Project Grant: funding tied to a defined piece of work

What is a project grant?

A project grant is funding awarded for a specific, defined piece of work rather than for the general running of the organisation that receives it. The grantee sets out what they intend to do, over what period and at what cost, and the funder approves that description. The money is tied to it.

Three things define a project grant: a defined scope, a fixed period, and a budget attached to that scope. Money awarded for a two-year literacy programme in four schools is a project grant. The same amount given to the same charity to spend as it judges best is not.

Because the funding is tied to a described project, it is a form of restricted funding. The grantee cannot move it to another activity without asking, and the grant agreement usually says so explicitly, along with what happens to anything unspent at the end.

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How is a project grant different from general operating support?

The difference is what the funder is buying, and it changes the whole relationship. A project grant funds an activity the funder has approved. General operating support funds the organisation, leaving it to decide where the money does most good, including on rent, salaries and the unglamorous costs that keep it running.

Project grants are easier for a funder to justify, because the outcome can be described in advance and reported afterwards. They are also harder for the grantee to live on, since they rarely cover the full share of overheads the work actually consumes. This is the long-running argument about indirect costs, and it is the main reason some funders have moved part of their portfolio towards unrestricted funding.

A capital grant sits apart from both. It funds an asset, a building, a vehicle, equipment, rather than an activity or an organisation, and is usually paid against proof of expenditure.

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Project grant or grant project? Two different things

The two terms are close enough to be used interchangeably, and they do not mean the same thing. A project grant is a type of funding, defined by what the money is tied to. A grant project is the piece of work itself, the thing the grantee runs once the money has been awarded.

Put simply, a project grant funds a grant project. A funder awards project grants; a grantee delivers grant projects and reports on them. Our guide to grant projects covers the delivery side, this page covers the funding instrument.

The distinction is worth holding onto when writing guidelines, because applicants read them literally. A call that says “we fund projects” and a call that says “we award project grants” set different expectations about what happens after the award.

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Running project grants in a grant management platform

Project grants generate more administration than any other form of funding, because each one carries its own scope, period, budget and reporting obligations. A funder running a hundred of them is tracking a hundred separate sets of milestones and deadlines.

A grant management platform holds the project description, the approved budget and the reporting schedule on a single record, tracks spend against what was allocated, and collects grantee reports against the milestones set in the agreement rather than by chasing them over email.

The practical benefit for the funder is being able to answer two questions at any moment: where each funded project stands, and how much of the programme budget is committed but not yet spent.