Comprehension and empathy is a human trait for other fellow human beings. To address important public problems, often a sum of money is given to the one who needs and deserves it.
The two terms associated with giving funds are aid and grant. Both the words seem similar but have distinct differences.
Aid vs Grant
The difference between aid and grant is that aid is given from one country to another while grants can be given from one party to another. Aids can include funds and resources while grant includes funds and opportunities.
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Aid involves funds given to a country during some emergency crisis. The need is urgent and aid should be given immediately to provide relief. The approval of these funds is treated on an urgent basis.
Most of the aids improve relations between the countries and ease the tensions. There are various types of aids depending upon the need, aim, situation, and receiver.
On the other hand, grant involves funds given to individuals, institutions, corporations, or non-profitable organizations. The funds given are not of urgent and emergency use.
The funds are of public benefit and involve a specific purpose. Grants are of several types and are classified on various parameters.
Comparison Table
| Parameters of Comparison | Aid | Grant |
|---|---|---|
| Definition | Transfer to funds or resources from one country to another | Transfer of funds from one party to another |
| Aim | To strengthen national and international relations | To initiate some process for a specific purpose of public benefit |
| Types | Six types – bilateral aid, multilateral aid, tied aid, project aid, military aid, and voluntary aid | Four types- competitive funding, formula funding, continuation funding, and pass-through funding |
| Urgency | In urgent state or need, especially in case of some natural calamity | Not in urgency. It is issued for projects, business startups, and other needs |
| Receiver | The receiver is mainly some other country | The receiver can be non-profit organizations, corporations, or projects |
What is Aid?
Aid is referred to the transfer of funds, money, or resources from one country to another. The goal of the transfer is to help and assist the country which receives the aid.
Aids help in improving foreign relations. Aids acts as a help or as a relief. Aids can be of various types – Overseas Aid, International Aid or Foreign Aid.
A common type of aid is flood relief. Aid helps in the strengthening of the military army. It is proven to build cultural aspects between the countries.
Aid can act as a reward from the government for actions worth recognition. Aid can be given by anyone. It is not only limited to the government. It can be given by private organizations and even by individuals.
Aid is an urgent fund transfer. It involves critical and sensitive needs that have to be addressed instantly. It can include relief from some natural calamity or disastrous event.
Aid is assistance. Aid can be of six types – bilateral aid, multilateral aid, tied aid, project aid, military aid, and voluntary aid.
Aid has several functions. It can act as a signal of diplomatic approval or provide infrastructure or provision of resources. Several tests need to be approved before the aid.
The most common type of aid is foreign aid since it serves purposes like humanitarian, political and commercial relief.
What is Grant?
Grant refers to a fund that is transferred by one party to another. Grants can be given by governments, corporations, foundations, or trusts. Numerous funding agents can grant funds.
Grants can be received by non-profit organizations. Example of such entities is health sectors, cultural or educational sectors.
Grants can be given to individuals too who need the funds. Grants do not include any sense of urgency. It is widely issued for projects or business startups that need time to get considered and passed by the funding agent.
Without the approval of the funding agent or organization, no grant can be issued.
Grants are not paid back like loans. They are granted to initiate some specific purpose that would be of public benefit. There are various specialized grant-making and generating institutions that work for providing funds to those who need and deserve it.
Grants are of four types- competitive funding, formula funding, continuation funding, and pass-through funding.
The European Union grants funds for project proposals. Grants are effective in improving the economy of the country. Public grants create opportunities for new jobs, capital value, and sales.
Various small and mid-size firms can grow to large-scale with pubic grants.
Main Differences Between Aid and Grant
- Aid is provided in emergencies while the grant is provided for specific purposes which may or may not be urgent.
- Aid involves fund transfer in critical and emergencies while grant involves fund transfer for public benefit but is not an emergency.
- Aids is generally given to other countries while the grant is generally given to other parties, individuals, or corporations.
- Aids aim to improve national and international relations while grant aims to initiate specific processes and functions.
- Aids can be of six types – bilateral aid, multilateral aid, tied aid, project aid, military aid, and voluntary aid while grants can be of four types- competitive funding, formula funding, continuation funding, and pass-through funding.
- https://www.journals.uchicago.edu/doi/pdf/10.1086/NTJ41791615
- https://www.aeaweb.org/articles?id=10.1257/pol.2.2.185
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
