Final answer:
The Department of Health and Human Services, the Department of Agriculture, and the Department of Housing and Urban Development (HUD) are likely the federal agencies that predominantly fund nonfederal entities receiving less than $50 million, often through categorical grants that support national objectives.
Step-by-step explanation:
The federal agency that makes the predominant amount of direct funding to the nonfederal entity receiving less than $50 million in federal awards is likely one of the departments that fund income security programs, such as the Department of Health and Human Services, the Department of Agriculture, or the Department of Housing and Urban Development (HUD). These departments manage a range of income security programs that are critical for providing aid to states and local entities, with the Office of Management and Budget disclosing that collectively, they have provided an estimated $62 billion in aid.
The federal government favors using categorical grants over block grants to ensure funds are spent in accordance with national objectives. Categorical grants come with strict administrative criteria and often require matching funds from recipients. This structure allows the federal government to exert control over how funds are utilized to align with specific policy goals. Examples of these types of grants include Medicaid and the food stamp program, with categorical grants representing the majority of grants distributed.