Government funding is a catch-all term that describes money given by government agencies to non-government organizations and individuals. Government funding comes in many forms; some have strict requirements and must be repaid, while other forms do not need to be repaid.
Grants are monetary amounts that never need to be repaid. Government agencies routinely give grants to non-governmental actors, such as non-profit agencies. Grants are given for a wide variety of activities, but the overall purpose is usually to improve the lives of a government's citizens. For example, a non-governmental community center might receive a grant to help revitalize an urban area. Universities routinely receive government grants to conduct research that will eventually improve the lives of ordinary people or help to preserve the environment.
Loans are money that the government lends to organizations and individuals that eventually need to be repaid. For example, federal student loans are a common form of government funding. Start-up loans for small businesses are another.
A third major type of government funding is government assistance. Government assistance is granted to individuals and families who have fallen on hard times. Typically, government assistance is granted because of a temporary situation, such as unemployment payments to workers who have been laid off. Most forms of government assistance are reserved for individuals and families considered to be low income. Common assistance programs include Medicaid, food assistance and heating assistance.