What is the difference between a Grant and a Donation?
Both Grants and Donations are gifts. While donation is a free and unrestricted contribution, grants are for a specific purpose that come attached with specific terms and conditions of use set by the grant maker.
Donations do not come with a caveat from the donor on how and where the funds are to be utilised. It is upto the discretion of the recipient non-profit to decide its utilisation – towards programs, meeting operating cost, or even developing their website!
A grant is issued with specific deliverables tied to a specific project or activity. Grants will specify the conditions subject to which it is made and the same is outlined in a signed grant agreement. The grant maker may also require the recipient non-profit to report on the utilisation as per the mutually agreed timelines.
Below are some common clauses that come attached with Grants:
- Use of Funds
- Opening of a separate bank account for the grant
- Payment schedule
- Budget and the acceptable variables percentage in spending
- Investment of Funds
A Grant is lot more regulated as compared to donations.
The decision to make a grant or a donation is at the discretion of the donor. A donor wishing to exercise control over how the funds are deployed may prefer giving Grants. The Government, Private corporations, and Foundations prefer supporting programs via Grants.