You might think the difference between public and private grant funding is simple. Public funding comes from a federal, state, or another publicly funded agency. Private funding does not entail public funds and may include both grants and gifts, depending upon the organization’s mission.

Not so fast!

There are a lot of “it depends” factors in discerning the funding source and how to best manage each, using research administration software.

Some examples are:

  • Direct federal award to your institution
  • Private organization awarding funds
  • Pass-through funding from federal sources then awarded by a private organization or state agency to your institution
  • Subaward of federal funds awarded to another institution of higher education
  • Private funds that are gifts

When an institution is seeking public and private grant funding for an activity, there needs to be an analysis of the advantages and disadvantages of each potential funding source, as well as congruency between the sponsor’s interests and the project’s objectives. It also pays to consider what “strings” will be included in the terms and conditions if funded.

Let’s talk about the advantages and disadvantages.

Advantages of private funding

  • More rapid turnaround of the award. Many private organizations have a set schedule of proposal reviews and presenting awards. With fewer levels of review, awards may be made more rapidly.
  • Possibly fewer regulations than federal awards. This can stretch from length and cost allowability to programmatic reporting of results.
  • Fewer applicants in proposal pool. Although the available funds may be much less, there are normally fewer proposals to consider. A grants management system can be used to generate reports that measure increased success rates.
  • Private sources may focus on emerging issues, new needs, populations emerging as “special interests” and be more willing to adapt by collaborating with other sources, providing alternative forms of assistance, and considering experimental activities.

Disadvantages of private funding

Consider these disadvantages when applying for private funding:

  • Awards are often smaller and less likely to cover all project costs, and many don’t cover indirect costs
  • Unless the foundation is big, there may be less support for questions, policies/procedures, and fewer opportunities for personal contact and/or site visits
  • Areas of focus may change rapidly, so continual funding may be hard to predict
  • At some institutions, private funding may not be “prized” as highly as federal funding because of perceptions that the review isn’t as rigorous as that of federal grants/contracts

Federal funding also has several advantages and disadvantages that you should consider before creating a proposal.

Advantages of federal funding

  • Federal agencies tend to have more funds available, although the number of applicants may offset this advantage
  • Funds are available for a wide range of organizations, both lead and partners
  • More likely to pay “all” project costs and/or cover indirect costs
  • Support during concept development and proposal design is easily available
  • You know the possibilities of renewal up front
  • Application process and deadlines are public and very firm
  • “Common” application forms and prescribed formats to decrease re-learning appropriate content and form

Disadvantages of federal funding

Federal funding requests, of course, also have their drawbacks. Just ask any pre-award research administrator. Sometimes, the advantages of consistency and structure can backfire and create crisis situations of limited review prior to submission.

Before you decide to seek federal funding, also consider:

  • Lengthy proposal requirements and complex application, administration, and compliance processes
  • Often required institutional cost-sharing. This is becoming less of a federal issue but still arises frequently with state and other public agencies.
  • Reviewers may tend to favor established applicants
  • Difficulty in proposing new or high risk approaches to a problem
  • Cost to institution may be higher due to complexity of applications and stricter compliance requirements

The sponsor type, public vs private, is an obvious starting place in terms of tracking this information with a grants management system. This and other information, such as the current indirect cost rate, can be easily linked to the sponsor. For internal reporting, many medical research institutions find it useful to group public sponsors into additional categories such as NIH, Other Federal, and State.

Public and private grant funding: know the source of funds

Knowing if a sponsor is a public or private entity affects the entire process:

Matching faculty ideas to the most likely source of funding. Working with the potential principal investigator (PI) to analyze the proposed project and scope of work can increase the probability of being funded through tailoring the scope of work and budget presentation to sponsor parameters.

Creating the appropriate type and style of proposal. A proposal is the first impression for a funding organization. Publicly funded organizations tend to have more rigid style and information requirements. Often private organizations will request a shorter, less-detailed proposal. Remember that outcomes may be the same, but the style of proposal will be different. No changing the form and submitting the same proposal to different sources.

Partnering with another PI and/or institution to complete the scope of work and strengthen the proposal. Does the person have the necessary experience to lead the proposed scope of work, or should s/he seek more senior faculty and consider revising the scope to fit a “new faculty” targeted program?

Ensuring your institution can comply with sponsor requirements. Read the RFP and background of the sponsor. Does your institution have the necessary committees, policies, procedures, and resources to ensure compliance with the selected potential sponsor? Can you meet the reporting requirements? Does the institution have necessary labs, graduate students, and compliance committees to satisfy the potential sponsor?

When considering public and private grant funding, knowing the type of sponsor and their requirements is critical for both the institution and sponsored programs faculty. Don’t set your institution or faculty up for failure. Investigate. And if you have questions, don’t hesitate to get in touch!

Find the right funding opportunity!
Search more than 22,000 awards worth more than $70 billion