Difference Between Aid and Grant (With Table)

Difference Between Aid and Grant (With Table)

Any country or any individual needs economic support to start their business or provide funding for their projects. It also may be needed by any organization to develop its programs. To simplify this process, we need aid and grants followed by criteria to provide funding to those countries, individuals, or organizations who need it.

Aid vs Grant

The main difference between Aid and a Grant is that a 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 helps gain many kinds of commercial access.

Aid vs Grant

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

Grants are mainly one kind of contribution or donation. It can be given to an organization, an institution, or an individual. Mainly, grants are the contributions made by one government to another. 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.
AdvantagesInternational organizations mainly use it to transfer money from one country to another.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 AreaGrants are used as a resource for any projects or non-profit organizations.International organizations mainly use it to transfer money from one country to another country.

What is Aid?

The transfer of funding or donations from one country to another is known as aid. An economically unstable country gives aid to a low-income and economically unstable country to provide a sustainable state. International organizations like the World Bank mostly use it to transfer money between countries. It is used for donations, military services, government rewards, or developing cultural aspects of any country.

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

It will only provide money to those projects that an institution or organization makes. Also, the project must be a way of improving the economic 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 that meet the requirements for funding. It only provides funding to those projects which will improve or bring profit to the country. The most commonly used grant is a project grant.

When the government funds a project to support and improve the program, the project is known as a Project grant. Several types of grants are available, like general operating grants, capital grants, capacity building, and endowments. A government grant is a reward in the form of money by the federal government to eligible individuals, and the main point is that there will be no expectation of getting a refund.

The government and the legislature normally decide this kind of funding. When a situation arrives where a particular project seems to be funded, only the fund is given to the individual, along with the government’s permission.

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 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 program or certain individuals to supply for their projects.
  3. International organizations use aid, and for grants, international organizations may or may not be needed.
  4. Aid transfers funds outside any country, but grants mainly occur within the country. Outside-country grants may be possible, but that’s a rare case.
  5. High-income countries always give aid 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 are both transfers of funds or donations (money). Aid is helpful for those countries that cannot support their economic crisis or other problems (like military support for making advanced weapons, etc). In that situation, aid is given by a country that 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 with grants, i.e., a lot of time is needed, and also that many preparations are needed to get the funding of grants. To get grant funding, you don’t have to repay the money. Unlike loans, it will fully provide money for 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
dot 1
One request?

I’ve put so much effort writing this blog post to provide value to you. It’ll be very helpful for me, if you consider sharing it on social media or with your friends/family. SHARING IS ♥️

Leave a Comment

Your email address will not be published. Required fields are marked *