Define: Capital Grant

A capital grant is a financial assistance provided by a government or organisation to fund the acquisition, construction, or improvement of fixed assets such as buildings, equipment, or infrastructure.

Eligibility for a capital grant varies depending on the specific criteria set by the granting entity. Generally, nonprofit organisations, educational institutions, local governments, and certain businesses may be eligible to apply for capital grants.

To apply for a capital grant, you typically need to submit a formal application to the granting entity. The application process may involve providing detailed project plans, financial statements, and other supporting documents as required by the grant guidelines.

A capital grant can be used to fund various purposes, such as the purchase of land or buildings, construction or renovation of facilities, acquisition of equipment, or infrastructure development. The specific allowable uses will be outlined in the grant agreement or guidelines.

In general, capital grants are not considered taxable income. However, it is advisable to consult with a tax professional to understand the specific tax implications based on your circumstances and the nature of the grant.

Capital grants are typically intended for capital expenditures and not for covering day-to-day operating expenses. However, some grants may allow a portion of the funds to be used for operating costs, subject to certain restrictions and reporting requirements.

In certain circumstances, a granting entity may have the right to revoke or reclaim a capital grant. This can occur if the recipient fails to meet the agreed-upon project milestones, misuses the funds, or violates any terms and conditions outlined in the grant agreement.

In most cases, capital grants are non-transferable and can only be used by the organisation that received the grant. However, there may be exceptions or provisions allowing for the transfer of funds under specific circumstances, subject to the approval of the granting entity.

If a capital grant is not fully utilized within the specified timeframe or for the intended purpose, the granting entity may require the recipient to return the unused funds or provide an explanation for the underutilization. The terms regarding unspent funds will be outlined in the grant agreement.