How U.S. grantmaking evolved, from 1862 land-grant colleges to Pell Grants and today's $100B+ foundation sector.

Grants feel like a permanent feature of American life: the money that funds college students, medical research, and the nonprofit down the street. But the system we know today was built piece by piece over more than 160 years, starting with a Civil War-era law that gave away public land to fund colleges.

This is the short history of how U.S. grantmaking grew from land scrip into a landscape where foundations alone move more than $100 billion a year.

TL;DR

The Morrill Act of 1862 launched federal grantmaking by giving states public land to endow colleges (USDA NIFA / National Archives).
The Higher Education Act of 1965 created the first federal college grant program; it was renamed the Pell Grant in 1980 (U.S. Department of Education).
Private foundations grew from roughly 7% of U.S. giving in 1984 to 19% in 2024, and now grant over $100 billion a year (Giving USA).
The through-line: American grantmaking has steadily expanded from land, to cash, to a mixed system of federal, state, and private funders.

The Morrill Act: Grantmaking Starts With Land

Federal grantmaking in America effectively begins in 1862. According to USDA NIFA and the National Archives, the Morrill Act of 1862 was the first major federal aid to higher education. Instead of writing checks, Congress gave away public land: 30,000 acres per member of Congress for each state, with the proceeds meant to endow colleges teaching agriculture and the mechanical arts.

The scale was significant. The 1862 Morrill Act allocated 17.4 million acres, which yielded a $7.55 million collective endowment when the land was sold, per the National Archives. How well a state managed its “land scrip” made an enormous difference. USDA NIFA notes that New York’s savvy handling of its land (which ultimately funded Cornell University) generated about one-third of all land-grant revenue despite New York receiving only about one-tenth of the land.

That first experiment endured. Today there are 112 land-grant institutions, with at least one in every state, territory, and D.C. (USDA NIFA). The Morrill model established a durable idea: the federal government could fund public goods through grants rather than run programs directly. For how this branch of funding compares to others, see federal vs. foundation vs. state grants.

The Rise of Private Foundations

While the government experimented with land grants, a parallel system was forming in the private sector. The early 20th century saw the birth of the modern foundation (Carnegie, Rockefeller, and their peers), institutions designed to give away private wealth systematically rather than through one-off gifts.

That sector has grown enormously. According to Giving USA, foundations made up roughly 7% of all U.S. giving in 1984 but 19% by 2024, a share that has held steady across recent years. In dollar terms, foundation giving reached $109.81 billion in 2024, and foundation grantmaking has now exceeded $100 billion for three consecutive years (Giving USA).

The assets behind that giving have surged too. Candid reports that foundation assets crossed $1.5 trillion, just five years after passing the $1 trillion mark in 2019. For a fuller statistical picture of the modern sector, see our Grant Statistics 2026 roundup.

Pell Grants: The Federal Government Funds Students Directly

The next leap came in the 1960s, when the federal government moved from funding institutions to funding individual students. The Higher Education Act of 1965 created the first federal college grant program, according to the U.S. Department of Education.

The program took its recognizable form in the 1970s. The original Basic Educational Opportunity Grant disbursed $47.52 million to about 170,000 freshmen in 1973 (U.S. Department of Education). In 1980, the grant was renamed after Senator Claiborne Pell, its longtime champion, and the Pell Grant name has stuck ever since.

Pell became one of the largest and most consequential grant programs in the country, aimed squarely at low- and moderate-income students. For how it fits within the broader federal education portfolio today, see Department of Education grants.

Research Grants and the Postwar Science System

Alongside student aid, the postwar decades built the machinery of federal research funding. Agencies like the National Institutes of Health and the National Science Foundation became the engines of American science, distributing tens of billions of dollars a year through competitive, peer-reviewed grants.

This is the part of the grant system most people never see, but it funds much of the biomedical and basic research that reshapes daily life. To understand how these programs work and what they fund, see the NSF & NIH grants guide.

What the History Tells Us

Trace the line from 1862 to today and a pattern emerges. American grantmaking started with land (the Morrill Act), added institutional philanthropy (the great foundations), then direct aid to individuals (Pell Grants), and finally a vast research-funding apparatus (NIH and NSF). Each layer was added without removing the last, producing the mixed system grant seekers navigate today: federal, state, foundation, and corporate money, each with its own rules and rhythms.

For grant writers and nonprofits, the lesson is practical. The modern funding landscape is not one thing but a stack of historical decisions, which is exactly why a diversified strategy across funder types tends to work best.

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Disclaimer: Grant programs, eligibility rules, deadlines, and policies vary by region and change frequently. The information in this article is for general informational purposes only and may not reflect the current rules in your area. Always consult a local grant writer or qualified expert in your region for advice specific to your organization, project, and jurisdiction.

The History of Grants in America: From the Morrill Act to Modern Philanthropy