Which type of grant uses a predetermined formula based on eligibility requirements?

Formula grants are characterized by their distribution based on predetermined formulas established by law or policy, incorporating eligibility criteria. These grants are designed to allocate funds to specific recipients—often state or local governments—according to a set formula that can take into account various factors, such as population size, income level, or demographic info. This ensures that the distribution of funds is objective and systematic, allowing for consistent funding that responds to the specific needs of the eligible populations.

The use of a formula provides clarity and predictability for recipients, as they know in advance the amount of funding they are likely to receive based on the criteria set forth. Common examples of formula grants can be found in federal programs like Medicaid and the Title I program for disadvantaged schools, where funding is directed based on the number of qualifying individuals or students in a given area. This structured approach contrasts with other types of grants, which may allow for a greater degree of subjectivity in determining how funds are allocated.