D is for Discretionary Grants: Private and Federal Funding Overview

With a Mark Twain inspired introduction

What are discretionary grants?

Unlike formula grants (which, as the name implies, are allotted by a dry mathematical recipe about as exciting as Aunt Hilda’s tapioca pudding), discretionary grants carry the thrill of unpredictability and the sweet agony of subjective appraisal.

The industries and niches served by discretionary grants are delightfully varied, stretching from the stern corridors of science and technology to the greener pastures of education and the arts, and even ambling leisurely into community initiatives and economic development. It’s a game of gentle persuasion and the artful alignment of one’s cause with the benefactor’s fancy.

In grant proposals, choosing precisely the right words can dramatically influence funders’ perceptions, clearly differentiate your project, and make your request compelling—indeed, marking the difference between success and near-miss.

“The difference between the almost right word and the right word is really a large matter – “tis the difference between the lightning bug and the lightning.” — Mark Twain

Private Funders:

Private funders have more leeway to distribute funds than federal grants.  Private funder discretionary grants are awarded by private foundations, corporations, or individual philanthropists at their own discretion, based on their interests, priorities, and judgment, rather than through a formal, formula-based, or standardized application process.

Here’s a straightforward breakdown of the characteristics of private funder discretionary grants:\

  • Flexible Selection Criteria: Unlike grants awarded through standardized procedures (e.g., federal formula grants), discretionary grants from private funders are based more on alignment of interests, relationships, and subjective judgment.
  • Invitation-Based or Relationship-Oriented: Often, discretionary grants are awarded to organizations or individuals the funder knows, trusts, or has previously supported. This may mean grants are invitation-only, or require an initial personal connection or introduction.
  • Varied Funding Interests: Private funders may have specific niches—such as arts, education, health, community development, or environmental sustainability—around which they build their grantmaking strategies.
  • Limited or No Open Application Process: Some private discretionary grants do not have publicly accessible applications, or their processes may be informal. Instead, funding may be provided following direct conversations, informal pitches, or personal meetings.

Examples of Private Funders Offering Discretionary Grants:

  • Family Foundations: Smaller foundations established by families often give discretionary grants based on personal interests or family legacy, rather than publicly announced competitive processes.
  • Corporate Philanthropy Programs: Companies like Bank of America, Wells Fargo, or JPMorgan Chase occasionally provide discretionary funding based on alignment with community initiatives or internal corporate goals.
  • Community Foundations: Local or regional community foundations sometimes offer discretionary grants to rapidly address emerging community needs, choosing recipients without a lengthy application process.
  • Private Philanthropists or Donor-Advised Funds: Individuals or families who manage private philanthropic funds often choose grantees based on personal priorities or recommendations.

Why These Grants Matter:

Discretionary grants can be particularly valuable because they often involve fewer bureaucratic requirements, are flexible in addressing unique community or organizational needs, and can rapidly respond to emerging opportunities or crises. Understanding discretionary grants—and how to build relationships with private funders—is essential for securing this type of funding.

Federal Discretionary Grant Funding:

There are two main types of federal grants: discretionary and mandatory. Discretionary grants permit the agency to exercise judgment in selecting recipients through a competitive grant process. Mandatory grants are required to be awarded if the recipients meet certain predetermined conditions.

Federal discretionary grant programs are created and approved by Congress. Virtually all federal discretionary grants must go through a competitive review process based on legislative and regulatory requirements, application requirements, and criteria established for the grant program.  An applicant chosen to receive an award becomes a grantee. After the initial competitive review process, the federal funding agency uses its own discretion in determining the grantees.

Federal discretionary grants have provided funding for various education, agriculture, healthcare, mental health, children, emergency services, and infrastructure needs.  Some require a cooperative agreement with the funding agency, which may include substantial involvement throughout the project to meet the objectives of the grant. Substantial involvement could include ongoing agency participation in the project, close collaboration with the grantee, and possible intervention or direct operational involvement in the review and approval of the successive stages of project activities.

Let’s take a look at a specific agency. 

The USDOT offers a variety of competitive discretionary grant programs for transportation projects and programs.  See the USDOT website for a matrix of opportunities organized by applicant type and project activities.

How to use the USDOT Discretionary Grant Funding Matrix

Identify the type of applicant interested in grant funding and refer to the applicable matrix. Each matrix lists grant programs (rows), which can be matched with the type of activities (columns) the project hopes to fund. Applicants are grouped into six categories:

Federal Grant Registration Requirements

How to Apply

  1. Register your organization with the System for Award Management (SAM.gov) and obtain a Unique Entity Identifier (UEI). The SAM registration process usually takes approximately 7 to 10 business days, but can take longer, depending on the completeness and accuracy of the data provided. SAM.gov will issue a UEI when you complete the registration process. You must continue to maintain an active SAM registration while the Department reviews your application, and if you receive a grant award.
  2. Register for an account on Grants.gov, a clearinghouse for grant seekers to find and apply for federal funding opportunities. To complete your registration, you must have a Unique Entity Identifier (UEI) from SAM.gov, a Taxpayer Identification Number (TIN) from the Internal Revenue Service, and designate an E-Business Point of Contact (E-Biz POC) and Authorized Organization Representative (AOR).
  3. Search for Grant Opportunities.
  4. Read the Notice Inviting Applications (NIA), which provides information about a grant competition’s program purpose, application requirements and deadlines, competition priorities, and selection criteria.
  5. Submit your application package electronically using Grants.gov. Applicants generally have between 30 to 60 days to apply. A competition’s closing date can be found on the NIA.

Best Practices for Developing Funder Relationships:

Approaching private or government funders to develop relationships for discretionary grants requires thoughtful strategy, genuine connection, and patience.

Here are five practical steps to establish and nurture these essential relationships:

1. Research Thoroughly

Before making your approach, get to know the funder’s priorities, past grantees, and their preferred methods of engagement. Carefully read their website, annual reports, and available funding histories. Understanding what makes them tick—and what doesn’t—is critical for aligning your mission with their interests.

2. Make an Initial Connection (Without Asking for Money)

First contact should be gentle, exploratory, and genuine. Attend events, webinars, or conferences where funder representatives speak or network. When introducing yourself, offer sincere appreciation for their work, articulate a clear alignment of values, and highlight your organization’s unique contributions without immediately discussing funding.

3. Clearly Articulate Shared Goals

When the conversation progresses, make your case around common interests and values rather than financial need alone. Funders prefer relationships grounded in mutual vision. Clearly illustrate how your mission complements their stated goals and demonstrate how collaboration could generate meaningful impact.

4. Provide Transparent and Consistent Updates

Maintain regular communication, even outside of formal grant cycles. Update funders with concise success stories, insights, or progress reports. Transparency builds trust, shows accountability, and keeps your organization positively present in their minds.

5. Express Gratitude and Build Long-Term Trust

After receiving support—big or small—promptly thank the funder with personalized communication. Highlight how their contribution has specifically impacted your work and invite ongoing dialogue or visits. Building trust and a positive track record can turn initial discretionary support into sustainable partnerships.

We must never forget Twain’s sage counsel: “A banker is a fellow who lends you his umbrella when the sun is shining but wants it back the minute it begins to rain.”

road under cloudy sky
Photo by Pixabay on Pexels.com

With discretionary grants, one must be ever mindful that generosity today does not guarantee generosity tomorrow.

So polish your applications, trim your projects neatly, and remember—when courting discretionary funds, charm and clarity outranks desperation and verbosity.

After all, as Mr. Twain quipped, “Get your facts first, and then you can distort them as much as you please.”

Developing funder relationships takes patience, authenticity, and intentional effort, but understanding how the funding mechanisms work and using these effective networking steps will increase your organization’s chance of securing discretionary grants effectively.