Categorical grant

Categorical grants, also called conditional grants, are grants issued by the United States Congress which may be spent only for narrowly defined purposes. They are the main source of federal aid to state and local governments and can be used only for specified categories of state and local spending, such as education or roads. These grants have been accompanying rules and guidelines that constrain the recipient government in the use of grant funds.^[1] Categorical grants are intended to help states improve the overall well-being of their residents, but also empower the federal government to exert more power over the states within a specific policy area.