I submitted my application for this Work In Progress grant last year and am going to do it again for their 2008 grant. I'm submitting my new YA novel and am really looking at my first Chapter since that's what I'll be submitting.
SCBWI offers several grants in different genres. Several grant winner have gone on to publish their novels. It would be a great item to include in a query letter.
If you're interested in writing or illustrating children's book, it really benefits you to join SCBWI. You can find them at SCBWI