There are three primary types of microgrants; one is a small sum of money (~US$50-500) granted to an individual to start an income-generating project, another is a small grant (~$2,000-$10,000) to a community for an impact-oriented projects and a third is a small grant to an individual for any cause they see fit.
Microgrants for income-generating projects
A microgrant is a small sum of money distributed to an individual living on less than $1/day, extreme poverty, for the purpose of creating a sustainable livelihood or microenterprise. Recipients of microgrants can also be organizations or grassroots groups that are engaged in charitable activities. Different from microcredits, microgrants are non-repayable.
While microfinance and other financial services are intended to serve the poor, many of the poorest are either too risk-averse to seek out a loan, or do not qualify for a microloan or other form of microcredit.
It can also refer to a grant that is low in value.
Microgrants for community-based projects
A microgrant serves as an opportunity for communities facing poverty to receive funding for impact-oriented projects, such as schools, health centers, farms and more. Microgrants for community projects provide a novel opportunity for people facing poverty to solve their own local problems with financing that need not be paid back.
Spark MicroGrants is known for pioneering this community-based approach to microgranting. Spark pairs capacity building facilitation with their microgrants to ensure communities receiving the grants are well positioned to take them on.
Microgrants for individual causes
A microgrant has also been coined to describe small amounts of funding awarded to individuals for their own use. The ROI Community deploys this type of microgrant.
- CSMonitor.com (2008-08-09). "U.S. Army microgrants". Csmonitor.com. Retrieved 2009-09-23.
- BenchFly.com (2010-04-02). "Search for Research". BenchFly.com. Retrieved 2010-05-02.