Categorical grants Congress gives money to states and localities with the requirement that spending is restricted to a particular issue or group that is listed in the law.
Federal payments known as categorical grants are awarded to state and local governments to promote their collaboration in carrying out particular goals and initiatives. Compared to block grants, these funds offer state governments less flexibility. Categorical grants include Medicaid and the food stamp program, for instance. Block grants give beneficiaries more freedom over how to use grant money and have fewer restrictive federal administrative requirements. Project grants, formula grants, formula-project grants, and open-ended reimbursement grants are the four categories of categorical awards that are recognized by law. An open-ended reimbursement award is given as compensation for expenses incurred by a government organization but does not have a set dollar amount.
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