It’s rare for one organization to have the muscle and reach to tackle all aspects of a complex problem. Nonprofits must often bring in expertise from partner organizations to develop programs with sufficient depth and geographic range to produce impact. When the workload will be shared significantly, grant funding associated with the work must also be shared. That’s where subcontracts come in.
Subcontracting is a process through which participating organizations agree on funding, work requirements, administrative requirements, and reporting expectations and then formalize those expectations through a binding agreement or contract.
“Even when you have warm, relaxed relations with partner organizations, it’s critical to handle subcontracts in a formal, business-like manner,” said Barbara Floersch, executive director of The Grantsmanship Center in Los Angeles, Calif. “Vague or imprecisely articulated expectations and consequences place your organization at risk.”
The subcontract documents that your organization’s attorney will prepare will include a myriad of details related to each specific grant program and funding situation. But as you begin working with partner organizations, things will go more smoothly when all parties agree beforehand on the basics.
- Work to be Delivered – What will be delivered, how much, and by when?
- Funding – What funding will each partner receive and when? How will funds be drawn down?
- Administrative Requirements – What recordkeeping is required? What rules or regulations must be met? Will there be mandatory meetings? Must records be open for review to both the applicant organization and the funder?
- Reporting – What reports will be required and when will they be due?
- Consequences of Violating Agreement – What will happen if the agreed upon work is not delivered, administrative requirements are not met, or reports are not submitted on time, or at all? Subcontracts must have teeth that are sharp enough to enforce agreements or terminate the relationship if necessary.
- Authority – Who is responsible for what? Who has authority to enforce the subcontract and impose consequences if requirements are not met?
Communicating beforehand about what will be required by all partners lays the groundwork for successful teamwork. Specific, enforceable subcontracts protect your organization and also keep the grant-funded program on track. © Copyright 2016. The Grantsmanship Center.