---
kind: "section"
citation: "42 U.S.C. § 9907"
title: "42"
title_heading: "The Public Health and Welfare"
number: "9907"
heading: "Uses of funds"
release: "119-102"
url: "https://uscodex.org/usc/42/9907"
units:
  - "Chapter 106 — Community Services Block Grant Program"
---

# §9907. Uses of funds

- (a) **Grants to eligible entities and other organizations—**
  - (1) **In general—** Not less than 90 percent of the [funds](/usc/42/12854.md?p=3) made available to a [State](/usc/42/9902.md?p=5) under section [9905](/usc/42/9905.md) or [9906](/usc/42/9906.md) of this title shall be used by the [State](/usc/42/9902.md?p=5) to make grants for the purposes described in [section 9901 of this title](/usc/42/9901.md) to [eligible entities](/usc/42/296.md?p=1).
  - (2) **Obligational authority—** [Funds](/usc/42/12854.md?p=3) distributed to [eligible entities](/usc/42/296.md?p=1) through grants made in accordance with [paragraph (1)](#a-1) for a fiscal year shall be available for obligation during that fiscal year and the succeeding fiscal year, subject to [paragraph (3)](#a-3).
  - (3) **Recapture and redistribution of unobligated funds—**
    - (A) **Amount—** Beginning on October 1, 2000, a [State](/usc/42/9902.md?p=5) may recapture and redistribute [funds](/usc/42/12854.md?p=3) distributed to an [eligible entity](/usc/42/9902.md?p=1-A) through a grant made under [paragraph (1)](#a-1) that are unobligated at the end of a fiscal year if such unobligated [funds](/usc/42/12854.md?p=3) exceed 20 percent of the amount so distributed to such [eligible entity](/usc/42/9902.md?p=1-A) for such fiscal year.
    - (B) **Redistribution—** In redistributing [funds](/usc/42/12854.md?p=3) recaptured in accordance with this paragraph, [States](/usc/42/9902.md?p=5) shall redistribute such [funds](/usc/42/12854.md?p=3) to an [eligible entity](/usc/42/9902.md?p=1-A), or require the original [recipient](/usc/42/2996a.md?p=6) of the [funds](/usc/42/12854.md?p=3) to redistribute the [funds](/usc/42/12854.md?p=3) to a [private, nonprofit organization](/usc/42/9902.md?p=3), located within the community served by the original [recipient](/usc/42/2996a.md?p=6) of the [funds](/usc/42/12854.md?p=3), for activities consistent with the purposes of this chapter.
- (b) **Statewide activities—**
  - (1) **Use of remainder—** If a [State](/usc/42/9902.md?p=5) uses less than 100 percent of the grant or allotment received under section [9905](/usc/42/9905.md) or [9906](/usc/42/9906.md) of this title to make grants under [subsection (a)](#a), the [State](/usc/42/9902.md?p=5) shall use the remainder of the grant or allotment under section [9905](/usc/42/9905.md) or [9906](/usc/42/9906.md) of this title (subject to [paragraph (2)](#b-2)) for activities that may include—
    - (A) providing [training](/usc/42/285e–2.md?p=b-2) and technical assistance to those entities in need of such [training](/usc/42/285e–2.md?p=b-2) and assistance;
    - (B) coordinating [State](/usc/42/9902.md?p=5)-operated [programs](/usc/42/274l–1.md?p=4) and services, and at the option of the [State](/usc/42/9902.md?p=5), locally-operated [programs](/usc/42/274l–1.md?p=4) and services, targeted to low-[income](/usc/42/292s.md?p=c-4) [children](/usc/42/256e.md?p=g-2) and [families](/usc/42/12704.md?p=11) with services provided by [eligible entities](/usc/42/296.md?p=1) and other organizations funded under this chapter, including detailing appropriate [employees](/usc/42/1320a–7h.md?p=e-7) of [State](/usc/42/9902.md?p=5) or local agencies to entities funded under this chapter, to ensure increased access to services provided by such [State](/usc/42/9902.md?p=5) or local agencies;
    - (C) supporting statewide coordination and communication among [eligible entities](/usc/42/296.md?p=1);
    - (D) analyzing the distribution of [funds](/usc/42/12854.md?p=3) made available under this chapter within the [State](/usc/42/9902.md?p=5) to determine if such [funds](/usc/42/12854.md?p=3) have been targeted to the areas of greatest need;
    - (E) supporting asset-[building](/usc/42/6881.md?p=i-3) [programs](/usc/42/274l–1.md?p=4) for low-[income](/usc/42/292s.md?p=c-4) individuals, such as [programs](/usc/42/274l–1.md?p=4) supporting individual development accounts;
    - (F) supporting innovative [programs](/usc/42/274l–1.md?p=4) and activities conducted by community action agencies or other neighborhood-based organizations to eliminate poverty, promote self-sufficiency, and promote community revitalization;
    - (G) supporting [State](/usc/42/9902.md?p=5) charity tax credits as described in [subsection (c)](#c); and
    - (H) supporting other activities, consistent with the purposes of this chapter.
  - (2) **Administrative cap—** No [State](/usc/42/9902.md?p=5) may spend more than the greater of $55,000, or 5 percent, of the grant received under [section 9905 of this title](/usc/42/9905.md) or [State](/usc/42/9902.md?p=5) allotment received under [section 9906 of this title](/usc/42/9906.md) for administrative expenses, including monitoring activities. [Funds](/usc/42/12854.md?p=3) to be spent for such expenses shall be taken from the portion of the grant under [section 9905 of this title](/usc/42/9905.md) or [State](/usc/42/9902.md?p=5) allotment that remains after the [State](/usc/42/9902.md?p=5) makes grants to [eligible entities](/usc/42/296.md?p=1) under [subsection (a)](#a). The cost of activities conducted under [paragraph (1)(A)](#b-1-A) shall not be considered to be administrative expenses. The startup cost and cost of administrative activities conducted under [subsection (c)](#c) shall be considered to be administrative expenses.
- (c) **Charity tax credit—**
  - (1) **In general—** Subject to [paragraph (2)](#c-2), if there is in effect under [State](/usc/42/9902.md?p=5) law a [charity tax credit](#c-3-A), the [State](/usc/42/9902.md?p=5) may use for any purpose the amount of the allotment that is available for expenditure under [subsection (b)](#b).
  - (2) **Limit—** The aggregate amount a [State](/usc/42/9902.md?p=5) may use under [paragraph (1)](#c-1) during a fiscal year shall not exceed 100 percent of the revenue loss of the [State](/usc/42/9902.md?p=5) during the fiscal year that is attributable to the [charity tax credit](#c-3-A), as determined by the [Secretary](/usc/42/9902.md?p=4) of the Treasury without regard to any such revenue loss occurring before January 1, 1999.
  - (3) **Definitions and rules—** In this subsection:
    - (A) **Charity tax credit—** The term “charity tax credit” means a nonrefundable credit against [State](/usc/42/9902.md?p=5) [income](/usc/42/292s.md?p=c-4) tax (or, in the case of a [State](/usc/42/9902.md?p=5) that does not impose an [income](/usc/42/292s.md?p=c-4) tax, a comparable benefit) that is allowable for contributions, in cash or in kind, to [qualified charities](#c-3-B-i).
    - (B) **Qualified charity—**
      - (i) **In general—** The term “qualified charity” means any organization—
        - (I) that is—
          - (aa) described in [section 501(c)(3) of title 26](/usc/26/501.md?p=c-3) and exempt from tax under [section 501(a)](/usc/42/501.md) of such title;
          - (bb) an [eligible entity](/usc/42/9902.md?p=1-A); or
          - (cc) a [public housing agency](/usc/42/8012.md?p=g-5) as defined in [section 1437a(b)(6) of this title](/usc/42/1437a.md?p=b-6);
        - (II) that is certified by the appropriate [State authority](/usc/42/6903.md?p=32) as meeting the requirements of clauses [(iii)](#c-3-B-iii) and [(iv)](#c-3-B-iv); and
        - (III) if such organization is otherwise required to file a return under section 6033 of such title, that elects to treat the information required to be furnished by [clause (v)](#c-3-B-v) as being specified in section 6033(b) of such title.
      - (ii) **Certain contributions to collection organizations treated as contributions to qualified charity—**
        - (I) **In general—** A contribution to a [collection organization](#c-3-B-ii-II) shall be treated as a contribution to a [qualified charity](#c-3-B-i) if the donor designates in writing that the contribution is for the [qualified charity](#c-3-B-i).
        - (II) **Collection organization—** The term “collection organization” means an organization described in [section 501(c)(3)](/usc/42/501.md) of such title and exempt from tax under [section 501(a)](/usc/42/501.md) of such title—
          - (aa) that solicits and collects gifts and grants that, by [agreement](/usc/42/1320b–8.md?p=a-3-A), are distributed to [qualified charities](#c-3-B-i);
          - (bb) that distributes to [qualified charities](#c-3-B-i) at least 90 percent of the gifts and grants the organization receives that are designated for such [qualified charities](#c-3-B-i); and
          - (cc) that meets the requirements of [clause (vi)](#c-3-B-vi).
      - (iii) **Charity must primarily assist poor individuals—**
        - (I) **In general—** An organization meets the requirements of this clause only if the appropriate [State authority](/usc/42/6903.md?p=32) reasonably expects that the predominant activity of such organization will be the provision of direct services within the [United States](/usc/42/403.md?p=k) to individuals and [families](/usc/42/12704.md?p=11) whose annual [incomes](/usc/42/292s.md?p=c-4) generally do not exceed 185 percent of the [poverty line](/usc/42/1395w–114.md?p=a-3-C-ii) in order to prevent or alleviate poverty among such individuals and [families](/usc/42/12704.md?p=11).
        - (II) **No recordkeeping in certain cases—** An organization shall not be required to establish or maintain records with respect to the [incomes](/usc/42/292s.md?p=c-4) of individuals and [families](/usc/42/12704.md?p=11) for purposes of [subclause (I)](#c-3-B-iii-I) if such individuals or [families](/usc/42/12704.md?p=11) are members of groups that are generally recognized as including substantially only individuals and [families](/usc/42/12704.md?p=11) described in [subclause (I)](#c-3-B-iii-I).
        - (III) **Food aid and homeless shelters—** Except as otherwise provided by the appropriate [State authority](/usc/42/6903.md?p=32), for purposes of [subclause (I)](#c-3-B-iii-I), services to individuals in the form of—
          - (aa) donations of food or meals; or
          - (bb) temporary shelter to [homeless individuals](/usc/42/290cc–34.md?p=2);

        shall be treated as provided to individuals described in [subclause (I)](#c-3-B-iii-I) if the location and provision of such services are such that the service provider may reasonably conclude that the beneficiaries of such services are predominantly individuals described in [subclause (I)](#c-3-B-iii-I).

      - (iv) **Minimum expense requirement—**
        - (I) **In general—** An organization meets the requirements of this clause only if the appropriate [State authority](/usc/42/6903.md?p=32) reasonably expects that the annual [poverty program expenses](#c-3-B-iv-II-aa) of such organization will not be less than 75 percent of the annual aggregate expenses of such organization.
        - (II) **Poverty program expense—** For purposes of [subclause (I)](#c-3-B-iv-I)—
          - (aa) **In general—** The term “poverty program expense” means any expense in providing direct services referred to in [clause (iii)](#c-3-B-iii).
          - (bb) **Exceptions—** Such term shall not include any management or general expense, any expense for the purpose of influencing legislation (as defined in [section 4911(d) of title 26](/usc/26/4911.md?p=d)), any expense for the purpose of fundraising, any expense for a legal service provided on behalf of any individual referred to in [clause (iii)](#c-3-B-iii), any expense for providing tuition assistance relating to compulsory [school](/usc/42/6372.md?p=1) attendance, and any expense that consists of a payment to an affiliate of the organization.
      - (v) **Reporting requirement—** The information required to be furnished under this clause about an organization is—
        - (I) the percentages determined by dividing the following [categories](/usc/42/1395w–4.md?p=j-1) of the organization’s expenses for the year by the total expenses of the organization for the year: expenses for direct services, management expenses, general expenses, fundraising expenses, and payments to affiliates; and
        - (II) the [category](/usc/42/1395w–4.md?p=j-1) or [categories](/usc/42/1395w–4.md?p=j-1) (including food, shelter, education, substance abuse prevention or [treatment](/usc/42/11851.md?p=11), job [training](/usc/42/285e–2.md?p=b-2), or other) of services that constitute predominant activities of the organization.
      - (vi) **Additional requirements for collection organizations—** The requirements of this clause are met if the organization—
        - (I) maintains separate accounting for revenues and expenses; and
        - (II) makes available to the public information on the administrative and fundraising costs of the organization, and information as to the organizations receiving [funds](/usc/42/12854.md?p=3) from the organization and the amount of such [funds](/usc/42/12854.md?p=3).
      - (vii) **Special rule for States requiring tax uniformity—** In the case of a [State](/usc/42/9902.md?p=5)—
        - (I) that has a constitutional requirement of tax uniformity; and
        - (II) that, as of December 31, 1997, imposed a tax on personal [income](/usc/42/292s.md?p=c-4) with—
          - (aa) a [single](/usc/42/2304.md?p=m) flat rate applicable to all earned and unearned [income](/usc/42/292s.md?p=c-4) (except insofar as any amount is not taxed pursuant to tax forgiveness provisions); and
          - (bb) no generally available exemptions or deductions to individuals;

      the requirement of [paragraph (2)](#c-2) shall be treated as met if the amount of the credit described in [paragraph (2)](#c-2) is limited to a uniform percentage (but not greater than 25 percent) of [State](/usc/42/9902.md?p=5) personal [income](/usc/42/292s.md?p=c-4) tax liability (determined without regard to credits).

  - (4) **Limitation on use of funds for startup and administrative activities—** Except to the extent provided in [subsection (b)(2)](#b-2), no part of the aggregate amount a [State](/usc/42/9902.md?p=5) uses under [paragraph (1)](#c-1) may be used to pay for the cost of the startup and administrative activities conducted under this subsection.
  - (5) **Prohibition on use of funds for legal services or tuition assistance—** No part of the aggregate amount a [State](/usc/42/9902.md?p=5) uses under [paragraph (1)](#c-1) may be used to provide legal services or to provide tuition assistance related to compulsory education requirements (not including tuition assistance for tutoring, camps, skills development, or other supplemental services or [training](/usc/42/285e–2.md?p=b-2)).
  - (6) **Prohibition on supplanting funds—** No part of the aggregate amount a [State](/usc/42/9902.md?p=5) uses under [paragraph (1)](#c-1) may be used to supplant non-Federal [funds](/usc/42/12854.md?p=3) that would be available, in the absence of Federal [funds](/usc/42/12854.md?p=3), to offset a revenue loss of the [State](/usc/42/9902.md?p=5) attributable to a [charity tax credit](#c-3-A).

## Source credit

(Pub. L. 97–35, title VI, § 675C, as added Pub. L. 105–285, title II, § 201, Oct. 27, 1998, 112 Stat. 2731.)

## Notes

### Editorial Notes

### Prior Provisions

A prior section 9907, Pub. L. 97–35, title VI, § 678, Aug. 13, 1981, 95 Stat. 516, related to payments to States, prior to the general amendment of this chapter by Pub. L. 105–285.