Learn about Grants | What is Government Grant? | Types of Grants & Incentives | Public Finance N5 N6

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WHAT IS A GRANT?

A grant is an award, usually financial, given by one entity (typically a company, foundation, or government) to an individual or a company to facilitate a goal or incentivize performance.

Grants are essentially funds, gifts or incentives given for a specific purpose that do not have to be paid back, in most cases.

DEFINITION OF GOVERNMENT GRANT

A government grant is a financial award, or an incentive, given by a government, for social relief to assist individuals or businesses or to stimulate the economy or for a specific project.

Some grants donors expect the grant recipient, to use the funds from the grant, for their stated purpose, which typically serves the public, or some larger public good and in some cases, the recipient of the grant is not expected to repay the funds.

A Government grant is a transfer of resources to an entity by government in return for past or future compliance with certain conditions relating to the operating activities of the entity.

Definition by the International Accounting Standards in IAS 20

TYPES OF GRANTS
1. CONDITIONAL GRANTS
2. UNCONDITIONAL GRANTS
3. PROJECT GRANTS

DIFFERENCE BETWEEN THE TYPES OF GRANTS

1. CONDITIONAL GRANTS
• Conditional grants are grants issued with the specific conditions attached.

2. UNCONDITIONAL GRANTS
• Unconditional grants incentives or funds that are issued or allocated without any conditions attached to such grants.

3. PROJECT-SPECIFIC GRANTS

• These grants are made available for funding specific projects such as housing, climate change or even HIV awareness, etc.

• These grants are normally given only once, on an ad hoc basis. Different organizations will usually compete by applying for such grant; and the government responsible to issue such grant would then evaluate the most beneficial.

SOME OF THE GOVERNMENT GRANTS AVAILABLE IN SOUTH AFRICA

WHAT IS A SOCIAL GRANT?

A social grant refers to grants paid by the government, to South African citizens, who are in need of assistance.

In South Africa, social grants are administered by, the South African Social Security Agency aka SASSA.

Some of the Social Grants available in South Africa
• Care dependency grant
• Older person's grant (old age pension)
• Child support grant• War veteran's grant
• Foster child grant
• Disability grant
• Grant in Aid

BUSINESS GRANTS & INDUSTRY SPECIFIC INCENTIVES

South Africa also has grants and incentives aimed at businesses and particular industries.

• Clothing & Textile Competitiveness Programme (CTCP)
• Critical Infrastructure Programme (CIP)
• Technology & Human Resources for Industry Programme (THRIP)
• Capital Projects Feasibility Programme (CPFP)
• Film & Television incentives
• Export Marketing & Investment Assistance Scheme (EMIA)
• Isivande Women's Fund
• Production incentives (PI)
• Section 12i Tax Allowance Incentive (12i TAI)
• Sector Specific Assistance Scheme (SSAS)
• Tourism Support Programme (TSP)
• Co-operative Incentive Scheme (CIS)
• Automotive Investment Scheme (AIS)
• Black Business Supplier Development Programme (BBSDP)
• Business Process Services (BPS) Incentive
• Aquaculture Development & Enhancement Programme
• Manufacturing Investment Programme (MIP)
• Support Programme for Industrial Innovation (SPII)

PURPOSE OF GRANTS & REASONS WHY GOVERNMENTS ISSUE GRANTS

Government also issue grants for the following reasons
• To assist members of the community who might be in need;
• To also assist poor people or the less fortunate to obtain essential needs such as food;
• To allow non-profit organisations to offer a services for the greater good or on behalf of the government
• To boost small & medium businesses;
• To stimulate the economy as a whole of specific industries within the economy

List of References
https://www.ifrs.org/content/dam/ifrs...
https://www.westerncape.gov.za/genera...

Disclaimer:
This publication and the information included in it are not intended to serve as a substitute for consultation with a professional. Specific issues, concerns and conditions always require the advice of an appropriate professional advisor. The use of the contained information is at the user's own discretion.