“Federal funding” isn’t one thing. The government moves money two very different ways: it buys goods and services with contracts, and it funds activities in the public interest with grants and other assistance. Contractors who only watch the contract world can miss a whole parallel stream of opportunity. This guide explains the difference and where grants fit.

The core distinction

  • A contract is a procurement: the government is buying something for its own use or benefit, and you deliver it. It’s governed by the FAR.
  • A grant (or cooperative agreement) is financial assistance: the government is funding an activity for a public purpose — research, community programs, workforce development — where the primary beneficiary is the public, not the agency. It’s governed by the Uniform Guidance (2 CFR 200), not the FAR.

A quick test: if the government is the customer receiving a deliverable, it’s a contract. If the government is a funder supporting your mission-aligned activity, it’s a grant.

Grants vs. cooperative agreements

Both are assistance. The difference is involvement: with a grant, the agency is largely hands-off; with a cooperative agreement, the agency expects substantial involvement in the work. The application and reporting mechanics are similar.

Can a for-profit company win grants?

Sometimes — it depends on the specific opportunity. Many grants are aimed at nonprofits, universities, state/local governments, or tribal entities, but a meaningful number are open to for-profit small businesses, especially in research and development (the SBIR/STTR programs are the best-known example) and in certain economic-development, energy, and technology areas. Always read the eligible applicant types on the specific notice — eligibility is defined per opportunity, not by a blanket rule.

Where to find grants

  • Grants.gov — the government-wide catalog of discretionary grant opportunities, searchable by agency, category, and eligibility.
  • SAM.gov — you still need an active registration (and UEI) to apply, the same identity you use for contracts.
  • Agency program pages — many agencies also post forecasts of upcoming funding.

How grants fit a contracting pipeline

Grants won’t replace a contracting strategy, but for the right firm they diversify revenue, fund R&D that later becomes a product or past performance, and open relationships with program offices. The application style is different — you’re proposing an activity and a budget against a public purpose, not bidding to deliver a defined scope — so treat grant pursuit as its own discipline.

How PursuitAI helps

PursuitAI surfaces Grants.gov opportunities in a dedicated Grants view alongside your contract pipeline, with a for-profit-eligibility signal so you can quickly filter to the assistance opportunities a company like yours can actually apply for — instead of wading through grants restricted to other applicant types.

A word of caution

Grant eligibility, allowable costs, and reporting rules (2 CFR 200) differ from contract rules and are defined per opportunity. Read each notice’s eligibility and requirements carefully, and confirm applicability before investing in an application.