Federal Grants and National Efforts to Influence the States

Federal Grants

In the United States, federal grants are economic aid issued by the federal 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. A grant is not used to acquire property or services for the federal government's direct benefit. They may also be issued by private non-profit organizations such as foundations, not-for-profit corporations or charitable trusts. For instance, PBS, the network on which Big Bird features, relies heavily upon federal grants.

Federal Grants and the 2012 Presidential Election

Republican candidate, Mitt Romney, claimed that he would cut federal grants to organizations like PBS to reduce the federal budget deficit. He famously declared, "I like PBS, I love Big Bird. Actually like you, too. But I'm not going to – I'm not going to keep on spending money on things to borrow money from China to pay for. That's number one. "

Federal grants are defined and governed by the Federal Grant and Cooperative Agreement Act of 1977. 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

There are four main types of grants available:

1. Block grants—large grants provided by the federal government to state or local governments for use in a general purpose.
2. Project grants—grants given by the government to fund research projects, such as medical research. Certain qualifications must be acquired before applying for a project grant and the normal duration is three years.
3. Formula grants—grants that provide funds as dictated by a law.
4. Earmark grants— grants are explicitly specified in appropriations of the U.S. Congress. They are not competitively awarded and are highly controversial due to the heavy involvement of paid political lobbyists used in securing them.
5. Categorical Grants – Categorical Grants are grants, issued by the United States Congress, which may be spent only for narrowly-defined purposes. Categorical grants are the main source of federal aid to state and local government, can only be used for specific purposes and for helping education, or categories of state and local spending. Categorical grants are distributed either on a formula basis or a project basis. For project grants, states compete for funding; the federal government selects specific projects based on merit. Formula grants, on the other hand, are distributed based on a standardized formula set by Congress.

Criticisms

Federal and state grants frequently receive criticism because they are perceived as excessive regulations and excluding opportunities for small business. These criticisms include problems of overlap, duplication, excessive categorization, insufficient information, varying requirements, arbitrary federal decision-making, and grantsmanship.