Federal Aid

In the United States of America, Federal assistance, also known as federal aid, federal benefits, or federal funds, is defined as any federal program, project, service, and activity provided by the U.S. federal government that directly assists or benefits the American public in the areas of education, health, public safety, public welfare, and public works, among others. The assistance, which can reach to over $400 billion dollars annually, is provided and administered by federal government agencies, such as the U.S. Department of Housing and Urban Development and the U.S. Department of Health and Human Services, through special programs to recipients.

Federal assistance programs

In order to provide Federal assistance in an organized manner, the federal government provides assistance through federal agencies. It is the agency's responsibility to adequately provide assistance, as well as manage, account, and monitor the responsible use of federal funds which were utilized for that assistance. The agencies then supply the assistance to beneficiaries (known as recipients, see below), such as States, hospitals, poverty-stricken families, etc., through hundreds of individual programs. These programs are defined by the federal government as: "any function of a Federal agency that provides assistance or benefits for: (1) a State or States, territorial possession, county, city, other political subdivision, grouping, or instrumentality thereof; (2) any domestic profit or nonprofit corporation or institution; or (3) an individual; other than an agency of the Federal government". Therefore, programs (or "functions") can refer to any number of activities or services provided by agencies, such as building a bridge, providing food or medicine vouchers to the poor, or providing counseling to violence victims. Programs are assigned to offices within a federal agency and may include administrative personnel which work directly or indirectly with the program.

Each program is created with a specific purpose and has unique operations and activities, (i.e., no program is made for the same purpose and to operate the same way as a previously existing program) and it is assigned an official name for which to differentiate them from each other. A program may be called by a different term than its official name by the general public, by an entity, or even by law or regulation; such as by the type of activity or service it engages, by a specific project name (e.g., the Big Dig tunnel project), or any other similar term. This type of name, title or term given to a program is called the "popular name". However, the official name of program is standardized within the federal government so that federal agencies can maintain better accountability of their assigned assistance.

For example, an individual who receives rent assistance payments through the Section 8 Housing Choice Voucher program might not know the exact official name of the program, and may simply call it the "rent subsidizing" program, due to its type of activity or service. However, since there are many other rent subsidizing programs provided by the federal government, standard program names must be maintained in order to differentiate them. In this case, programs such as Supportive Housing for the Elderly (Sec. 202), which is a project-based rental assistance program exclusively for the elderly and Section 8 Housing Assistance Payments Program-Special Allocations, a rent assistance program usually tied to public housing projects, also engage in the activity of rent subsidizing.

Federal grants and awards

Programs administer assistance by "granting" or "awarding" a portion of the assistance to recipients. These are called Federal grants or awards. Recipients must first apply for the award directly to the federal agency which administers the program. The agency must then determine the amount of assistance to be awarded and notifies the recipient of the award. In order for an award to be considered official, a contract or grant agreements is entered between the agency and the recipient where details of the use of the award and the restrictions and limitations of the award are included.

Federal awards may specify a time period during which the recipient may use the assistance which is called the Period of Availability of Federal Funds. Most grants have a term of one year (although some may have a longer lifespan, even indefinitely), and the recipient must use the assistance within that timeframe. This is done because federal assistance is tied to the federal government's budget process, and any funds not used by a recipient within the specified time limit is reverted to other uses.

As a condition of receiving Federal awards or grants, recipients must agree to comply with the applicable laws and regulations related to the program and its agency, as well as any provisions included in the contracts and grant agreements entered between the recipient and the agency. Failure to do so may lead to sanctions, including fines and penalties, exclusion or suspension from participating in federal assistance programs and activities, and/or criminal charges. Most federal program regulations for which agencies and recipients must always comply are compiled in the Code of Federal Regulations, with summaries and guidance for these regulations contained in OMB Circular letters.

Types of federal grants

Given the enormous size of federal assistance provided, the Federal government has designed different types of grants, each with its own unique way of awarding and/or operating:
Project grants are awarded competitively. Project grants are the most common form of grants and a large number are found in scientific research, technology development, education (such as Federal Pell Grants), social services, the arts and health care types of assistance.

Formula grants provide funds as dictated by a law. Examples of this type of grant includes Aid to Families with Dependent Children and the Job Training Partnership Act, and the Work Incentive Program. These can be sub-categorized as either Categorical or Block:

Categorical grants may be spent only for narrowly defined purposes and recipients often must match a portion of the federal funds.

Block grants combine categorical grants into a single program. Examples of this type of grant includes the Community Development Block Grant and the Alcohol, Drug Abuse, and Mental Health Services Block Grant. Recipients of block grants have more leeway in using funds than recipients of individual categorical grants.

Earmark grants are explicitly specified in appropriations of the U.S. Congress. They are not competitively awarded, and have become controversial because of the involvement of political lobbyists used in the process of awarding them to recipients. In fiscal year 1996 appropriations, the Congressional Research Service found 3,023 earmarks totalling $19.5 billion, while in FY2006 it found 12,852 earmarks totalling $64 billion.


A recipient of federal awards or funds is defined as any non-federal entity that receives federal assistance and which is part of, and/or located within, the United States and its territories and possessions. Recipients are grouped into six main categories, as established by the GSA:

State governments - This category includes any of the 50 States of the United States and the District of Columbia (Washington, D.C.), or any agency or instrumentality of these governments, with the exception of institutions of higher education (colleges and universities) and hospitals.

Local governments - This category includes any county, parish, municipality, city, town, township, village, State-designated Indian tribal government, local public authority, school district, special district, intrastate district, council of governments, sponsor group representative organizations, and other regional or interstate government entity, or any agency or instrumentality of a local government, which are located within the U.S.

Territories and possessions - This category includes the Commonwealths of Puerto Rico and the Northern Mariana Islands, the Virgin Islands, Guam, Trust Territory of the Pacific Islands, and American Samoa.

Indian Tribal governments - This category includes the governing body or a governmental agency of any Indian tribe, band, nation, or other organized group or community (including any Native village) within the U.S. and its territories. These must first be certified by the U.S. Secretary of the Interior as eligible to receive assistance under special programs and services provided through the Bureau of Indian Affairs.

Non-profit organizations and institutions - This category includes semi-public, public and private institutions of higher education and hospitals, Native American Indian Organizations, and any other semi-public and private nonprofit organizations. However, Federally funded research and development centers are excluded from this category.

Private individuals - This category includes Native Americans, homeowners, students, farmers, artists, scientists, consumers, small businesses, refugees, aliens, veterans, senior citizens, low-income persons, health and education professionals, builders, contractors, developers, handicapped persons, and the physically afflicted. Examples of direct assistance to these individuals include Section 8 vouchers, Pell Grant scholarships, and disaster relief awards, among many others.

Every program is designed with a specific recipient in mind. Certain programs have restrictions on who may receive the assistance because of the nature of its activity or service. Examples include infrastructure programs and grants which are usually restricted to States, local governments, and U.S. territories given that these are usually the only entities that administer public roads, bridges, etc., or health-related research grants which individuals may be eligible so long as they satisfy certain criteria, such as that they have a professional or scientific degree, 3 years of research experience, and be a citizen of the United States.

Via Wikipedia