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In the United States, federal grants are economic aid issued by the United
States government out of the general federal revenue. A federal grant is
an award of financial assistance from a federal agency to a recipient to
carry out a public purpose of support or stimulation authorized by a law
of the United States.
Grants are not federal assistance or loans to individuals, benefits
or entitlements. A grant is not used to acquire property or services for
the federal government's direct benefit.
Grants may also be issued by private non-profit organizations such as
foundations, not-for-profit corporations or charitable trusts which are
all collectively referred to as charities.
Outside the United States grants, subventions or subsidies are used
to in similar fashion by government or private charities to subsidize programs
and projects that fit within the funding criteria of the grant-giving entity
or donor. Grants can be unrestricted, to be used by the recipient in any
fashion within the perimeter of the recipient organization's activities
or they may be restricted to a specific purpose by the benefactor.
Federal grants are defined and governed by the Federal Grant and Cooperative
Agreement Act of 1977, as incorporated in Title 31 Section 6304 of the
U.S. Code. A Federal grant is a:
"...legal instrument reflecting the relationship between the United
States Government and a State, a local government, or other entity when
1) the principal purpose of the relationship is to transfer a thing of
value to the State or local government or other recipient to carry out
a public purpose of support or stimulation authorized by a law of the United
States instead of acquiring (by purchase, lease, or barter) property or
services for the direct benefit or use of the United States Government;
and 2) substantial involvement is not expected between the executive agency
and the State, local government, or other recipient when carrying out the
activity contemplated in the agreement."
When an awarding agency expects to be substantially involved in a project
(beyond routine monitoring and technical assistance), the law requires
use of a cooperative agreement instead. When the government is procuring
goods or services for its own direct benefit, and not for a broader public
purpose, the law requires use of a federal contract
Types of Grants
Project grants are grants given by the government in order to fund
research projects such as a research project for medical purposes. An individual
must acquire certain qualifications before applying for such a grant and
the normal duration for project grants is 3 years.
Formula Grants provide funds as dictated by a law. See: Aid to Families
with Dependent Children, Job Training Partnership Act, Work Incentive Program
Categorical grants may be spent only for narrowly defined purposes
and recipients often must match a portion of the federal funds. 33% of
categorical grants are considered to be formula grants. See: Head Start,
Urban Forestry Assistance, Asbestos School Hazards Abatement. About 90%
of federal aid dollars are spent for categorical grants.
Block grants combine categorical grants into a single program. See:
Community Development Block Grant; Alcohol, Drug Abuse, and Mental Health
Services Block Grant. Recipients of block grants have more leeway in using
funds than recipients of individual categorical grants. All block grants
are considered to be formula grants.
Earmark grants are explicitly specified in appropriations of the U.S.
Congress. They are not competitively awarded and have become highly controversial
because of the heavy involvement of paid political lobbyists used in securing
them. In FY1996 appropriations, the Congressional Research Service found
3,023 earmarks totalling $19.5 billion, while in FY2006 it found 12,852
earmarks totalling $64 billion
Federal and State grants frequently receive criticism due to what are
perceived to be excessive regulations and not include opportunities for
small business, as well as for often giving more money per person to smaller
states regardless of population or need. These criticisms include problems
of overlap, duplication, excessive categorization, insufficient information,
varying requirements, arbitrary federal decision-making, and grantsmanship
(a funding bias towards entities most familiar with how to exploit the
system, rather than to those most in need).
(For charitable grants and funds for schools and organizations see:
Grant writing and Grants )
There are over 900 grant programs offered by the 26 Federal grant-making
agencies. These programs fall into 21 categories:
Agriculture
Arts
Business and Commerce
Community Development
Consumer Protection
Disaster Prevention and Relief
Education Regional Development
Employment, Labor, and Training
Energy
Environmental Quality
Food and Nutrition
Health
Housing
Humanities
Information and Statistics
Law, Justice, and Legal Services
Natural Resources
Science and Technology
Social Services and Income Security
Stimulus Money
Transportation