This is the second in a three-part series about the State Digital Equity Capacity Grant Program announcement from the National Telecommunications and Information Administration (NTIA). Read the first blog post with an overview of the program, and check back for more information specific to Native entities. The State Digital Equity Capacity Grant Program is the second set of funds available in the Digital Equity Act (DEA) authorized by the Infrastructure Investment and Jobs Act (IIJA) of 2021. 

 Now that the NOFO (Notice of Funding Opportunity) is published, all states and territories are eligible to apply for the State Digital Equity Capacity Grant. The application process began on March 29th, and applicants have 60 days to complete it. States and territories can use these funds to implement their digital equity plans and provide programs to communities to close the digital divide.


Funding and Allocations

Congress appropriated $840 million to the State Digital Equity Capacity Grant program for fiscal years 2022 through 2024.

States, DC, and Puerto Rico: $760.8 million
  • Allocations are based on a formula defined in the Digital Equity Act and specified in the NOFO (pg. 22 in the NOFO)
  • The formula uses three main factors: the state’s relative population (50 percent), the relative size of the covered populations residing in the state (25 percent), and the comparative lack of availability and adoption of broadband (25 percent)
  • Each state receives an allocation proportional to its population, the size of its covered populations, and its level of broadband availability and adoption relative to all other eligible states
Territories: $8.4 million
Native entities: $45.3 million
  • Includes over $3 million for digital equity planning activities and $42 million for related projects 
  • Available on a competitive basis to Native entities
Future funding
  • This funding opportunity includes funding for the first three years of the program. Funding for years 4 and 5 will be provided in future funding rounds, and via two additional NOFOs, states, territories, and Native entities will apply to 
  • We expect each of the future funding rounds will allocate (up to) an additional $300,000,000 to states, Native entities (with a set aside of 5 percent), and territories (with a set aside of 1 percent) to continue the work under the Capacity Grant Program  (pg. 21 of the NOFO)
        • A “set aside” means funds are reserved for specific purposes. The funding set-asides are mandated by the IIJA and outlined in the NOFO. *See the first blog post in this series for information on tentative allocations for each state

Capacity Grant Requirements

States and territories can use the capacity grant funds for the following (pg. 32 of the NOFO):

    • Update or maintain the state or territory’s digital equity plan
    • Implementation of the state or territory’s digital equity plan
    • Provide subgrants to eligible entities located within the state *See the first blog post in this series for information on subgrants
    • Evaluate the efficacy of the subgrantee activities that the grant has funded
    • Cover administrative costs.

NTIA doesn’t tell the states or territories how they should implement their digital equity plans, as they expect the states and territories to propose various strategies to address the barriers to digital equity. Instead, they say states and territories should ensure their strategies (pg. 33 of the NOFO):

    • Focus on covered populations
    • Ensure long-lasting and meaningful change
    • Have measurable implementation strategies and
    • Regularly engage with stakeholders impacted by the digital equity plan to improve the effectiveness of the plan.

Digital Equity Strategies

States and territories are encouraged to adopt new and innovative strategies that align with their digital equity plan. NTIA does not prescribe strategies but provides a (non-exhaustive) list of examples the states and territories can consider. 

While the examples are not mandatory, if a state/territory implements one of the strategies outlined in the examples, they should pay careful attention to any requirements that might be in the example as those requirements must be met if the state chooses to implement one of the example strategies. Some of the example strategies included are (pgs. 34-35 of the NOFO):

    • Digital Literacy and Skills Training
    • Device Distribution Programs 
    • Online Accessibility 
    • Access to Affordable Broadband Service 

Prohibited Expenses

The NOFO specifies spending limits and excludes certain activities from grant funding (pg. 35-36 of the NOFO). 

Limits on allowable expenditures 

    • 20% cap to update or maintain the state or territory’s digital equity plan. This may include measurement and evaluation activities.
    • 5% cap for subgrant evaluation. This applies to subgrantee program evaluation only, not the full evaluation of the program.  
    • 3% cap for administrative costs (not including the costs for program evaluation and updating the digital equity plan). This consists of a combined total of direct and indirect administrative costs charged to the award.
    • 10% cap for affordable broadband benefit programs. In other words, if the state chooses to establish its own affordable broadband benefit program similar to ACP, it can only allocate 10% of the total award to establish such a program. If the state chooses to implement an affordable broadband program, they must meet the following requirements (pg. 35 of the NOFO):
        • Promotion of any existing low-cost service programs (FCC, federal, state, local) should take precedence.  
        • While a new affordable access program may be established, a state or territory must first use funds from existing programs, grants, and other resources. Funds from the Capacity Grant program must be used as a last resort.
        • Any affordable access program should provide digital literacy and skills training (pg.35 of the NOFO).

Prohibited activities 

    • If federal or state funds have already been allocated to carry out activities outlined in this NOFO, those funds must be used to carry out those activities. If State Capacity Grant funds are used to build up other federal or state-funded programs that carry out activities listed in this NOFO, the application must describe how the funds will not duplicate other funds. *See the Other Funds section below for more details on how to do this. 
    • While the capacity grant must align with Broadband Equity, Access, and Deployment (BEAD), Capacity Grant Funds may not be used for the BEAD program or deployment expenses. If an eligible activity or program requires minimal installation of broadband infrastructure (such as installing fixed equipment on a building as part of a strategy to promote access to affordable broadband service), it is subject to environmental and purchasing regulations.
    • Grant funds may not be used for website upgrades or other accessibility projects otherwise required by law. This would include IT Accessibility Laws and Policies in Section 508 of the Rehabilitation Act, which ensures access to information communication technologies for individuals with disabilities. 
    • Profit, fee, or other incremental charge above the actual cost (pg. 36-37 in the NOFO).

Other Considerations
A state or territory offering a device distribution program must include digital literacy and skills training. Participants in the program should understand how to use the device, access online resources, and protect their personal information (pg. 34 of the NOFO).

Measurement and Evaluation

Demonstrating the impact of implementing the state or territory’s digital equity plan is essential to showing how digital inclusion activities positively impact the everyday lives of community members. Measurement and evaluation are also used for knowledge sharing, to show the program’s success, lessons learned to improve digital equity work, and advocacy for sustaining digital inclusion work through increasing staff capacity in organizations and future funding opportunities (pg. 21-22 of the NOFO). 

  • Measurable or countable data, such as the total number of activities funded by a state or territory to achieve a digital equity plan objective
  • Information collected must include the following:
      • Number of the covered population(s) served and how many people within each covered population served
      • Total number of people served
      • The number of programs implemented and the type of program
  • Data that provides improved understanding through insights, opinions, and individual experiences. 
      • Interviews and surveys can be used to hear from program participants about how their experiences in the program changed their knowledge, skills, attitudes, or behaviors
      • Another way to do this is through telling stories of personal accounts that demonstrate the positive impact of the program *See NDIA’s Advocating for ACP post for some examples of storytelling and how to tell your own stories
  • Impact on the state or territory’s goals in the following areas : 
      • Economic and workforce development outcomes
      • Educational outcomes 
      • Health outcomes
      • Civic and social engagement, and 
      • Delivery of essential services

States and territories are required to share their assessment of the program’s effectiveness with NTIA. This includes the results, processes, and tools used to collect the data. The results may be posted publicly on NTIA’s website.

Application Details

States and territories must include the following elements in their application (pgs. 27 – 40 of the NOFO):

General Applicant Information

Including a account information and information on the state or territories’ administrating entity or administering organization

Digital Equity Plan

A digital equity plan that meets the requirements of the State Digital Equity Planning Grant Program

Project Narrative
  • An executive summary of the overall implementation strategy, projects, and outcomes funded with this grant 
  • Elements of the digital equity plan that will be implemented with this bucket of funding from the grant 
    • This includes specific elements of the plan or a focus on prioritized covered populations, along with an explanation of how the priorities align with the needs assessment in the digital equity plan 
  • A project plan that describes all activities and programs, a timeline that includes key milestones, each project’s beginning and end, and measurable objectives
  • A description of ongoing collaboration with key stakeholders
  • A description of how each covered population will benefit from the implementation activities and programs
  • How the state or territory plans to measure digital equity outcomes and benefits to the covered population will be measured
  • An evaluation plan
  • A description of how the state or territory will prevent waste, fraud, and abuse during the program
Specific Projects
  • This section requires a description of specific projects and activities the grant will finance. States are asked to submit what they know about specific projects at the time of submission. If they don’t know all the details at the time of submission, they have nine months from the date they receive funds to submit those details. This means states and territories have up to nine months from the date the grant is awarded to name subgrant awardees (if they have a subgrant program). 
  • The description of each project or activity should include:
    • A brief summary of the specific activity or set of activities 
    • The barrier(s) to digital equity the project will address
    • The measurable objectives and the data collected to demonstrate success in meeting these objectives
    • The covered population and the estimated number of individuals that the program will serve 
    • The specific geographies to be served (if not state or territory-wide)
    • Whether the state or territory will implement the activity directly or subgrant funds to implement the activity
    • How the proposed project or activity will be evaluated to determine the successful implementation of the digital equity plan *See the measurement and evaluation section above for more details
    • Estimates of the anticipated outputs of each activity or project. Outputs include the total number of community members served, devices distributed, increased participant digital skill confidence, etc.
    • A timeline for the project
    • The funding amount for the project
Other Funding Sources
  • States and territories may receive funds from sources other than the State Digital Equity Capacity Grant Program.  any state or territory that plans to use multiple funding sources needs to clarify how funds are being used and provide:  
    • a description of all other funding sources 
    • amounts that will be allocated
    • specific elements in their digital equity plan that will be funded using alternative sources
    • An explanation of how the capacity grant funds will not duplicate other funding
  • If no other funds will be used to implement the plan, a statement indicating that no other funds were used to implement the digital equity plan should be submitted (pg. 38 of the NOFO)
  • The budget must outline all expenses for the grant and include:
    • Personnel
    • Travel
    • Equipment
    • Supplies
    • Contractual-subgrants
    • Construction
    • Other
    • Indirect
Forms: SF-424, Standard Forms, Certifications and Assurances

*See NTIA’s States and Territories Application Guidance for more information on the application process.

How states and territories can prepare