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.
American definition
Federal grants are defined and governed by the Federal Grant and Cooperative Agreement Act of 1977, as incorporated in . 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 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, 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
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.
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.
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:
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.
