Grants vs. Contracts in Plain English
Grants and contracts are often confused, but they serve different purposes and follow different workflows. This guide explains the difference and why it matters when searching for opportunities.
Contracts: the government buys something
A government contract is a procurement arrangement where an agency buys specific goods or services from a business. The government defines what it needs, and businesses compete to provide it. Contracts are typically awarded to the business that offers the best combination of capability, price, and past performance.
Grants: the government funds a mission
A grant provides funding to support a specific purpose, program, or initiative. Grants are typically awarded to organizations that can demonstrate they will use the funds to achieve outcomes aligned with the grant program goals. The recipient generally has more flexibility in how they achieve those outcomes.
Key differences
Who receives them: Contracts go primarily to businesses. Grants go primarily to nonprofits, schools, local governments, and other mission-driven organizations.
How they work: Contracts require delivering specific goods or services. Grants require using funds to achieve program goals.
How they are found: Federal contracts are primarily found through SAM.gov. Federal grants are primarily found through Grants.gov.
Why it matters
Understanding whether you should be searching for contracts, grants, or both helps you focus your effort on opportunities where you are most likely to be eligible and competitive.