Grace has been defined in many ways at many times. The Bible, especially the New Testament speaks much of grace. It is important to know what it really means.
Grace has been defined as the unearned, unmerited favour of God. This definition helps us to see that it is something good that comes from God, which we don't deserve. It is a gift. "The Lord will give grace and glory" (Psalm 84:11). "God .. gives grace to the humble." (James 4:6).
Two important things to realise about grace is the totally undeserving nature of the recipient (us), and the totally generous nature of the giver (God).
It is important to realize that God may give grace as He pleases. He can set conditions, or waive them. No one can demand grace from God based on what they have done. Grace is something you cannot earn by good works or even by suffering. No amount of religious activity - Bible study, prayer, obedience to church leaders, fasting, or church programs gives you the right to expect God to bless you or help you in any way. Giving money to the poor or to the church does not earn us any right to God's favour or blessings. Your struggle to obey God's commandments does not earn you God's grace either. Nothing you do can make God owe you grace. "Now to him who works, the wages are not counted as grace but as debt." (Romans 4:4). The things we do for God or others - our works - if they earned favour with God, this favour would not be grace, but rather something that God owes us according to the principle of what is just and fair. "And if by grace, then it is no longer of works; otherwise grace is no longer grace. But if it is of works, it is no longer grace; otherwise work is no longer work." (Romans 11:6)
The fact that grace is unearned and unmerited does not tell us everything about grace, because it does not tell us what grace does. A more practical definition of grace could be "God's life, power and righteousness coming to us, the undeserving, as a gift." It is through grace that God works effective change in our hearts and lives. God's laws in themselves do not have the power to make us what we should be. It takes God Himself, working in the human life, to make us what we ought to be. At every step, we are dependent on God's life and power to come to us and work within our hearts, if we want to be what God wants and do what He wants.
It follows therefore that we cannot say that our life and power, independent of God, is sufficient to fulfil God's plan. No, every proud religious effort to keep a set of rules, even Biblical rules, is doomed to failure. To live under the law in this way is to be separated from Christ and to be fallen from grace. Paul wrote to some people who had come to fall exactly in this trap. He writes, "You have become estranged from Christ, you who are seeking to be justified [made right] by law [rules]; you have fallen from grace!" (Galatians 5:4).
So then, grace is God's life, power and righteousness coming to us, the undeserving as a gift.
Grace gives us a new life which is not condemned by God. Through God's grace we are forgiven. Grace also transforms our thinking, resulting in the renewal of the mind. Through grace we are sanctified and made holy. Grace enables us to live the kind of generous, carefree life of service and joy that God would like every one of His children to experience.
We will now consider more in detail what the grace of God does.
Grace saves us
"For by grace you have been saved, through faith, and that not of yourselves; it is the gift of God, not of works, lest any man should boast". (Eph 2:8,9).
It is important to see here that by God's grace we have been saved. It is not by works. Salvation is all that God does in taking a fallen man and making him into a son of God - righteous, holy and glorified. Legally it all belongs to us now. God's grace works to make it a reality in our being. First God saves our spirits, making us born again. Then in this life He saves our souls - our minds, emotions and wills, as the process of sanctification in this life unfolds. He also saves our bodies - firstly in part through divine healing and health, and then eternally through the resurrection and redemption of our bodies (Romans 8:23). All this, and anything else which God does in salvation, is strictly on the basis of God's grace. God's gift, not our works, made it all possible.
Grace justifies us
"... being justified freely by His grace through the redemption that is in Christ Jesus" (Romans 3:24). See also Titus 3:7.
We may be considered to be right by God only because of the grace of Jesus Christ, which is available to us because Jesus willingly laid down His life for us - paying the price we deserved for our rebellion against God. Our justification is not something we receive because of good works, but because of the payment Jesus paid for us at the cross when he suffered and died.
Grace sanctifies us
Indeed, not only our right standing with God, but also our right living depends on grace. God does not leave us to struggle in our own power to think, speak and act correctly. He gives grace after grace. "And of His fullness we have all received, and grace for grace." (John 1:16). We need to "continue in God's grace" (Acts 13:43) in order to go on with God. The Word of God's Grace "builds us up and gives us an inheritance among all those who are sanctified" (Acts 20:32). As we hear about all that God's grace does for us, our faith grows and we can then receive the actual grace to make all this a possibility.
The work of sanctification and perfection belongs firstly to God, not to us. This is why it says, "But may the God of all grace, who has called us to His eternal glory by Christ Jesus, after you have suffered a while, perfect, establish, strengthen and settle you." (1 Peter 5:10). It is as the "God of all grace" that the Lord "perfects, establishes and strengthens us."
Grace gives us the power to conduct ourselves correctly in the world. "For our boasting is this: the testimony of our conscience that we conducted ourselves in the world in all simplicity and godly sincerity, not with fleshly wisdom but by the grace of God, and more abundantly toward you." (2 Corinthians 1:12). It is only by God's grace, and the graciousness He puts in us, that we can conduct ourselves simply and with godly sincerity in the world.