Here’s The Problem With $600 Billion In Federal Grants

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Ethan Barton Editor in Chief
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Congress’ watchdog “found some problems” with the federal grant process across government – a $600 billion investment – and noted that throwing money at obstacles isn’t always the best solution.

“In fiscal year 2015, federal government spending on grants was estimated at more than $600 billion,” the Government Accountability Office wrote in its Thursday Watchblog post. “We followed the federal funding trail for grants and found some problems.”

“For example, there are no government-wide standards for the people reviewing grant applications and deciding who receives what piece of the pie,” the post said. “Most grant spending – almost three quarters – goes from numerous federal agencies to even more numerous state and local governments as well as nonprofit organizations.”

GAO also pointed out that money isn’t always the solution to a vexing problem: “There are some policy challenges that take more than grant money to fix.”

Cities in financial distress like Detroit, for example, “struggle to manage their federal grants as their staff left or were laid off,” the post said.

The watchdog instead recommended helping states through non-financial means, such as by teaching officials how to better manage programs.

“We recommended ways to improve government-wide grant management and training and we’re currently monitoring whether these recommendations are being implemented,” the post said. “The government’s use of grants has grown significantly in the last three decades.”

“Consolidating some of these could improve government efficiency and effectiveness,” GAO continued. “Yet federal agencies lack clear standards for how to streamline their grant programs.”

Also, programs across government vary in how grant recipients are allowed to spend federal money on administrative costs. In other words, grants from two agencies with identical dollar amounts may allow the recipients to spend different amounts on administrative costs, such as the utility costs.

“As a result, comparing administrative costs across programs may not be the best way to make policy decisions about federal grant expenses,” the post said.

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