Federal grants are monetary assistance given by the government for public support purposes. The US has 26 agencies offering over 1,000 grant programs. Grants can be direct or rollover, competitive or formula, categorical or block, and allocation grants are controversial.
A federal grant is a form of monetary assistance given to an individual or group from the government. In the United States, federal grants may only be made for public support purposes as authorized by national law. Federal grants do not directly benefit the government. The United States has 26 federal agencies that offer more than 1,000 different grant programs. In other countries, governments use grants or private charities to finance projects that require these grants.
Federal grants are commonly issued by non-profit organizations or charities. Grants from the federal government may be unlimited in terms of use, or may come with specific guidelines as established at the time of administration. Federal grant money can be categorized in two ways: direct grants and rollover grants. Direct grants are awarded directly by the government to an individual or group that applied for the money. Step-up grants require the state to apply to the government for the grant, then the state gives the federal grant to the organization that applied for it.
A grant from the federal government may be further classified as competitive or formula. A competitive grant, or project grant, is one that multiple groups compete for because the amount of money is limited. A group of peer reviewers makes the decision by scoring the applications and assigning the one with the highest number of grant points. A formula grant does not imply competition with other groups; the government simply distributes formula subsidies based on set standards. An application must be completed and submitted to the government, once received, the government delivers the grant.
Some additional types of federal grants include categorical, block, and target grants. Categorical grants have restrictions, dictating that free federal grants must only be spent on projects or causes that fall within certain categories. Groups receiving categorical grants are often required to match a set amount of the awarded grant. About a third of categorical grants are formula grants, so since most of these grants are awarded competitively, the restrictions make sense.
Block grants are similar to categorical grants, except they are grouped into one category. Although the money can only be used for projects within a category, those who receive block grants have fewer restrictions on the use of the money than categorical grant recipients. All block grants awarded are formula grants. Allocation grants are regulated by the United States Congress and are controversial for their strong involvement in politics. They are not delivered competitively; instead, political lobbyists pay high prices to receive them.
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