Federal Grant
Government funding awarded to state/local governments, nonprofits, or institutions for a specific public purpose — unlike contracts, grants are not purchases of goods or services.
How It Works
Grants are transfer payments: the government gives money to support an activity (scientific research, education programs, infrastructure construction) rather than buying something. Grants come with conditions — recipients must use the money for the stated purpose and comply with federal reporting requirements. Major grant-making agencies include HHS (health research), Education (school funding), and Transportation (highway construction). Grants can be competitive (applications reviewed and ranked) or formula-based (allocated by a statutory formula, like population or poverty rate).
Related Terms
- Federal Contract — A legally binding agreement between the U.S. government and a private company to provide goods or services — from fighter jets to IT consulting.
- Obligation — A legally binding commitment by the government to spend money — the point at which funds are formally committed to a contract, grant, or other agreement.
- Cooperative Agreement — A type of federal financial assistance similar to a grant, but with "substantial involvement" by the government in carrying out the funded activity.
Explore Federal Spending
About This Definition
This definition is part of the TaxDollarData Federal Spending Glossary — 31 terms explaining how the U.S. government spends taxpayer money. All definitions are written in plain language for taxpayers, journalists, contractors, and researchers.