One of the most useful distinctions in federal funding is discretionary vs mandatory. It determines whether you compete for an award or whether it flows automatically to a designated recipient.
| Discretionary grant | Mandatory / formula grant | |
|---|---|---|
| How awarded | Competitively, on merit | By law, via a set formula |
| Who decides | The funding agency | Statute (Congress) |
| Typical recipient | Any eligible applicant who competes | States and localities |
| Can nonprofits apply directly? | Yes | Usually only via a state subgrant |
| Example | Project grants, research grants | Block grants (e.g. CDBG) |
Discretionary grants
A discretionary grant is awarded competitively, at the funding agency’s discretion, based on the merit of applications. This is what most people mean by “applying for a grant” — you submit a proposal and compete. These are the opportunities you’ll browse and apply for directly.
Mandatory and formula grants
Mandatory grants are required by law to be awarded to specific recipients, often by a formula based on factors like population or poverty rates. Block grants are a common example, distributed to states to administer.
Why it matters to you
You compete directly for discretionary grants. For formula funds, the money usually goes to a state or local government first — and you may be able to apply for a subgrant from that recipient. If a federal program seems closed to you, check whether a state agency re-grants its formula funds.
How to tell them apart
The Assistance Listing states the assistance type, and the NOFO makes the process clear. Discretionary programs publish competitive application windows; formula programs name designated recipients.
Pursue both paths
A strong funding strategy works discretionary opportunities and watches for subgrants from formula-funded state agencies. Learn the full structure in understanding federal grant funding.
Federal grants open right now
Live from Grantoria — updated daily from Grants.gov & SAM.gov.
Frequently asked questions
Can nonprofits apply for formula grants?
Usually not directly — formula funds go to states or localities first. But you can often apply for a subgrant from the government agency that received and administers the formula funding.
What is the difference between a block grant and a discretionary grant?
A block grant is a formula-based award distributed to states or localities to administer broadly. A discretionary grant is awarded competitively by a federal agency to applicants it selects on merit.