Federal grant funding is primarily distributed through two distinct mechanisms: discretionary grants and mandatory grants. It outlines how each type is awarded, the role of federal agencies in the process, and the legal frameworks guiding their distribution.
Key Insights
- Discretionary grants are awarded at the judgment of federal agencies and require a merit review process before funds are disbursed.
- These grants are guided by agency priorities, statutory provisions, and budget availability, and are announced through a Notification of Funding Opportunity.
- Mandatory grants follow funding formulas set by Congress, are typically awarded to state governments, and are not tied to specific projects.
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Let's talk about the two types of grants that are issued by the federal government: discretionary and mandatory. Now, discretionary grants, the key is in the word discretion. These are grants that the federal agency has the power and authority to use its own judgment.
Awarding agencies decide the recipients and the amounts, and it's based sometimes on statutory provisions, agency priorities, and their own budgets. All discretionary grants, whether competitive or non-competitive, must undergo a merit review process during the pre-award phase. Additionally, discretionary grants are detailed on what the process is and what the general terms and conditions of any award that comes through the selection of a grantee through the Notification of Funding Opportunity, or the NOFA.
Now, discretionary grants are different from mandatory grants. Mandatory grants, sometimes called formula grants or block grant funding, are formula-based, which is set at the top by Congress and is typically awarded to states and governmental bodies. Think Medicare, Medicaid.
Agencies must make awards as Congress directed them to make to the designated recipients, which are usually state entities, and funds are not tied to specific projects. Once Congress has directed how the money must be set and sent via formula, federal agencies have to abide by that formula for funding.