What are federal grants?

You have probably heard this term countless times. Here we will explain in detail what exactly it is and how it influences our society.

Federal grants explained in detail is how the government allocates money for the creation and maintenance of projects in health, infrastructure, economy, education, security, art and other needs that the government identifies to achieve the efficient administration of a country. You have seen how the words "funds", "expenses", "legislation", "debt", etc., constantly resonate in the media, this is so because the approval of concessions entails a political-legal process subject to in-depth analysis by elected legislators. It is described in Article I, Section 9, Clause 7 of the United States Constitution, which states: "Money shall not be drawn from the Treasury, except in consequence of appropriations made by law;..."

After the grant is approved through Congressional legislation and finalized with the President's signature, the money is authorized to be allocated and used. But of course, this is only part of the tip of the iceberg of the US budget and spending process, as it includes the approval of annual appropriations of federal funds for agencies to administer their programs during the fiscal year, which is similarly legislated. and signed by the president.

There are two types of grant classifications, direct grants and pass-through. The former are those in which the beneficiary or concessionaire receives the funds directly from the federal government without any intermediary between them; these are more flexible since it only has one application and the agreements (which are essential) and the agreements with the federal government. Transfers are those that the state receives from the federal government and then distributes to local applicants to administer programs or initiatives.

Then we have some specific types of federal grants: block grants or formula grants, categorical grants, project and earmarked grants. Block grants are distributed to state or local governments to create or maintain different projects in communities. Also, they are known as formula grants since they are defined by law, where factors such as population, taxes, poverty, etc., can determine the amount of funds to be received. Categorical grants are that the recipient has to match part of their funds with the portion provided by the federal government forget 100 percent of the amount to use it. They are more specific and the most common funds provided by the government. Then we have the project grants, and these are allocated for particular projects that require in-depth study.

Many of these grants are provided in the areas of science, technology, and education, where applicants must complete some criteria beforehand as prerequisites. Ultimately, the type of appropriation grant is determined by the appropriations bills of the US Congress and is intended by specific provisions to address any particular problem contained in the language of the appropriations law. These types of funds are the most controversial due to the different definitions.

Today, this is a topic we should all be familiar with, as most of our economy revolves and operates around federal grants. Although programs such as Medicaid, Head Start, Public Assistance or TANF have been part of our reality and the Puerto Rican economy for decades.

Therefore, the term and what it entails is essential to understand and know them thoroughly.

On Point Strategy LLC (On Point) is a management consulting firm that provides a wide range of operational improvement and compliance services to corporations, governments, nonprofits and other organizations. Our office is located in Puerto Rico and our experience allows us to provide services internationally. we can offer service without geographical limits. Our team is made up of bilingual experts who are fluent in English and Spanish and specialize in areas such as administration, accounting, engineering, operations and supply chain management, sports management and human resources, among others.

At OPS we have the staff and experience necessary to manage and develop grants of all kinds.

Contact us for more information about our services by sending an email to info@opspr.com or by calling 787-766-6100.