By definition, grants do not generally require repayment, and are thus “free money”. There are no filing fees, taxes to be paid, or licenses to purchase to apply for grants.
That is not to say that free grants are free of any costs. There may be salaries for employees who write the grant application, or fees for a contracted grant writer. Large grants may require salaries or fees for an administrator to keep track of costs associated with delivery of goods or services provided by the free grant. These administrative costs typically cannot be included in the use of the grant funds. They are considered a normal cost of doing business, not a program cost.
Free grants should not be confused with low-interest loans. There is a difference between a disaster mitigation loan with low interest and long repayment terms, and truly free grants.
One circumstance that may require repayment of free grant funding would be in the event of misuse of the grant funds, or failure to complete all of the goals of the program that was funded by the free grant.
If the grant application or the RFP does not provide for the free grant money to be used for administrative costs (and some do, particularly government grants), you must be very careful not to co-mingle funds or report the administrative costs as a permitted use of the free grant funding. At some point, there will need to be a report made on the use of the funds, and any portion that the grantor deems to have been used improperly may have to be repaid.
Free grant money may also require a matching component. You may be able to count your administrative, delivery or marketing costs as a matching amount, or you may be required to show that you have already the funds on hand as a result of donations or other fundraising activity.
