Grants vs. Contracts

Commonly folks have asked me what the technical difference is between a contract and a grant. The difference is not about the dollar value or who the buying entity is nor the kind of work being done. Instead it is about the legal concept of default. In my eyes, the corner stone of whether something should be called a grant or a contract lies in whether one is legally bound to produce results as one is in a contractual relationship or whether you are simply granted funds to do something. Did you get that nuance? Perhaps that is oversimplifying it.

Essentially, a contract is a legally binding document in which the parties make promises to deliver a product or service in exchange for consideration (usually money.) A grant on the other hand is when one party grants funds to another party to do something, in reasonable hopes that the task can be accomplished. If the task is accomplished ? great, everyone is happy and it could lead to more grant funding! On the flip side, if the task is not accomplished there are most likely no legal ramifications (assuming you have broken no other laws) as would be the case in a contract.

If we were to compare and contrast the two mechanisms we would say that a contract has two parties exchanging promises where one party delivers and one party pays. A grant however has two parties where one party gives the money and one party performs the objectives in hopes of achieving them. Do you see the difference now?

In summary, the difference between the two mechanisms ? grant vs. contract mainly deals with the legal concept of default. If you do not deliver under a contract you are in "default" and can reasonably assume some justifiable action may be taken against the party that did not hold up its end of the deal. However, if you do not deliver under a grant, minimally you can rest assured that you will not deal with financial or legal repercussions.

However, from a business perspective, if you do not produce under either mechanism it is fairly likely that you will not receive those kinds of funds again in either a grant or a contract form. So as much as you might not be heading off to jail, you may find yourself wondering where your next meal is coming from and defending your good name.

Accordingly, if you are in the Government Contracting arena it is always wise to make sure you understand which instrument you are working under. If you are faced with using a contract rather than a grant and you have some concern surrounding whether you can attain a goal or the task at hand, you will definitely want to use a "best efforts" type contract. This will allow you to operate as if it were similar to a grant where you have high hopes of attaining said goal, but ultimately not guaranteeing you can deliver.

Lisa DeMaio is the president and founder of Virtual Contract Manager, LLC, which is a one-stop "information shop" for and about the Contract Management Community. Let Virtual Contract Manager be your resource for Contract Management information. Come visit Virtual Contract Manager and get a wealth of FREE Contract Management information and to sign up for our content-rich monthly newsletter. Let Virtual Contract Manager keep you one step ahead of the game! http://www.virtualcontractmanager.com/

---

ADH Will Make Your Life More Productive & Your Life More Profitable

What is a Virtual Assistant?? A Virtual Assistant is that... Read More

Increase Profits With a Small Investment of Time and No Money

The less a business pays for goods and services the... Read More

New Habits, Rebounding Economy Help To Sell Giftware and Collectibles

Just a few years ago, when one thought of a... Read More

Why the Over Regulation on the Franchising Model?

Franchising is the fastest way to build small businesses, provide... Read More

Employee Relations Manual Sample Outline

Most smart entrepreneurs and all large corporations have Employee Relations... Read More

How To Accept Credit Cards

If you plan to do business online, then your website... Read More

Be Prepared When Business Investors Look Beyond Your Business Plan

You have spent considerable time pulling your business plan together,... Read More

Concrete Cleaning Discussed at World of Concrete Expo 03

If you are in the pressure washing business and are... Read More

Franchisee; Vacation Managing

Do you own a franchised business? Over 400,000 franchised businesses... Read More

5 Tips for Hiring a GREAT Bookkeeper

Bookkeeping?the "dreaded" word is something we all have to worry... Read More

Got Stimulation?

An observation while returning home from a seminar: Getting away... Read More

Do You Microbifer in Your Cleaning Business?

Microfiber cleaning towels have been around for about ten years... Read More

How to Compete with the Big Guns?!

Many small business startups fail within the first 2 years... Read More

Eight Ways To Improve Your Companys Cash-Flow ? TODAY!

Cash is the lifeblood of any business. As humans need... Read More

5 Good Reasons a Self-Employed Professional Should Take Vacation

So you think you're not justified in taking time away... Read More

Boston Suburban areas a good choice to run a business

BioTechs even with the latest news had shed over 1000... Read More

How to Give FREE Advice and Make Money

When is advice free and when should you charge for... Read More

Government Does Not Pay Its Bills on Time

Many small companies work very hard to get new accounts.... Read More

Entrepreneurs Ask: What Can a Virtual Assistant Do For Me?

Great question!Freeing your time is an indisputably key element in... Read More

Small Business Owners - They Owe You The Money Why Dont They Pay?

Doesn't it frustrate you when you've given good service, sometimes... Read More

The Key to Small Business Growth? Buyer Alignment

Unfortunately for all buyers, each selling organization and their individual... Read More

The Business Autopsy: A Fact Of Life

Last week we discussed the importance of performing an autopsy... Read More

Image of Your Franchise Automotive Outlet is So Important

Image of your franchise automotive outlet is so important. Some... Read More

11 Things Small Business Owners Can Learn From The Supreme Court

1. Have A Strong Constitution ? Justices deliver decisions by... Read More

How to Profile a Client

At first glance, this topic may seem a little repetitive,... Read More

Business Debt Collection Letter Writing Secrets

Debt collection letters--an overview"Debt collection letter" in the singular may... Read More

Creating a Paperless Office

When working from home, it is usual to find that... Read More

How to Raise Your Fees and Thrill Your Customers

Think the best way to get more customers is to... Read More

The PR Commitment to Small Business

We're birds of a feather, public relations and small business.... Read More

Pressure Washing Market Niche

Those who are in the pressure washer business should not... Read More

Window Cleaning Business Future Challenge With Self Cleaning Glass

Self-cleaning glass has been talked about a lot, with such... Read More

Comparing Boston Area for a mobile car wash business

The Boston suburbs seem to be rich with possible locations... Read More

Hone Your Edge, Stay Focused

A common hazard faced by new entrepreneurs is a lack... Read More