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Mayor Nutter has created an Office of Grants in response to the nationwide competition for a shrinking pool of federal funds, increasingly doled out based for merit and innovation.

The new office, established by executive order, will seek federal, state, and private funding, and coordinate grant priorities across the administration.

The office will be run by Maari Porter, who since 2010 has been in charge of winning and managing the city’s share of federal stimulus money from the Recovery Act.

Any remaining Recovery Act money must be spent by September 2013.

Through the awarding of the stimulus money, Porter said, the Obama administration largely has shifted the way federal funds are dispensed.

She said the federal government often seeks to fund “the best demonstration project,” which can be evaluated and possibly replicated, and encourages partnerships with nonprofits and other jurisdictions.

The competition, she said, is stiff.

“We are competing with L.A., New York, Chicago,” Porter said. “I think the quality has really been pushed up in terms of innovation.”

Continuing to win grant money is key to the city’s finances.

In the 2011 fiscal year, the last year for which complete data are available, the city received $1.2 billion from federal and state grants.

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