In the United States, as incorporated in Title 31 Section 6304 of the US Code, Federal grants are defined and governed by the Federal Grant and Cooperative Agreement Act of 1977. Federal grants are econimic assistance issued by the government out of the general federal revenue. The recipient has to purposely support or stimulate a public deed as authorized by a law of the United States.

US CODE: Title 31,6304. Using grant agreements

An executive agency shall use a grant agreement as the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when

• (1) the principal purpose of the relationship is to transfer a thing of value to the State or local government or other recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the United States Government; and


• (2) substantial involvement is not expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.

A private non-profit organization such as foundations, charitable institutions or corporations may also issue grants outside of grants issued by the United States government.Subventions or subsidies are used to in similar fashion by government or private charities to subsidize programs and projects that fit within the funding criteria of the grant-giving entity or donor. Grants can be unrestricted, to be used by the recipient in any fashion within the perimeter of the recipient organization's activities or they may be restricted to a specific purpose by the benefactor.

Types of Grants

Project grants are grants given by the government in order to fund research projects such as a research project for medical purposes. An individual must acquire certain qualifications before applying for such a grant and the normal duration for project grants is 3 years.

Formula Grants provide funds as dictated by a law. See: Aid to Families with Dependent Children, Job Training Partnership Act, Work Incentive Program

Earmark grants are explicitly specified in appropriations of the U.S. Congress. They are not competitively awarded and have become highly controversial because of the heavy involvement of paid political lobbyists used in securing them. In FY1996 appropriations, the Congressional Research Service found 3,023 earmarks totalling $19.5 billion, while in FY2006 it found 12,852 earmarks totalling $64 billion.

Criticisms always follows State and Federal grants due to what are perceived to e excessive regulations and not include opportunities for small business, also giving more money per person to smaller states regardless of population or need. These criticisms include problems of overlap, duplication, excessive categorization, insufficient information, varying requirements, arbitrary federal decision-making, and grantsmanship.

21 Categories of grant programs offered by the 26 Federal grant-making agencies.

Agriculture, Arts, Business and Commerce, Community Development, Consumer Protection, Disaster Prevention, Education Regional Development, Employment Labor and Training, Energy, Environmental Quality, Food and Nutrition, Health, Housing, Humanities, Information and Statistics, Law and Justice, Natural Resources, Science and Technology, Social Services, Transportation.