What Is the Difference Between Block and Categorical Grants?

Community Development Block Grants are designated for general projects that require major funding. Categorical grants provide targeted funding for specific projects. According to U.S. Rep. Adam Smith of Washington, these are the two main grants made available to states from the federal government.

Block grants can include a wide range of government programs under one funding umbrella. These programs may share similar goals and funding. According to the National Council on Disability, block grants have been used by several presidents over the years to consolidate funding for domestic programs. An example of block grant funding is the Temporary Assistance to Needy Families program, a state block grant program that makes federal funds available to states to help families in need. Under this arrangement, each state receives a certain amount of funds and determines how to distribute it.

Categorical grants are narrower in scope and are distributed on a project-by-project basis, according to FederalFunding.net. The federal government makes funding available for a project such as highway infrastructure repair and maintenance. States compete for these funds based on criteria set by Congress. When a categorical grant is awarded, the monies must be used to fulfill the stated purpose of the grant. For instance, a state awarded highway funds cannot use it to repair state buildings.