In the United States, federal assistance, also known as federal aid, federal benefits, or federal funds, is defined as any federal program, project, service, and activity provided by the federal government that directly assists or benefits the American public in the areas of education, health, public safety, public welfare, and public works, among others. The assistance, which can reach to over $400 billion dollars annually,[1] is provided and administered by federal government agencies, such as the U.S. Department of Housing and Urban Development and the U.S. Department of Health and Human Services, through special programs to recipients.
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The term assistance (or benefits) is defined by the federal government as:[2]
| “ | The transfer of money, property, services, or anything of value, the principal purpose of which is to accomplish a public purpose of support or stimulation authorized by Federal statute,…and includes, but is not limited to, grants, loans, loan guarantees, scholarships, mortgage loans, insurance…, property, technical assistance, counseling, statistical, and other expert information; and service activities of regulatory agencies. | ” |
In order to provide Federal assistance in an organized manner, the federal government provides assistance through federal agencies. It is the agency’s responsibility to adequately provide assistance, as well as manage, account, and monitor the responsible use of federal funds which were utilized for that assistance. The agencies then supply the assistance to beneficiaries (known as recipients, see below), such as States, hospitals, poverty-stricken families, etc., through hundreds of individual programs. These programs are defined by the federal government as: “any function of a Federal agency that provides assistance or benefits for: (1) a State or States, territorial possession, county, city, other political subdivision, grouping, or instrumentality thereof; (2) any domestic profit or nonprofit corporation or institution; or (3) an individual; other than an agency of the Federal government”.[2] Therefore, programs (or “functions”) can refer to any number of activities or services provided by agencies, such as building a bridge, providing food or medicine vouchers to the poor, or providing counseling to violence victims. Programs are assigned to offices within a federal agency and may include administrative personnel which work directly or indirectly with the program.
Each program is created with a specific purpose and has unique operations and activities, (i.e., no program is made for the same purpose and to operate the same way as a previously existing program) and it is assigned an official name for which to differentiate them from each other. A program may be called by a different term than its official name by the general public, by an entity, or even by law or regulation; such as by the type of activity or service it engages, by a specific project name (e.g., the Big Dig tunnel project), or any other similar term. This type of name, title or term given to a program is called the “popular name”.[3] However, the official name of program is standardized within the federal government so that federal agencies can maintain better accountability of their assigned assistance.[2][3]
For example, an individual who receives rent assistance payments through the Section 8 Housing Choice Voucher program might not know the exact official name of the program, and may simply call it the “rent subsidizing” program, due to its type of activity or service. However, since there are many other rent subsidizing programs provided by the federal government, standard program names must be maintained in order to differentiate them. In this case, programs such as Supportive Housing for the Elderly (Sec. 202), which is a project-based rental assistance program exclusively for the elderly and Section 8 Housing Assistance Payments Program-Special Allocations, a rent assistance program usually tied to public housing projects, also engage in the activity of rent subsidizing.[4]
Programs administer assistance by “granting” or “awarding” a portion of the assistance to recipients. These are called Federal grants or awards. Recipients must first apply for the award directly to the federal agency which administers the program. The agency must then determine the amount of assistance to be awarded and notifies the recipient of the award. In order for an award to be considered official, a contract or grant agreements is entered between the agency and the recipient where details of the use of the award and the restrictions and limitations of the award are included.
Federal awards may specify a time period during which the recipient may use the assistance which is called the Period of Availability of Federal Funds.[5] Most grants have a term of one year (although some may have a longer lifespan, even indefinitely), and the recipient must use the assistance within that timeframe. This is done because federal assistance is tied to the federal government’s budget process, and any funds not used by a recipient within the specified time limit is reverted to other uses.
As a condition of receiving Federal awards or grants, recipients must agree to comply with the applicable laws and regulations related to the program and its agency, as well as any provisions included in the contracts and grant agreements entered between the recipient and the agency.[6] Failure to do so may lead to sanctions, including fines and penalties, exclusion or suspension from participating in federal assistance programs and activities, and/or criminal charges. Most federal program regulations for which agencies and recipients must always comply are compiled in the Code of Federal Regulations, with summaries and guidance for these regulations contained in OMB Circular letters.
Given the enormous size of federal assistance provided, the Federal government has designed different types of grants, each with its own unique way of awarding and/or operating:
A recipient of federal awards or funds is defined as any non-federal entity that receives federal assistance and which is part of, and/or located within, the United States and its territories and possessions. Recipients are grouped into six main categories, as established by the GSA:[8]
Every program is designed with a specific recipient in mind. Certain programs have restrictions on who may receive the assistance because of the nature of its activity or service.[8] Examples include infrastructure programs and grants which are usually restricted to States, local governments, and U.S. territories given that these are usually the only entities that administer public roads, bridges, etc., or health-related research grants which individuals may be eligible so long as they satisfy certain criteria, such as that they have a professional or scientific degree, 3 years of research experience, and be a citizen of the United States.[9]
The federal government allows certain entities mentioned above to act as a Pass-through entity in order to provide the federal assistance to another recipient. The Pass-through entity is still considered a recipient, but the assistance assigned to it may be “passed on” or “passed-through it” to another recipient. The entity which receives the assistance from a pass-through entity is considered a sub-recipient.[10][11] This is allowed because certain federal programs may not have the organizational structure to provide assistance directly to the final recipient and requires support from other entities.
For example, crime-prevention federal programs may be assigned to a State Attorney General’s Office (AGO) (considered a State government). This State office may decide to assign part of its federal grant through sub-grants (also known as sub-awards)[10] to cities and counties within the State (considered local governments) for crime-prevention activities such as neighborhood watch programs or supplying new equipment to police forces. The original recipient, the AGO, has become a Pass-through entity and the cities and counties have become “sub-recipients”, all the while the assistance is still serving the federal program’s purpose to prevent crime. Sub-recipients may in turn pass on the assistance to another sub-recipient to serve the purpose required by the federal program, for example if the cities mentioned above pass on part of their assistance to nonprofit organizations dedicated to patrolling neighborhoods at night. Therefore, a recipient may be considered a pass-through entity and a sub-recipient at the same time.
Certain programs may require the original recipient to pass on the assistance to sub-recipients (i.e., the federal program requires that the assistance be provided to nonprofit neighborhood watch organizations, and the assistance passes recipient through recipient until it reaches them), while others may require that the recipient not pass on the assistance (i.e., State must use the assistance entirely on its own). Some programs award assistance to a pass-through entity who is neither the direct applicant nor the ultimate beneficiary, such as the Pell Grant program where students apply and receive the aid but it is the university’s responsibility to receive and administer the applications and disburse the aid.[9]
Pass-through entities and sub-recipients are equally responsible for the management of federal aid received. The federal government monitors the federal aid provided to any recipient and requires all pass-through entities to monitor the aid they pass on. Noncompliance of a federal regulation on the part of the sub-recipient may also be attributed to the pass-through entity because it is still responsible for the funds it passed on.
The task of organizing and categorizing federal assistance programs into a uniform and standardized system has been assigned to the U.S. General Services Administration (GSA) since 1984.[12] The GSA achieves these tasks by maintaining the Federal assistance information database, which incorporates all federal agency programs that provide grants and awards to recipients. The Office of Management and Budget assists the GSA in maintaining the database by serving as an intermediary agent between the Federal agencies and GSA.
In addition to these tasks, the Federal Program Information Act requires the GSA to provide federal assistance information to the general public through the Catalog of Federal Domestic Assistance (CFDA), a free register which incorporates both federal agency and federal program information. This register acts both as a directory and as a dictionary, facilitating both recipients and the general public in finding information of a specific program.
Currently, programs in the Catalog are being classified by the GSA into 15 types of assistance, which are then sub-classified into seven financial types of assistance and eight non-financial types of assistance:[8]
In order to assist in locating a federal program, the General Services Administration assigns a two-digit number unique to each federal agency authorized to provide assistance, and a three digit number to each federal assistance program within that agency. With these designations, a federal assistance program is identified by the combination of both numbers which in turn creates a five digit number divided by a dot (55.555).[3] The two digit numbers assigned to federal agencies are:
Due to the extensive amount of assistance provided by the federal government, the Federal agencies rely on numerous monitoring activities performed by themselves, pass-through entities, and external sources. The most common monitoring procedure used is the Single Audit, which is an annual examination of a recipient’s operations and records in order to determine whether or not the recipient complied with laws and regulations applicable to the assistance received. Additionally, Federal agencies routinely visit recipients and inspect their records and statements to check for situations of noncompliance with laws and regulations, as well as require periodic financial and performance reports in order to monitor recipient operations. Federal agencies also require pass-through entities to perform similar procedures to their sub-recipients since they are responsible for the assistance they pass on.[13][14][15]
The following is a list of circular letters issued by the U.S. Office of Management and Budget which provide significant information and guidance for Federal agencies, recipients, auditors, and the general public over the use and management of federal funds, operations of federal assistance programs, and agencies’ and recipients’ compliance with laws and regulations imposed by the federal government: