Whether or not it is moral to accept government grants rests on the way that the government grant is funded. Because the government does not produce and sell goods on the market, the only way it gets money is by taxing, either through outright taxation (taking money directly from taxpayers), inflation (sapping the purchasing power out of everyone’s wallets), or borrowing (taxing future generations to pay for present consumption).
Thus, the real measure of taxation (i.e. state theft) is equal to government spending.
Government spending can be classified in two categories, however.
A). It is earmarked out of a fund that would otherwise go to another branch of the government, or
B). It requires entirely new spending.
Earmarks, for instance, are a very deceptive issue. A lot of libertarians oppose earmarking, but we should actually very much favor the act of earmarking, because any funds in the federal budget that Congress does not earmark will just go to the executive branch. This is why Ron Paul consistently puts in as many earmarks as possible and then votes against the budget in its entirety. It’s as though you and a group of your friends pool some money together and are deciding on what to order for dinner. You say Chinese food, because it’s much more economical, while all of your friends want pizza. So you decide to have a vote, but before the vote you “earmark” two pieces of pizza, assuming that pizza wins. When the vote comes, you vote against ordering the pizza, but when you lose the vote, you at least get the two pieces of pizza.
Likewise, if, in accepting government grants, you are merely diverting funding to yourself (or other taxpayers) that would otherwise go to the executive branch, or some other apparatus of the state, then you are not violating the private property rights of other innocent people.
However, if you apply for a government grant that requires a net increase in spending, then in order for the government to give you that grant, it must steal someone else’s property (either the property of outright taxpayers if the funds come from outright taxation, or the property of everyone who holds Dollars if the funds come from inflation, or the property of future generations if the funds come from borrowing).
So, to determine whether it is moral to accept government grants, one first has to distinguish if the act of applying for a government grant means an increase in government spending, or a mere shuffling around of an already existing pool of government funds.