Contracts, Grants, and Cooperative Agreements: Understanding the Differences

When it comes to obtaining funding for a project, there are several options available. The most common types of funding mechanisms are contracts, grants, and cooperative agreements. While they may seem similar at first glance, each of these funding mechanisms has its own unique characteristics and requirements.


A contract is a legally binding agreement between two or more parties. In the context of obtaining funding, a contract is typically awarded to a private company or organization to perform specific tasks or provide goods and services. Contracts are typically awarded through a competitive bidding process, with the winning bidder being awarded the contract.

Contracts typically have strict requirements and timelines that must be followed. Failure to meet these requirements can result in the termination of the contract and the forfeiture of any funds paid to the contractor. Additionally, contracts often have a set payment structure, with payments being made to the contractor upon completion of specific milestones or deliverables.


A grant is a funding mechanism that is typically awarded to nonprofit organizations, educational institutions, or government agencies. Grants are awarded based on a competitive application process, with the recipient being chosen based on a variety of factors, including the proposed project`s relevance to the funder`s mission and the organization`s track record of success.

Grants typically have fewer restrictions than contracts, but they still come with a set of requirements that must be met. Recipients of grants are typically required to provide regular progress reports to the funder, and funds may be withheld if milestones are not met.

Cooperative Agreements

A cooperative agreement is similar to a grant but involves a more significant level of collaboration between the funder and the recipient. Cooperative agreements are typically awarded for research projects or other initiatives that require a high degree of interaction between the funder and the recipient.

Cooperative agreements typically require the recipient to work closely with the funder to develop and implement the project. This level of collaboration can result in a higher level of oversight and potential interference from the funder, but it can also lead to greater support and resources.

Choosing the Right Funding Mechanism

When seeking funding for a project, it`s essential to understand the differences between contracts, grants, and cooperative agreements. Each of these funding mechanisms has its own unique strengths and weaknesses, and the decision of which to pursue will depend on the nature of the project, the available resources, and the preferences of the funder.

Ultimately, the most important factor in obtaining funding is demonstrating the potential impact of the proposed project. Regardless of the funding mechanism chosen, a strong proposal that clearly outlines the project`s goals, methodology, and expected outcomes is essential to securing funding and achieving success.