What is the difference between a grant and a contract?

A grant and a contract serve different purposes and involve different frameworks regarding accountability and requirements. The correct distinction lies in the nature of funding and oversight associated with each.

A grant typically refers to funds provided by a government body or private organization to support a specific project or initiative. Grants usually come with more lenient requirements and greater flexibility regarding how funds are spent. They are intended to support activities that align with the funder's mission, but they do not dictate specific actions or outputs in the same way contracts do. Grantees generally have a degree of freedom in planning and executing their projects, which allows for innovation and adaptability.

On the other hand, contracts are agreements that are more structured and specific. They involve a provider delivering services or fulfilling conditions outlined in the contract in exchange for payment. Contracts come with defined performance requirements, expectations, and deliverables that the contractor needs to adhere to. Failure to meet these requirements can lead to penalties or loss of funding.

Understanding the primary distinction that grants have fewer restrictions and more flexibility compared to contracts is essential for effective grant and contract management. This knowledge aids in assessing the appropriate funding mechanism based on the goals and nature of the project being pursued.