Grant Applicant Organization Holds the Bag

When nonprofits work collaboratively to tackle community needs, they often submit joint grant proposals and share the funding to implement programs. Still, only one organization can serve as the applicant for the grant. 

“In a joint funding proposal, the strength of the applicant’s operating systems and administrative track record are crucial,” said Barbara Floersch of The Grantsmanship Center in Los Angeles, Calif. “No matter how many organizations are involved through sub-grants, the applicant holds bottom-line responsibility for the entire project.” 

Once a grant is awarded, the organization that will manage the joint program becomes what’s known in fed-speak as the pass-through entity — here it will just be called the grantee. As you would expect, the Office of Management and Budget (OMB) Uniform Guidance (2 CFR 200) includes specific requirements for managing sub-grants. Although guidance from foundations and corporations on this topic is limited or nonexistent, the basic tenets laid out by OMB provide direction that is applicable to any situation including: 

* Document the financial arrangement: Documentation of the financial arrangement between organizations should specify that the money passed to the sub-recipient is a sub-award of grant funding from the specific grantmaker. Be sure the amount of the sub-grant, indirect cost rate, award date, and period of performance are clear.

* Identify funder’s requirements: The rules the funder imposes on the grantee are passed along with the money to the sub-recipient. For example, if the subgrant is federal funding, the sub-recipient must abide by OMB Uniform Guidance and additional program-specific rules that may come from the federal awarding agency. Be sure sub-recipients organizations are fully aware of the rules they’ll have to follow.

* Identify grantee’s requirements: Grantees typically require sub-recipients to submit regular program and financial reports, participate in site visits, and comply with other monitoring approaches. They also generally require access to sub-recipient financial records and audits related to the program. It is especially important that grantees lay out a clear, well-documented process for remediation of sub-recipient performance deficiencies and for termination of the sub-grant, if necessary.

Handling sub-grants is serious business that requires detailed documentation and clear expectations among collaborating organizations. Communication is key. When in question, over-communicate rather than assume understandings are clear.

“Be sure sub-grant award documents are well-constructed and give you the authority necessary to lead the effort,” said Floersch. “But no matter how sturdy the sub-award documents are, the quality of sub-recipient management and program implementation comes down to communication, monitoring and enforcement.” © Copyright 2020, The Grantsmanship Center.