GAO: US Grant-making System is Very Dysfunctional

During the past fiscal year the United States issued over $125 billion dollars in improper grant payments. That is just one of the disturbing facts reported in a study by the Government Accounting Office (GAO) called Federal Grants, Improvements Needed in Oversight and Accountability Processes  in Grants Play a Significant Role in Implementing and Funding Federal Programs (embedded below).

Why is a study of grant making so important? Because grants have become increasingly important as a the federal governments way to achieve national objectives and to respond to emerging trends, such as changing demographics and changing threats to homeland security.

From fiscal years 1990 to 2010, federal grant outlays to states and local governments, increased from about $135 billion to over $600 billion—almost one-fifth of the fiscal year 2010 federal budget, according to the Office of Management and Budget (OMB). In fiscal year 2010, over 1,670 federal grant programs were offered by 23 federal grant-making departments and agencies.

According to the GAO, there are no internal controls over the processes and the money distributed either by the granting agencies or by the organizations receiving the grants.  Because of that there is no way to fully track if grants are being given out correctly and once the money is distributed, if the funds are being used for the proper purpose.

In awarding federal grants, effective oversight and internal control is of fundamental importance in assuring the proper and effective use of federal funds to achieve program goals. Effective internal control systems provide reasonable assurance to taxpayers that grants are awarded properly, recipients are eligible, and federal funds are used as intended and in accordance with applicable laws and regulations.

 In authorizing grant programs, federal laws identify the types of activities that can be funded. OMB circulars specify how grants are to be administered and the standards for determining allowable costs.

In addition to the legal and regulatory underpinnings, each grant program has stated purposes that guide what the grant is intended to accomplish. Before awarding any grants, agencies’ preaward processes should ensure that potential recipients have the necessary capabilities to effectively implement the program to comply with relevant laws and regulations, and provide the necessary accountability for federal resources. Once the agency has awarded the grants, its monitoring of grantee performance is important to help ensure that grantees are meeting program and accountability requirements. Following grant completion, it is important for agencies to evaluate the goals and measures established at the beginning of the process against actual results, and to make any needed adjustments for future grant efforts.

How often do we read about US grant money being used for something silly, like the effect of cocaine on monkeys, and will using yoga eliminate hot flashes,  part of the reason programs like these get approved  is that the federal bureaucracy knows that it is unlikely that there will be any kind of follow up after the funds are distributed. The U.S. government’s dysfunctional system for dispersing hundreds of billions of dollars in grants lacks transparency and is rife with waste, fraud and abuse.

Read the full study below:

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