Federal Aid Grant

Federal aid grants are issued to enhance the socio-economic condition of a particular group of people. Specifications for receiving grants are determined and regulated by the Federal Grant and Cooperative Agreement Act of 1977 of the U.S. Code.

Who gives Federal Aid Grants?
Federal aid grants are issued by the United States government in either by check or in tax credits and loans. Other grants are issued through private non-profit establishments such as charitable trusts and non-profit organizations.

Types of grants
A Federal aid grant can either be restricted to serve a particular need of the applicant or it can be used in an unlimited manner within a particular scope of activities.

Some primary types of grants include formula grants, categorical grants, earmark grants, and block grants. Approximately 90% of federal aid dollars are spent on categorical grants and 33% of those categorical grants are considered formula grants.

Purpose of Federal Aid Grants
Federal aid grants are awarded to organizations working towards the benefit of their community.

Some examples include:
Building a program to retrain unemployed workers
Planning the restructure and refinance of new business to an economically depressed area
Creating a national flood control project
Repaving an unsafe area
Development of a regional water conservation program.

Recipients of Federal Aid grants must follow certain guidelines and meet strict performance standards while carrying out their projects.
All granted funds must be spent. In the event the grant funds are greater than needed to complete a project, all unspent funds will be returned to the treasury.
All the project expenditures must be precisely accounted for.
In the event the project needs to be changed, all changes are to be pre-approved by the government.
All projects should successfully be completed within the given time period. Any failure or fraudulent expenditures can result in penalties.
Audits are carried out annually.

Categories of grant programs

Categories of grant programs include:
Business and commerce
Consumer protection
Disaster prevention
Food and nutrition.


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Last Updated on : 10th July 2013

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