Is it possible to set up an ftp account that grants the user access only to a specific directory within my site? The idea is to give an outsider the ability to update that portion of my site without compromising security.

I'm very new to this, so any explanation appreciated.

What FTP server [software] are you using? and what OS?

If it's ProFTPd on unix you can create a unix user id and give him permissions to the desired directory and then add

DocumentRoot ~/directoryname

in your proftpd.conf file

Ofcourse you should restart proFTPd or kill -HUP processid for the change to take place

Cheers
Balaji