In a federal system of government, a block grant is a large sum of money granted by the national government to a regional government with only general provisions as to the way it is to be spent.

An advantage of block grants is that they allow regional governments to experiment with different ways of spending money with the same goal in mind, though it is very difficult to compare the results of such spending and reach a conclusion. A disadvantage is that the regional governments might be able to use the money if they collected it through their own taxation systems and spent it without any restrictions from above.

Since the 1980s, the United States government has provided vast sums of money through block grants, under a policy that has come to be known as "devolutionary" or "new federalism."

According to the General Accounting Office, from 1980 to 2001 the number of federal block grant programs went from 450 to 700. The grants are aimed at a wide range of activities from education, to healthcare, to transportation, to housing, to counterterrorism.

In the United States, the formulas for how much money states receive favor small states. Most grant programs have a minimum amount per state - usually 0.5 % or 0.75 %.

For instance, in 2003, under the State Homeland Security Grant Programs and Critical Infrastructure Protection Grants, Wyoming, the least populous state, received $17.5 million and California, the most populous state, received $164 million. In 2004 FY2004 Wyoming is guaranteed to receive a minimum of $15 million and California, the most populated state, $133 million. Wyoming's receives $35.3 per person, California receives $ 4.7 per person.

Similar patterns exist for other block grant formulas.

Related topics

• Federalism
• Fiscal policy