Final answer:
The federal agency that predominantly funds nonfederal entities receiving less than $50 million in federal awards is usually responsible for categorical grants. The Departments of Health and Human Services, Agriculture, and HUD are significant providers of such funding, focusing on income security programs.
Step-by-step explanation:
The federal agency that makes the predominant amount of direct funding to a nonfederal entity receiving less than $50 million in federal awards is typically one that manages categorical grants. Categorical grants are designed to limit the recipient's discretion in the use of funds and are subject to strict administrative criteria. These grants, such as those for Medicaid or the food stamp program, often require some matching funds and have to be used for policy activities that advance national objectives. On the other hand, block grants, like the Workforce Investment Act program, provide state and local governments more flexibility over how to spend the funds.
However, for the specific identification of the predominant funding agency, one would look at the departments responsible for the majority of non-defense discretionary spending on income security programs. According to the Office of Management and Budget, the Departments of Health and Human Services, Agriculture, and Housing and Urban Development (HUD) have collectively provided substantial support through various programs aimed at income security, which include supplemental feeding programs, subsidized housing, and energy assistance among others.