Block Grant

In a fiscal federal form 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. This can be contrasted with a categorical grant which has more strict and specific provisions on 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 spend it without any restrictions from above.