Challenge Grants are awarded from within the 15% Community Development Block Grant (CDBG) public service category cap. No more than 15% of any CDBG annual allocation may be expended for public service activities.
An eligible public service activity must be either a new service not currently receiving CDBG funds or a quantifiable increase in the level of an existing service.
Eligible public services include, but are not limited to:
Drug abuse counseling
Fair housing counseling
Homebuyer down payment assistance
Challenge grants will be for a minimum initial grant award of $20,000. New public service activities will be funded for one-year periods and conditionally renewed each year for a total of three years. Second-year continuation projects will be funded at the same level as year one if performance benchmarks and other requirements are met. Third-year continuation project awards will be reduced by 25% from years one and two.
Matching funds are required in the amount of 25% of the grant award for years one and two and a minimum of 40% in year three. When an agency receives two or more years of continuous CDBG funding, it may not receive another public service grant award for three years.