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What are Federal Grants?
Federal grants are financial awards provided by a federal government to individuals, organisations, businesses, or subnational governments to support specific programs, projects, or policy objectives.
Definition
Federal Grants refer to non-repayable funds distributed by a federal government to eligible recipients, typically subject to conditions, reporting requirements, and performance criteria.
Key Takeaways
- Non-repayable government funding.
- Used to support targeted programs and initiatives.
- Often conditional on compliance and reporting.
- Major tool for intergovernmental and sectoral support.
Understanding Federal Grants
Federal grants are designed to advance public policy goals such as education, healthcare, infrastructure development, research, social services, and economic development. Funds may be awarded competitively or allocated by formula based on predefined criteria.
Grants differ from transfer payments in that they are usually earmarked for specific purposes and subject to oversight. Recipients are required to meet compliance standards, track expenditures, and report outcomes to ensure accountability and effective use of public funds.
In federal systems, grants are a key mechanism for aligning national priorities with state or regional implementation.
Importance in Business or Economics
- Supports public services, innovation, and infrastructure.
- Enables coordination between federal and regional governments.
- Influences regional development and service delivery.
- Creates funding opportunities for businesses and institutions.
Types or Variations
- Categorical Grants – Restricted to specific uses.
- Block Grants – Broader discretion for recipients.
- Matching Grants – Require recipient co-funding.
Related Terms
- Federal Transfer Payments
- Fiscal Policy
- Intergovernmental Transfers
- Public Finance
Sources and Further Reading
- Investopedia — Grant
- U.S. Government — Federal Grants Overview
- World Bank — Public Sector Financing
Quick Reference
- Non-repayable funding
- Policy-targeted support
- Conditional and monitored
Frequently Asked Questions (FAQs)
Do federal grants need to be repaid?
No. Grants are non-repayable if conditions are met.
Who can receive federal grants?
Governments, organisations, businesses, and individuals, depending on program rules.
How are federal grants monitored?
Through reporting, audits, and performance evaluations.
