Federal assistance to State and local governments, institutions, agencies, organizations, and individuals to carry out specified activities in the public's interest. In contrast to "block grants" money is to be spent for a particular purpose or for the benefit of a particular class or group of individuals, such as older persons. Also see block grant or formula grant.
During the development of the interstate highway system, congressional grants provided roughly 90% of the funding. These types of federal grants are called categorical grants because the national government determines the purposes, or categories, for which the money should be used. Categorical grants may be spent only for narrowly defined purposes and recipients often must match a portion of the federal funds. 33% of categorical grants are considered to be formula grants.