In a nutshell
Fellowships finance a (post)doctoral researcher’s grant or salary for a limited period because of his/her excellent curriculum and/or within the framework of a research project. Fellowships are usually temporary appointments (2 or 3 years), but may, in exceptional cases, have a longer duration (in which case they are financed through external funds).
The term fellowship can basically be described as a research position awarded to a researcher on an individual basis. Fellowships are usually limited to payment of a grant or a salary, but occasionally are complemented with additional financial resources (operating budget, bench fee).
Fellowships are usually limited in time, and sometimes have a fixed start date. They can be awarded at either the doctoral or the postdoctoral level and are usually applied for by the beneficiary, under the supervision of a tenured academic staff member, who acts as the fellow’s promoter.
Fellowships can refer to an appointment with an employment contract or even a permanent appointment, but some fellowships, especially the doctoral ones, are often issued in the form of a doctoral grant. Doctoral grants are possible on a wide range of financing channels, provided that there is no intended private benefit to the lender. The main advantage of these grants is that they are tax-free, which as such creates a favourable gross labour cost that is markably lower for the grant-awarding body than for example for an employer in case of an employment contract. In addition, all branches of social security are covered by the grants and the net grant amounts have been more or less equalized for all grant systems and now correspond to the wages of university research and teaching assistants. Other employee benefits, such as holiday pay and Christmas bonus, have meanwhile been equated as well.
Grants issued within the frame of postdoctoral fellowships are usually only awarded to foreign researchers (subsidized postdocs), and depend heavily on the nature of the financing source. As a consequence, the number of grant recipients among the group of postdoctoral fellows is limited.
Please note, finally, that fellowships are not always managed and paid by the university, but can also be the subject of a direct agreement between lender and applicant (eg. FWO, IWT).