Block grants are grants given by the federal government to state and local governments to pay for various categories of programs. With block grants, the federal government might allocate $10 million toward community development in a particular state. That state then has discretion regarding how to best use the money within that arena of community development. Block grants were intended to fix the problem of federal governments funding programs other than what communities needed.


The first block grants were Democratic initiatives of the 1960s, Johnson-era White House, according to the Urban Institute. In 1971, President Richard Nixon proposed consolidating 129 different programs into six block grants. The block grants provided more funding than the programs they replaced. In the 1990s and early 2000s there was a shift in the use of block grants that eradicated the individual entitlement of U.S. citizens to certain benefits. For example, the federal government replaced the Aid to Dependent Children program, which entitled all parents of a certain income level to federal aid, with the Temporary Assistance to Needy Families block grant, which gave the money to states to use at their discretion. Individuals were no longer automatically entitled to benefits.

How Grant Funds Are Distributed

New block grants consolidating programs are approved by Congress. Existing block grants are generally allocated according to population. States and cities have to decide how they will use the block grants within parameters set by the federal government. For example, state TANF funds can be used to provide assistance to needy families so dependents can be cared for in their own homes; end dependence on government programs by promoting job preparation, work and marriage; curb the incidence of out-of-wedlock pregnancies; and encourage the maintenance of two parent families. But states must decide how best to do that on their citizens' needs.


There are many advantages to block grants. Because the programs are administered on a state or local level, they can reduce the amount of money spent on bureaucracy so that more can be dedicated to the area of need. They can avoid the incidence of money being wasted on unnecessary programs designed by people out of touch with specific groups. And they give more opportunity to state and local governments to help people in their communities.


Problems do exist, however, with block grants. In some instances, state and local governments have historically relied on the federal government and have little infrastructure or experience in dealing with problems. In some cases, funding for the block grants results in less overall funding for programs. On some programs, using block grants threatens the safety of constituents who rely on a personal federal entitlement to maintain their families.