The Four Main Types of Grant Funding

Formula, Competitive, Continuation, Pass-Through Funds

The new grant seeker may be easily overwhelmed by a seemingly endless collection of grant programs. There are actually only four main types of grant funding. This document gives descriptions of four main types of funding formula, competitive, continuation, and pass-through grants.

Formula Funding

A formula grant specifies a precise formula in the legislation creating the program and the recipients are pre-determined. Formula Grants include quantifiable elements, such as population, amount of tax effort, proportion of population unemployed or below poverty level, density of housing, or other demographic data. The specified formula is a rule that tells potential recipients precisely how they can calculate the quantity of aid to which they are entitled under the provisions of grant, as long as the recipient qualifies for such assistance under the stipulations of the program. Usually, the elements in the formula are chosen to reflect characteristics related to the purpose of the aid.

Competitive Funding

Unlike a formula grant, a competitive or discretionary grant awards funds on the basis of a competitive process. The funder reviews applications through a formal review process, in light of the legislative and regulatory requirements and published selection criteria established for a program. The review process gives the funder discretion to determine which applications best address the program requirements and are, therefore, most worthy of funding.

Continuation Funding

Continuation funding grants are renewable programs have been funded for multiple years. A continuation application is submitted annually after the first year, for each subsequent year of the project. Programs may be restricted to current grantees or in some cases open to new applicants. The applicant is generally required to provide a progress report and note any changes in the program. Often priority is given to current grantees; new applicants should consider partnering with a currently funded entity.

Pass-Through Funding

Pass-through grants are funds given to the states by the federal government and then distributed by the states to local governments. The states may disburse the pass-through federal funds to eligible local jurisdictions using formula allocations or competitive applications.

By understanding of these types of grant funding applicants can best decide how to focus their efforts when applying for a grant. The primary focus of the application may differ significantly, for instance in a competitive grant the narrative should be very compelling and align the applicant’s program with the funder’s goals and guidelines. While an application for a non-competitive formula or continuation program may only require you to submit reports or updated documents. Pass-through funding may be either competitive or non-competitive, carefully read the funding announcement and be sure what type of grant you are applying for, then follow the guidelines above to have the best chance of being awarded funds.

FSC is positioned to help you understand what funding opportunities best fit your situation and needs.