What are SMART Grants? A Guide for Nonprofits & Local Government

“SMART grant” is not one thing. It’s a label used by different U.S. programs. The two you’ll most often run into are (1) USDOT’s SMART Grants Program—an active federal program funding public-sector pilots in smart transportation; and (2) the National SMART Grant—a now-defunct student-aid grant that ended in 2011. There’s also the DoD SMART Scholarship, which funds individual students (scholarship-for-service), not organizations.

If you’re a nonprofit, you generally won’t apply directly for USDOT SMART, but you can partner as a subrecipient or project contributor—meaning the compliance and financial-management burden still lands on your desk.

What it is:
Created by the Bipartisan Infrastructure Law, USDOT’s SMART program funds real-world transportation technology pilots—things like connected vehicles, coordinated automation, intelligent sensor infrastructure, systems integration, smart traffic signals, smart grids, delivery/logistics innovations, and certain aviation tech. Its purpose is to help governments deploy and prove technology with measurable safety, equity, climate, and efficiency impacts. The program is authorized at $100M per year for FY2022–FY2026.

How it works (two stages):
SMART runs in two phases: Stage 1 (Planning & Prototyping)—awards up to $2M for up to 18 months—and Stage 2 (Implementation)—awards up to $15M for up to 36 months. Only Stage 1 recipients can apply to Stage 2. USDOT indicates the FY25 Stage 2 NOFO is expected in fall 2025 (with FY26 in summer/fall 2026).

Eligibility:
Eligible lead applicants are public-sector entities: states, political subdivisions (cities/counties), transit or toll authorities, MPOs, and federally recognized tribes. Collaborations among those entities are encouraged. Nonprofits are not listed as prime-eligible leads, but they commonly participate as partners, sub-recipients, evaluators, or technical implementers.

Funding to date:

• FY22 Stage 1: 392 applications → 59 awards across 33 states (~$94M) announced March 2023.
• FY23 Stage 1: 321 applications → 34 awards across 22 states + DC + Puerto Rico (~$54M), with USDOT reporting cumulative awards spanning most of the country.

Who’s affected:
City DOTs, state DOTs, transit agencies, MPOs, and tribes are the typical leads; universities, nonprofits, and private firms frequently support as subrecipients or contractors (e.g., data, sensors, V2X pilots, analytics, safety evaluation). USDOT’s Volpe Center has supported program setup, NOFO development, application review (via Valid Eval), communications, and technical advising to grantees—underscoring the depth of oversight and documentation these awards entail.

What this means for nonprofits:
Even if you’re not the prime grantee, partnering on a SMART project makes you subject to public-grant rules: allowable costs, restricted use, time-and-effort/allocations, procurement standards, budget-vs-actual control, and deadline-driven reporting. Treat it with the same rigor as any federal pass-through grant. (More on handling the complexity below.)

This was the National Science and Mathematics Access to Retain Talent (SMART) Grant—a Pell-linked, need-based aid program for undergrads in their 3rd or 4th year majoring in specified STEM fields or critical foreign languages.

The federal government ended the ACG and National SMART Grant programs at the close of AY 2010–11; no awards have been made since. If you see references to “SMART Grants” in higher-ed contexts, this is the one—and it’s history.

The DoD SMART Scholarship is a scholarship-for-service: full tuition + stipend to eligible STEM students in exchange for internships and post-graduation employment with the Department of Defense. It’s for individuals, not organizational grants. If a nonprofit operates workforce or STEM-education programs, you might advise students about it—but it’s not grant funding to your organization.

Before you commit staff time or reshape your pipeline, verify which SMART is meant:

• USDOT SMART (active) → public-sector transportation tech pilots; nonprofits as subs/partners; two-stage structure; heavy reporting.
• National SMART Grant (ended) → student aid program (no longer available).
• DoD SMART Scholarship (ongoing) → individual student support with a service commitment.

A surprising amount of confusion (and wasted effort) comes from not clarifying this on day one.

Pathways to involvement:
Nonprofits most commonly participate as subrecipients, evaluation partners, community engagement leads, equity advisors, data stewards, or implementation partners responsible for specific work packages (e.g., sensor deployments around schools or clinics, active-transportation safety pilots, first/last-mile accessibility). Leads are usually public agencies; you enter via MOUs, sub-awards, or contracts.

Your obligations mirror federal grant expectations. As a sub-recipient you should assume responsibility for:

• Allowable costs & restricted use: Charge only what the award allows; map every expense to an approved category.
• Allocation methodology: Establish how you’ll allocate shared costs (FTE, labor hours, square footage) across projects and grants before work begins, and document it.
• Time & effort (personnel): Track labor accurately and promptly; SMART pilots move fast—lagging timesheets undermine reports.
• Budget vs. actual control: Reconcile monthly; flag variances early; request modifications through the prime as needed.
• Procurement & conflicts: If you procure equipment/services, follow the applicable rules (often those of the pass-through or 2 CFR Part 200 standards) and keep the paper trail clean.
• Reporting calendar: Align your internal reporting cadence to the prime Grantee's deadlines (technical + financial). The program’s two-stage structure and high visibility mean late or incomplete reports reflect poorly on the whole consortium.

Stakeholders you’ll coordinate with:
Expect to interact with the prime agency’s grants/finance team, an implementation vendor or systems integrator, university researchers serving as independent evaluators, and potentially a regional MPO or state DOT for data and systems coordination. That’s normal for SMART—and it increases the need for clear sub-recipient controls.

1) Disambiguate and create a “grant profile.”
Start every “SMART” conversation with a one-page internal profile: program owner (USDOT vs other), status (active/ended), lead eligibility, your role (subrecipient/contractor), stage (1 or 2), funding ceiling, period of performance, reporting cadence, allowable cost map. This prevents scope creep and “wrong SMART” confusion.

2) Lock your allocation methodology early.
For multi-grant environments, write a short, auditable cost-allocation plan (e.g., overhead split by FTE or labor hours; non-personnel by usage). Apply it consistently and update at defined intervals so your financials and program reports tell the same story.

3) Wire your budget-vs-actual and document trail.
Set monthly reconciliations, attach documents to every transaction category (quotes, POs, invoices, receiving, timesheets), and keep a live variance log with root-cause notes and corrective actions. Stage transitions (1→2) go smoother when the history is clean.

4) Build a compliance calendar that mirrors the prime Grantee's.
Map all deliverables: kickoff, quarterly/biannual technical reports, financial reports, equipment inventories, data-sharing milestones, close-out steps. Invite the prime’s PM/finance lead to that calendar and confirm hand-offs.

5) Treat data like a grant deliverable.
SMART emphasizes measurable outcomes; data governance (sources, quality, privacy, retention) is not optional. Assign a data steward; document schemas and hand-offs; maintain a read-me for evaluators.

6) Plan for audits from day zero.
Create a standing “audit pack” folder: award docs, subaward, budget, allocation plan, procurement files, payroll/time records, drawdown/support, reports, and correspondence. Update it monthly so you’re always inspection-ready.

Whether you’re a sub-recipient on a USDOT SMART pilot or managing any restricted public/private award, the pain is the same: allocations, allowability, timing, documentation. MissionGranted gives you one integration point to:

• Automate cost and grant allocations according to your documented methodology.
• Tag and enforce allowability so expenses land in the right buckets the first time.
• Reconcile budget vs. actual in real time and flag variances early.
• Run audit-ready reports on demand for the prime grantee and the funder.

If your organization is considering a SMART partnership—or you just want your next federal pass-through to be painless—centralize the finances and controls before work starts.

Ready to simplify restricted fund management? Request a demo today.