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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 federal assistance 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.
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Federal grants are defined and governed by the Federal Grant and Cooperative Agreement Act of 1977[1], 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.[2]
The preference for use of goods, products, and materials produced in, and services offered in, the United States which applies to federal procurement policy is also applied to the use of federal grants.[3]
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- 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. About 90% of federal aid dollars are spent for categorical grants.
- Project grants are grants given by the government 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 three years.
- Formula grants provide funds as dictated by a law.
- Block grants are large grants provided from the federal government to state or local governments for use in a general purpose.[4]
- 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 totaling $19.5 billion, while in FY2006 it found 12,852 earmarks totaling $64 billion.[5]
- Pass-Through Grants - Pass-through grants are funds provided by the federal government to a primary recipient, such as a state government, which then distributes the funds to sub-recipients, such as local governments or nonprofit organizations. This type of grant allows for the decentralization of fund distribution and administration.
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 20 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
- Transportation
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State and local governments also provide grants to support various projects and initiatives within their jurisdictions. These grants often focus on areas such as economic development, education, public safety, healthcare, and infrastructure.
State Grants
State grants are financial awards provided by individual states to support projects and programs that benefit residents. These grants can be used for purposes such as education, environmental conservation, public health, and community development. Each state has its own agencies and programs that administer these grants.
Local Government Grants
Local government grants are offered by counties, cities, and municipalities to support local initiatives. These grants often target community-specific needs, such as housing, transportation, public safety, and cultural programs. Local governments may also pass through federal and state grant funds to local organizations.
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Private foundations are nonprofit organizations that provide grants to support various causes and initiatives. These foundations are typically funded by individuals, families, or corporations and have specific focus areas, such as education, health, social services, arts, and the environment.
Independent Foundations
Independent foundations, also known as private foundations, are established by individuals or families and operate independently of government control. Examples include the Bill & Melinda Gates Foundation and the Ford Foundation. These foundations often have substantial endowments and provide grants to nonprofit organizations, educational institutions, and other entities that align with their mission and goals.
Corporate Foundations
Corporate foundations are philanthropic arms of corporations that provide grants to support charitable activities. These foundations are funded by the parent company and focus on areas that align with the corporation’s values and business interests. Examples include the Coca-Cola Foundation and the Walmart Foundation.
Community Foundations
Community foundations are public charities that provide grants to support local community needs. These foundations pool donations from multiple sources, including individuals, families, and businesses, to create endowment funds that support a wide range of community initiatives. Examples include the Cleveland Foundation and the Silicon Valley Community Foundation.
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In addition to corporate foundations, many corporations provide grants directly through their corporate social responsibility (CSR) programs. These grants are often used to support community development, environmental sustainability, education, and employee volunteerism.
Direct Corporate Grants
Corporations may offer direct grants to nonprofit organizations, schools, and other entities. These grants are typically aligned with the company’s CSR goals and business priorities. For example, a technology company might provide grants to support STEM education programs.
In-Kind Donations
Some corporations provide in-kind donations instead of or in addition to monetary grants. In-kind donations can include products, services, technology, and expertise that support the recipient organization's operations and programs.
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Many nonprofit organizations provide grants to support specific causes and initiatives. These organizations raise funds from various sources, including private donors, foundations, and government grants, and redistribute them through grant programs.
Nonprofit Grantmakers
Nonprofit grantmakers, such as the United Way and the American Heart Association, provide grants to support programs and services that align with their mission. These grants often focus on areas such as health, education, social services, and disaster relief.
Philanthropic Networks
Philanthropic networks and collaboratives, such as Grantmakers for Education and the Environmental Grantmakers Association, consist of multiple foundations and grantmakers that work together to fund projects and initiatives within specific focus areas.
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Educational institutions, including colleges and universities, often provide grants to support research, scholarships, and educational programs. These grants are funded through a combination of federal and state grants, private donations, and institutional funds.
Research Grants
Many universities and research institutions offer grants to support academic research projects. These grants are often funded by federal agencies, private foundations, and corporate sponsors. Examples include research grants provided by the National Science Foundation (NSF) and the National Institutes of Health (NIH).
Scholarship and Fellowship Grants
Educational institutions provide scholarships and fellowships to support students’ educational pursuits. These grants can be merit-based,[6] need-based, or specific to certain fields of study. They are funded through endowments, private donations, and institutional funds.
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Award information in grants generally includes:
- Estimated funding
- Expected number of awards
- Anticipated award size
- Period of performance
Eligibility information includes:
- Eligible applicants
- Cost sharing
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 toward entities most familiar with how to exploit the system, rather than to those most in need). Research also suggests that federal grants are often allocated politically, with more money going to areas represented by the political party commanding a majority in Congress or that controls the presidency.[7][8][9]
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- Community Development Block Grant
- Alcohol, Drug Abuse, and Mental Health Services Block Grant (ADMS)
- Substance Abuse Prevention and Treatment Block Grant (SABG or SAPT)
- Community Mental Health Services Block Grant (MHBG or CMHS)
- Local Law Enforcement Block Grant
- National Institutes of Health for bioscience research
- National Science Foundation for physical science research
Formulary
Categorical
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