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Advantages & disadvantages of government grants

Updated March 23, 2017

Grants are a source of debt-free financing offered by both organisations and government entities. Government grants function in much the same way as grants offered by private sources, but there are a number of distinct advantages and disadvantages of government grants that make them ideal for specific situations. Understanding these benefits and drawbacks can reveal whether it makes sense for you to pursue this unique form of financing.

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Debt-Free Government Financing

Government grants carry inherent benefits over loans and outside investments since grant funding does not incur a financial responsibility. Government grants carry this benefit a step further from the fact that grant funding ultimately derives from tax income, which grant-seekers have often been paying for their entire adult lives. In this way, government grants offer a way to tap into your past tax payments by receiving debt-free investment back from the government.

Societal Benefits

Government entities offer grants to achieve positive changes in society. Because of this, government grant funding is almost always guaranteed to make a positive difference in citizens' lives. Government granters favour programs that raise the quality of life in struggling communities, in addition to programs that aim to benefit the country economically or politically.

Oversight Restrictions

Government grant funding can come packaged with strict spending limitations governing exactly how recipients use the funds, and public granters are more likely to check in with recipients regularly to ensure that funding is being put to appropriate uses. Since government granters use citizens' tax money to fund grants, they have a responsibility to ensure that grant funds are put to the most productive uses possible, which can become burdensome for grant recipients.

Bureaucratic Process

Government agencies struggle with efficiency more than most private organisations. Grant-seekers are often subject to a wider range of administrative requirements, involving longer and more drawn-out proposal processes than private granters. The bureaucratic structure of government granters can also make it more challenging to get personal advice and assistance on your grant proposal, which is vital to increasing your chances of obtaining the funds you seek.


Competition for government grants can be more intense than for smaller, private grants. Because of this, the chances of winning grant funding from a government entity can be lower than winning a grant award from a private organisation that receives a smaller number of proposals.

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About the Author

David Ingram has written for multiple publications since 2009, including "The Houston Chronicle" and online at As a small-business owner, Ingram regularly confronts modern issues in management, marketing, finance and business law. He has earned a Bachelor of Arts in management from Walsh University.

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