Doug Hellmann and Mike Driscoll put up an excellent post on the Python Software Foundation blog about most of the grant-type work that the foundation performed over the 2011 year. To add some color to it - reviews and discussions about grants and awarding this comprises quite a bit of the board-level work that goes on (excluding individual committees).
You can see from the post quite a bit of the capital spent goes to support other conferences - as I've stated before, money that comes into the foundation in the forms of donations and PyCon "revenue" goes back into the system to be issued out to things like this.
This is why I am so hot to encourage grants around Porting to Python 3 - I think that the PSF can, in the next year, increase grant work for conference and outreach as well as developer work (such as porting libraries and other projects). None of these things should be solely focused on CPython alone - PyPy, Jython, etc should all be recipients of grants.
And therein lies the rub.
The PSF does not "go looking" for places to issue grants - the PyPy grant at PyCon 2011 was a bit of an aberration in that I proposed it to the board directly.
We need applications from the community! We can do things such as cover meetup fees for user groups, or help fund conferences, or development work. Jessica McKellar, I and others recently revamped the PSF grants page to hopefully provide a better outline of how grants work.
If you have more questions - feel free to ask me here or via email - the PSF's mission is happily broad, and we're here to serve and represent the community as best we can. But we do need to hear from you!