Grant refers to non-repayable funds allocated to an entity or organization for the implementation of the predefined activities and they are regulated by an agreement or contract between the Grant beneficiary and the Contracting Authority according to the EU rules.

The body(ies) signing a grant contract is known as the Grant beneficiary(ies) and should not be confused with the beneficiary country, the final beneficiary of the operation nor with the target group. These could be entities involved in education, training, information, innovation or research and study on European policies, any activities contributing to the promotion of citizenship or human rights, or a European standards body; or a legal entity representing non-profit bodies active in the Member States or in the candidate countries and promoting principles and policies consistent with the objectives of the Treaties. A grant is made for an action proposed to the Contracting Authority by an applicant which falls within the normal framework of the beneficiary's activities. This is in contrast to a procurement contract, in which the Contracting Authority draws up the terms of reference for a project it wants to be carried out.

The applicant may act individually or with co-applicant(s): however, if awarded the Grant contract, both the applicant and the co-applicant(s) (if any) become Grant Beneficiary(ies).There are strict rules governing the way in which grants are awarded. They require programming, transparency and equal treatment. Grants may not be cumulative or awarded retrospectively and they must generally involve co-financing. The amount specified in the grant contract as eligible for financing may not be exceeded.

As a general rule with some specific exceptions, the grant may not have the purpose or effect of producing a profit for the beneficiary.

A Grant beneficiary is responsible for implementing the action and owns the results.

The Contracting Authority is responsible for publishing work programmes, issuing calls for proposals, receiving proposals, chairing Evaluation Committees and deciding on the results of calls for proposals. The Contracting Authority must submit the Evaluation Report, details of the proposed grants and, where required, the draft contracts to the European Commission for endorsement.

Once the grant has been approved, the Contracting Authority signs the contract and notifies the European Commission accordingly. As a general rule, the European Commission is represented as an observer when proposals are opened and evaluated and must always be invited.