Difference Between Aid and Grant (With Table)

The need of economical support is needed by any country or any individual to start their business or provide funding for their projects. It also may be needed by any kind of organization to develop their programs. To make this process easier we need aid and grants which are followed by criteria to provide any kind of funding to those countries or individuals or organizations who need it.

Aid vs Grant

The main difference between Aid and Grant is that grant is one kind of fund, on the other hand Aid is funding transfer within countries. Grant can be given to local government, an institution or to an individual. But aid is connected between countries. Aid improves diplomatic approval and also helps to gain many kinds of commercial access.

Aid can be represented as an amount of resources. There are mainly two types of aid,i.e, Bilateral aid and multilateral aid. The former one means the country or countries which are receiving fundings from other advanced countries must use the funding accordingly. The latter one means those countries which are economically stable and have the ability to help other countries by donating money through international organizations.

Grants are mainly one kind of contribution or donations. It can be given to an organization, an institution or any individual. Mainly grants are the amount of contributions made by one government to another government. There are 3 main types of grants. These are –  block grants, categorical grants and general revenue sharing.

Comparison Table Between Aid and Grant

Parameter of ComparisonAidGrant
DefinitionIt is one kind of fund transfer from one donor to a recipient (mainly country).The amount of money given by the central government to a specific project, institution or organization.
PurposeTo ensure the countries receiving aid adopt policies that bring profits.To fund any project or provide public services to stimulate the economy.
TypesBilateral AidMultilateral AidBlock grantsCategorical grants and General revenue sharing.
AdvantagesIt helps to improve a low-income or economically unstable country to build-up and stay in a sustainable state.It is helpful to any group projects or individual projects as it gives funding where they don’t have to pay back the money.
Use of AreaIt is mainly used by international organizations to transfer the money from one country to another country.Grants are used as a resource to any projects or non-profit organizations.

What is Aid?

The transfer of funding or donations from one country to another is known as aid. Aid is given by an economically unstable country to a low-income and economically unstable country to provide a sustainable state. It is mostly used by international organizations like the World Bank to transfer the money between countries. It is not only used for donations but also for military services and government rewards or developing cultural aspects of any country.

In case of military purpose the aid is called military aid. It helps the receiving country to strengthen their military service by building weapons and developing the security services. Aid is also used for developing one country’s cultural aspect. One popular and mostly used foreign aid is project aid that is similar to grants, it gives funds to a certain project but not gives the fund to any individual.

It will only provide the money to those projects that are made by an institution or organization and also the project must be a way of improving the economical state of the country.

What is Grant?

Grant is one kind of funding that is given by the government to individual projects or institutions and organizations. The government allows funding to projects which meet the requirement for funding. It only provides funding to those projects which will improve or bring profit to the country. Most commonly used grant is project grant.

When a project is funded by the government to support and improve the program or the project is basically known as Project grants. There are several different types of grants available like- general operating grants, capital grants, capacity building and endowments. Government grant is a reward in the form of money by the federal government to eligible individuals and also the main point is that there will be no expectation of getting the refund.

This kind of funding is normally decided by the government and the legislature. When a situation arrives where a particular project seems to be funded then only the fund is given to the individual along with the permission of the government.

Main Differences Between Aid and Grant

  1. Aid is a way of transferring funds especially within countries whereas Grants are also funding but the difference between them is that grants can also be given to certain individuals. But it is not applicable in aid.
  2. Aid is given by one country to another. Grant is given by the government to any project or programs or any certain individuals to provide the supply for their projects.
  3. Aid is used by international organizations. For grant international organizations may or may not be needed.
  4. Aid is mainly transferring funds outside any country, but grant mainly occurs within the country. Outside country grants may be possible but that’s a rare case.
  5. Aid is always given by high-income countries to low-income countries. But in the case of grants it can provide money to any project whether it’s a sustainable country or not.

Conclusion

Aid and grants both are transfers of funds or donations (money). Where aid is helpful for those countries which cannot support their economical crisis or other problems (like military support, for making advanced weapons etc). In that situation aid is given by a country which has an economically stable state. 

Grants are also helpful for entrepreneurs or non-profit organizations to support their programs and projects. But there is one problem about grants, i.e. , a lot of time is needed and also that many preparations are needed to get the funding of grants. For getting grant funding you don’t have to repay the money. Unlike loans, it will fully provide money to your project without any demands. Grants are especially helpful for start up companies.

References

  1. https://www.journals.uchicago.edu/doi/pdf/10.1086/NTJ41792095
  2. https://www.nber.org/papers/w18710