offers a range of government grant services, helping businesses of all sizes to discover, apply for, and win the best grant opportunities. We can help you with anything from finding the right grants, to writing your application, formulating an ongoing grant strategy, and more.

Get started now by filling in the form below, or tap the ‘Book a Discovery Call’ button to schedule a no-obligation virtual meeting with an experienced government grants consultant.

Prefer to talk? Call 0409 478 850 now for a no-obligation discussion. We’re here to help your business better understand grants, submit your best possible application, and get you in the winners’ circle.

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