Categorical grants, also called conditional grants, are grants issued by the United States Congress which may be spent only for narrowly defined purposes. Categorical grants comprise the bulk of activity in the federal grant-in-aid system, both in terms of the number of programs and the amount of funding. Categorical grants derive their name from the fact that their uses are limited to a narrowly defined category of activities that generally are specified in the authorizing legislation. Categorical grants contrast with block grants, which can be used for broadly defined purposes and are not subject to as much oversight or as many administrative conditions. A block grant can be used for a variety of purposes, with the distribution of funds overseen and allocated by local authorities. A categorical grant is awarded for a singular and specific purpose, with distributions audited to ensure the intended recipient.
