Grant Terms in Plain English: The Glossary Every Applicant Needs

A financial award from a government agency, foundation, or corporation to support a specific project, program, or purpose. Unlike a loan, a grant does not create a repayment obligation — but it does create a compliance obligation. Funds must be used for the purposes stated in the application and grant agreement. Misuse can require full repayment plus penalties (OMB 2024, 2 CFR Part 200).

In federal grant terminology, the award is the legal instrument — the signed grant agreement — that transfers funds from the federal agency to the recipient. "Award" and "grant" are sometimes used interchangeably in casual usage, but in formal grant documents they are distinct: the grant is the funding mechanism; the award is the executed agreement that activates it. Other award types include cooperative agreements and contracts, each carrying different levels of federal oversight.

A stipend is a set payment made to an individual for services rendered or participation in a program — such as a fellowship stipend, a participant incentive, or an honorarium. Stipends are taxable income to the recipient. A grant awarded to an Organization that then pays stipends to participants is handling two distinct financial transactions, each with different tax and compliance implications.

A type of federal grant where funds are distributed to eligible recipients based on a predetermined formula — typically using demographic or need-based data such as population, poverty rate, or number of eligible beneficiaries. Formula grants do not require a competitive application; eligible entities receive funding automatically based on their formula calculation. Examples include CDBG and Title I education funding.

A preliminary document, typically one to three pages, that introduces your Organization and proposed project to a funder before a full application is submitted. Many foundations require an LOI as the first step in their application process. An LOI that does not align with the funder's stated priorities will not advance to a full proposal invitation — which is why reading the foundation's 990-PF before writing the LOI is non-negotiable.

A formal document issued by a funder — government agency or foundation — announcing that grant funds are available and soliciting applications. The RFP (called a NOFO in federal grant terminology) contains everything you need to know about eligibility, application requirements, review criteria, and award terms. It is not background reading — it is a checklist.

A 12-character alphanumeric identifier assigned by SAM.gov to every entity registered to receive federal funding. The UEI replaced the DUNS number in April 2022. If your Organization does not have an active SAM.gov registration with a current UEI, you cannot apply for federal grants. Registration is free and must be renewed annually — a lapsed registration is one of the most common and preventable reasons Organizations miss federal grant deadlines.

The written sections of a grant application that describe your Organization, the problem you are addressing, your proposed approach, your capacity to deliver, and your expected outcomes. Most funders specify exact section headings and page limits. Exceeding page limits or omitting required sections are grounds for disqualification regardless of the quality of the content. The narrative must be internally consistent with the budget — reviewers look for alignment between what you say you will do and what you say it will cost.

A visual framework required by many government funders that maps the relationship between your program's inputs (staff, funding, facilities), activities (what you do), outputs (what you produce), and outcomes (the changes your program creates). A well-constructed logic model demonstrates that you understand why your intervention works, not just what you do. It is increasingly required in federal grant applications and strengthens the credibility of your outcome claims (W.K. Kellogg Foundation 2004).

Costs that can be directly attributed to a specific grant project — such as project staff salaries and benefits, consultant fees, supplies, travel, and program-specific equipment. Each direct cost line must be justified in the budget narrative and must be necessary, reasonable, and allowable under the funder's guidelines. Personnel costs must specify the percentage of each staff member's time dedicated to the project, expressed as a FTE allocation (OMB 2024, 2 CFR Part 200).

Administrative and operational costs that support a grant project but cannot be attributed to it exclusively — such as rent, utilities, accounting, IT, and executive leadership time. Most private funders cap reimbursable indirect costs at 10–15% of direct costs. Federal grants may allow a higher rate if the Organization has a NICRA. Understanding the funder's indirect cost policy before you build your budget is essential — an indirect cost rate above the funder's cap effectively means your Organization subsidises the grant.

A funder requirement that the applicant contribute a specified percentage of the total project cost from other sources. A 1:1 match means for every dollar granted, the Organization contributes one dollar of its own. Match can be cash (actual expenditures) or in-kind (documented non-cash contributions such as volunteer time or donated space). Match commitments made in a grant application become binding obligations — failing to provide committed match is a compliance violation (OMB 2024, 2 CFR Part 200).

A written section accompanying the budget spreadsheet that explains and justifies every line item. Reviewers read the budget narrative alongside the budget table to verify that costs are reasonable, necessary, and aligned with the program activities described in the narrative. A budget line without a clear justification invites a reviewer to question it. A budget narrative that contradicts the program narrative signals an application assembled hastily from parts.

The start and end dates during which a grant recipient is Authorized to incur costs and spend award funds. Costs incurred before the period of performance begins or after it ends are generally unallowable — they cannot be charged to the grant. Extensions to the period of performance require funder approval and must be requested before the original end date expires, not after.

A subaward is made by a primary grant recipient (the "pass-through entity") to a subrecipient Organization to carry out part of the funded project. The primary recipient remains responsible to the funder for the entire award — including how the subaward funds are used and reported. Distinguishing a subrecipient from a contractor is a specific federal compliance requirement — the distinction has legal and financial implications for both parties (OMB 2024, 2 CFR Part 200.331).

Costs that meet the funder's criteria for reimbursement under the grant. Federal grants follow the cost principles in OMB's Uniform Guidance (2 CFR Part 200, Subpart E), which requires that costs be necessary, reasonable, allocable to the grant, and not prohibited by the award terms. Private funders set their own allowable cost rules in the grant agreement. Common unallowable costs under federal grants include alcoholic beverages, entertainment, lobbying, and fines.

An independent audit required of Organizations that expend $750,000 or more in federal awards in a single fiscal year. It examines both the financial statements and compliance with major federal program requirements. Required under 2 CFR Part 200 (Uniform Guidance). The threshold applies to total federal expenditures across all awards — not just a single grant. Organizations approaching this threshold should plan for the audit requirement well in advance, as it requires a cognizant agency designation and coordination (OMB 2024).

The portion of grant funds not expended by the end of a budget period that a recipient is Authorized to carry forward into the next period. Federal grants may require prior approval to carry over unexpended funds; private funders vary. Carryover is not automatic — it requires a request, justification, and funder approval before the current period ends. Unexpended funds at the end of the award period that have not been Authorized as carryover must be returned to the funder.

For federal grants, a drawdown is the act of requesting funds from the federal payment system — typically PMS or ASAP. Funds must be drawn down on a reimbursement basis (after expenses are incurred) or on an advance basis (with justification and reconciliation requirements). Drawing down funds in excess of immediate needs is a compliance violation and can trigger audit findings.