Funding Sources Provide a Great View into Emerging Opportunities
In a call this week with a GovTech 100 CEO, he wondered aloud whether grants were too far upstream to be meaningful.
But in our Selling to Government Guide, top sellers told us that the key to winning deals is identifying and focusing on opportunities where there is a known challenge, initiative, or funding mechanism for their solutions.
Follow the Money
There are thousands of state and county grants that sellers should be aware of in their key states, but the federal grants are great early indicators of investment. (There is a great list at the bottom of this blog.)
The cities and counties that receive these grants may not have a fully formed budget at line item for how these will be implemented, which means that these are an excellent early signal for engaging with governments receiving federal funding.
Many of the biggest grants programs are actually designed with a two-stage process that lets agencies get funded before they have everything figured out.
Formula grants (CDBG housing/economic development and road infrastructure grants) don't require a project-level budget to receive funds at all. The money comes automatically based on formulas, like population, poverty rates, road miles, etc. The city or county then decides how to spend it within program guidelines.
These require more of a strategic framework than a line-item project budget. They can even get reimbursed for pre-award planning costs as long as the activity was included in their plan.
Provide Expert Guidance
Competitive/discretionary grants are where budgets matter more, but many programs deliberately separate planning from implementation:
SS4A (Safe Streets is a great example. A city can first apply for a Planning & Demonstration Grant (up to $200K–$400K) just to develop a safety action plan – no project budget needed yet.
Then once they have that plan in hand, they can come back and apply for an Implementation Grant with the detailed scope and budget. So there's a clear on-ramp for cities that know they have a problem but haven't scoped the solution yet.
FEMA's Building Resilient Infrastructure and Communities (BRIC) program works similarly — there's a planning track and an implementation track.
For Byrne JAG, the formula portion flows automatically to qualifying jurisdictions. They submit a budget with their application, but it can be fairly high-level and gets refined after the award.
The practical reality is that administrative capacity is often the bigger bottleneck than having a finished budget.
Urban Institute research found that local governments with more staff and bigger budgets are significantly more likely to win federal infrastructure grants. The reason for this isn’t because the budget requirement is so onerous, but because smaller cities often don't have a dedicated grants person to navigate the application process in the first place.
This may be a place where solutions providers can lean in and provide their expertise. This was another lesson of our Selling to Government Best Practices Guide: being seen as a trusted advisor is the very best way to establish yourself with a government and create downstream opportunities.
Know the Grants that Matter to Your Business
1. Community Development Block Grant (CDBG) — ~$3.3B/year The granddaddy of direct-to-local grants. HUD distributes CDBG formula funding directly to "entitlement communities" (cities over 50,000 and urban counties over 200,000), plus smaller cities through state-administered allocations. Covers infrastructure, housing rehab, economic development, and public facilities — almost anything benefiting low-to-moderate income residents.
2. Federal-Aid Highway Program — ~$48B/year (state + local share) Distributed through the Highway Trust Fund via state DOTs, with significant sub-allocations to cities and counties for road, bridge, and transit projects. The Infrastructure Investment and Jobs Act (IIJA) pushed nearly $11 billion in direct funds to municipalities.
3. FEMA Hazard Mitigation & Preparedness Grants — ~$3-5B/year Includes the Homeland Security Grant Program (~$1B), Building Resilient Infrastructure and Communities (BRIC), Hazard Mitigation Grant Program, and Flood Mitigation Assistance. These flow to counties and cities for emergency management, first responder equipment, and resilience projects.
4. Edward Byrne Memorial Justice Assistance Grant (JAG) — ~$500M-$700M/year The primary federal criminal justice grant to local governments. Funds go directly to cities and counties for law enforcement, prosecution, courts, crime prevention, corrections, drug treatment, and technology. Often the first federal grant a small city encounters.
5. EPA Clean Water & Drinking Water State Revolving Funds — ~$5-6B/year (boosted under IIJA) Capitalized by EPA and administered through states, these funds flow as low-interest loans and principal forgiveness grants to cities and counties for water and sewer infrastructure. The IIJA significantly increased these allocations, and many local governments in your NationGraph signals (Hoschton GA, Escondido CA, Junction City OR) are dealing with exactly the kind of water/sewer failures these funds address.
6. SS4A is administered by USDOT and cities and counties apply directly to the federal government — they don't need to go through their state DOT. That's a big deal for local governments. The program got $5 billion over 5 years (FY2022–2026), roughly $1 billion per year, and so far has awarded $3.9 billion to over 2,000 communities across all 50 states.
Schools Grants
7. Title I, Part A — ~$18.4B/year. The biggest one. Goes to ~90% of school districts serving low-income students. Districts have wide discretion — they use it for staffing, curriculum, tutoring, technology, you name it.
8. IDEA Part B (Special Education) — ~$14B/year. Second largest. Helps districts cover special education services. The federal government originally promised 40% of per-pupil costs but has never come close — most districts see around 15%. Practically every district receives this.
9. Child Nutrition (USDA) — ~$22B/year. Reimburses schools for free and reduced-price meals. Technically USDA, not Department of Education, but it's the largest single federal funding stream many districts manage day to day.
