The Tools of Government: Grants
David R. Beam & Timothy J. Conlan
Defining the Tool: Grants
• Defining Features
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Stimulating or supporting
Founded in land grants
Primarily cash payment
Directed toward other levels of government, nonprofit
organizations, universities, or individuals
• Relation to Key Tool Features
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Directness: “The principle indirect tool”
Automaticity: High level due to reliance on other entities
Coerciveness: Generally non-coercive
Visibility: Fairly visible
Defining the Tools: Grants
• Design Features and Major Variants
– Scope of Purpose: Categorical Grants, Block Grants, and
General Purpose Assistance
– Method of Allocation: Formula (continuous, prescribed
by law) & Project Grants (fixed period, specific project
or service)
– Degree of Federal or Donor Control: Application
process and financial audits
– Other Design Features: Recipient variation and “pass
through grants”
Patterns of Grants Use
• Current Extent
– Most widely used policy tool of American Federal Government
– 928 funded grant programs amoung the 1,412 federal assistance
programs in 1999
• Nonfederal Grants
– Numerous grants from states to their localities
– Grants and “pass through grants” generated from state receipts
– In 1996, 30% of the $248 billion in state aid was pass-through
federal funding
• International Experience
– Comparably the US relies more heavily on Categorical Grants
– There has been an international shift to Block and General Grants
Patterns of Grant Use
• Recent Trends in the United States
– Grant Growth: Significant growth since mid-nineteenth century
with bursts in the 1930’s, 1956, 1960’s and 1990’s
– More Payments to Individuals: Nearly all growth has been in the
form of individual payments such as Medicaid, welfare aid, and
housing assistance
– The Erosion Flexible Funding: While the number of block grants
has increased the proportion of federal aid has not
– Growing Mandates: Crosscutting requirements and crossover
sanctions
– Research Grant Trends: On the rise since WWII and it is an
important component of external funding streams for institutional
research and development
Basic Mechanics of Grant In Aid
• Authorization
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Administering organization
Description of supported activities
Eligibility
Distribution of funds
• Allocation: Application, Selection, and Awarding
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Regulations
Marketing
Application
Application Review
Award Process
• Post Award Management and Assessment
– Program implementation
– Monitoring and evaluation
Tool Selection: Theory and Practice
• Rationale for the Use of Grants
– Constitutional Considerations: Grants judged by
federal government as appropriate tool for handling
domestic functions
– Administrative Rationales: Justified on basis of
administrative efficiency
– Economic Theory: The federal government possesses
the strongest and “fairest” revenue source
• Political Considerations
– Effective way to bring states into federal programs
– Addresses specific concerns of interest groups on federal
level
– Centralization of American Government
Tool Selection: Theory and Practice
• Systemic Concerns: Reducing Duplication and
Confusion
– Grant Consolidation: Categorical grants to block grants
– Grant Simplification: Simplify and Standardize administrative
procedures
– Trade-off Proposals: 100% cost shift between state and federal level
• Inefficient Allocation of Funds
– Adherence to the “Robin Hood” tax system
• Individual Program Concerns
– Delays in Spending Funds: Money is not always spent
– Improper Expenditure Funds: Money not spent where intended
– Failure to Achieve Objective: Desired results are not always met
Overall Assessment
• Legitimacy: High in political legitimacy
• Effectiveness: Moderate- some programs are
very effective while others are hard to gauge
• Efficiency: Grants are poor in efficiency due to
the difficulty in tracking funds
• Equity: The wide distribution rather than need
based distribution leads to poor equity ratings
• Accountability: There are many complexities
leading to a poor rating
Future Directions
• More of the Same: Expect that grants in the
United States will continue to grow
• Recurring Cycles of Growth and Reform:
With expected growth there needs to be significant
reform in terms of implementation, efficiency, and
evaluation
• Shift from Grants to Other Tools: There
will be other domestic policy tools which will
compete for dominance with grants