A capital grant is funding from senior governments (federal or provincial) designated specifically for capital projects—construction, major renovations, or infrastructure acquisition—rather than operating costs. Capital grants help municipalities afford major projects they could not fund alone. Grant programs typically specify eligible project types, require applications demonstrating need and readiness, and often require matching contributions from the municipality. While capital grants are valuable, they can create challenges: municipalities may prioritize projects that qualify for grants over other needs, and grants for construction do not cover ongoing operating and maintenance costs of new facilities.