Federal funding
In almost all the countries, to provide the necessary boost to the developmental and other such activities, government provides various types of funds. These funds are provided as grants and other forms of financial assistance. All these activities are included under federal funding. Thus, federal funding can easily be defined as the financial assistance given by government, in monetary way or non-monetary way, to different sectors of economy to ensure the overall development the nation. Let us try to understand more about the federal funding by taking United States as an example.
FEDERAL FUNDING IN UNITED STATES
Federal funding in United States is known by many names like federal aid, federal funds, federal assistance, federal benefits etc. It can simply be described as the assistance provided by the U.S government for any activity that aims to bring development and is helpful for the growth of economy. The area of operation of federal funds is quite vast and it includes various types of activities, projects, programs and services. Important sectors that receive preference in providing federal assistance comprise health, education, public welfare, public safety and public works. Apart from these areas, there are many other fields in which financial assistance is given by federal government. All the funds given for different programs are administered by various federal agencies. For example, funds provided for the development of housing sector are administered by the United States Department of Housing and Urban Development.
For clarifying its objectives, federal government has defined the term funding very clearly. It is stated as Âtransfer of services, property, money etc for accomplishing public stimulation or activity as authorized by the U.S government in form of loans, grants, scholarships, loan guarantees, technical assistance, expert information etc. Thus, actual description of federal funding has been made quite vast by the federal government so that large number of activities and programs can easily be financed by means of federal funding. It is important to note here that federal funding is not restricted to grants and loans as assistance is provided in many other forms by the federal government.
HOW FEDERAL FUNDING IS DONE
The federal government in United States does not provide loans directly to the beneficiaries. Instead, these are provided by means of various federal agencies. This is done so as to ensure that the federal funding is being done in an organized manner. There are many agencies that are associated with different classes of development projects etc in United States. These agencies are responsible not only for providing funds for different types of programs but also for their maintenance and administration. The beneficiaries are called as Recipients. The reader should understand that recipient of federal funding are not just individuals but state governments, cities counties, domestic corporations and institutions are also eligible for getting funds from federal government for various types of developmental activities.
VARIOUS ASPECTS
Federal funding is done with a specific purpose and if federal funding has been obtained earlier also for the program that has same purpose and operational way, it may not be provided again by any federal agency.
Federal funding is done under various types of programs. First is the Formula Grants. In this type of federal funding program, funds are provided to states and their subdivisions for resorting to various types of activities of continuing nature. These activities are not restricted to a particular project. For example, Community Development Block Grant is a funding activity that is resorted to by federal government to states. Next category of federal funding is Project Grants. In this type of funding, specific projects that have fixed period are funded. This type of funding includes research grants, scholarships, fellowships, experimental grants, planning, survey grants etc. Construction grants are also included in this category of federal funding. 3rd type of federal funding constitutes Direct Payments for Specified Use. Under this type of funding, assistance is given to individuals, private institutions and private firms for encouraging a particular activity. For example, Federal government arranges for funds under the Section 8 of Housing Choice Voucher Program. Next type of federal funding is Direct Payments with Unrestricted Use. Under this category of funding, the U.S government gives financial assistance to the beneficiaries without any restriction on the use of funds.
For getting this type of fund, the borrower is required to fulfill all the eligibility requirements of the federal government for a particular program. Examples of this type of funding include pension, different types of retirement programs and compensatory programs. Direct Loan is next category under which federal funds are provided by U.S Federal government. In this category of finance, federal assistance is provided for a fixed period of time and the beneficiary may or may not be required to pay the interest, which depends upon the type of program. Under this type of funding, repayment of eligible amount is expected. Next category under which federal funds are provided is Guarantee or Insured Loans. They do this type of federal funding so as to make arrangements for all the recipients that have defaulted in making repayment of different types of financial facilities availed. Insurance is the last type of federal funding program that is resorted to so as to ensure the reimbursement of various losses that have occurred. The insurance coverage may be given directly by the federal government or by means of a private company. The beneficiary may or may not be required to pay the premium.
Apart from various funding activity mentioned above, there are some non-financial assistance programs also that are categorized in overall federal funding. For example, Advisory and counseling services, Donation of property, planning, training, technical assistance and other such activities are the programs that are included in this category. Investigation of complaints, use of properties, facilities or equipments, federal employment etc is also included in this category of federal funding. For receiving federal funds, all the organizations, individuals etc are required to make full disclosures under the Federal Funding Accountability and Transparency Act, 2006. This bill was passed in September 06.
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