Congratulations! Your grant application for a federal award was successful, and you have received your signed Notice of Award (NOA). Now the real work begins as you start to navigate the grant process through the initial steps all the way to a successful and fully functioning program. Although it can be tempting to jump right into the excitement of program development, there are some administrative tasks that must be addressed first to build a solid foundation for the overall program.
The six steps to grant success are discussed below:
Step 1: Carefully Read and Review the NOA
The NOA is required by 2 Code of Federal Regulations (CFR) Part 200 “Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards” (Uniform Guidance) (see specifically 2 CFR 200.210) and contains a plethora of information critical to the successful management of the grant award. While reviewing the NOA, write down questions or comments that you may have to address with the award administrator when you get to Step 2. Consider preparing a grant summary noting the key elements of the grant and its applicable compliance requirements. The complete grant summary should then be routed internally for review and signatures to ensure all the applicable parties have been made aware of this new grant and noted the compliance requirements.
Here are some of the most critical items on the NOA you will need to review:
Period of Performance: This is the period that the grant covers. You will need to make sure that expenses incurred under the award are incurred and obligated within the specified time frame. Expenses incurred before or after the period of performance are not allowable without prior approval. Some federal agencies may waive the prior approval requirement for project costs incurred up to 90 days prior to the award and/or allow the recipient to initiate a one-time extension of the period of performance by up to 12 months under certain conditions without prior approval. This last point highlights the importance of familiarizing yourself with specific guidance for the awarding agency found in the code of federal regulations and the grants policy statement for the awarding agency.
Award Amount: You may notice that the NOA includes two terms under the award amount: total award amount and an amount obligated by this action. The total award amount is the complete award over the life of the grant. However, some awards roll out in installments during the period of performance. These are called “obligation notices,” and they will eventually equal the total award amount over time. Most importantly, double check that your award amount equals the amount outlined in your approved budget, and document any discussions you have regarding the award with the award administrator. Remember, expenses attributed to a grant always need to be allocable, allowable, and reasonable.
Approved Budget and Narrative: Verify that the final approved budget and program narrative, which includes information such as a project description, budget explanation, risk assessment, and cost-benefit analysis, match what you submitted during the application process, and that there is a plan for how to deliver the outlined services.
Cost Sharing and Matching Requirements: Cost sharing or matching are project costs that are not reimbursed by the grant but are important to the execution of the project. They have a monetary value and represent required organizational support toward a project. If the award comes with a cost sharing or match requirement, you’ll need to develop a plan to satisfy the requirements. Remember that without prior approval, federal awards cannot use other federal funds as a match. The Uniform Guidance outlines what can constitute as a match at 2 CFR 200.306.
General Terms and Conditions: Review the terms and conditions of the award and ensure that your organization complies with all federal statutes outlined in the award. Examples of statutes include the Drug-Free Workplace Act or Equal Employment Opportunity. Having accurate and updated policies in place that address these statutes will avoid non-compliance.
Specific Conditions: These conditions are determined by the awarding agency and are based on their internal review of the awardee during either the application process or on historical grant award performance. Failure to comply with any of the conditions could lead to additional specific conditions. Types of specific conditions can vary and are outlined in the Uniform Guidance at 2 CFR 200.207. They can include restrictions on drawdowns, increased reporting, and/or require the awardee to request additional approvals from their grant administrator before proceeding with purchases or programmatic development.
Indirect Cost Rate (IDC): An indirect cost rate equitably divides an organization’s indirect cost recovery across funding mechanisms. If you do not already have an IDC rate at the time of the award, you will need to either negotiate one or, if you have never had a federally negotiated IDC, consider electing the de minims rate of 10%. Obtaining an IDC rate entails writing a proposal to the applicable agency outlining projected and historical cost which must then be approved by that agency. Make sure you are familiar with allowable costs, applicable cost caps, or any special instructions related to the IDC collection. The Uniform Guidance also outlines the specifics surrounding IDC rates and collection at 2 CFR 200.414.
Reporting Deadlines: Reporting back to the grant agency is a major component of the grant process, and understanding your obligations is critical. There are two types of reports: financial and programmatic. Financial reports typically detail the amount of cash expended and received for the program (see 2 CFR 200.327). Programmatic reports monitor and report on program performance (see 2 CFR 200.328). Depending on the type of report, your reporting deadlines could be monthly, quarterly, semi-annual, or annual (or some combination of both!). Keep in mind that financial reporting and programmatic reporting can go hand-in-hand, and that, in some instances, one reporting will not be accepted without the other. If one is late, they may both be late.
Method of Payment: In general, there are two ways in which you will receive funds for the grant: through reimbursable expenditures or through an upfront advance before any expenditures have been made. Each type of funding is reported differently on your financial statements, so be sure your accounting staff understands the funding terms to ensure proper accounting. Keep in mind that if you are receiving funds based on reimbursed expenses, you will need enough cash in the bank to cover those expenses until you can get reimbursed.
Reporting and Payment Portals: A reporting and payment portal is where you go online to process reports and drawdown funds. Different agencies maintain different portal systems, and you need to make sure you understand the specific portal and how it works for the applicable grant. Go to the website, register as a user, and practice. Read and understand the user guides. Most portals also offer trainings, which can be invaluable.
Step 2: Get to Know Your Award Administrator
Building a positive relationship and communicating with your award administrator from the start is essential. The administrator is there for support and guidance and will help you make the project a success. Be sure to ask questions, seek prior approvals with the individual(s) specified, and notify them of changes. 2 CFR 200.308 outlines important instances where you must inform the award administrator of changes related to the approved budget and/or the scope of work. It is also important to keep them informed of any changes in key personnel associated with the project.
Step 3: Document, Document, Document
Proactively calling your award administrator whenever questions or concerns arise is an important habit to develop, and so is obtaining written documentation of any important decisions or prior approvals granted by the administrator. Please note that some prior approvals must be obtained from your oversight or cognizant agency (see 2 CFR 200.18, 200.19 and 200.73). Develop an electronic or physical file containing all important documents, such as a grant summary; reports; drawdown receipts; major grantor communications and approvals; the approved budget, narrative, and any revisions; and the signed NOA. When you have an audit or an onsite review, you will be thankful that everything is centrally located and well organized.
Step 4: Involve your Colleagues in the Planning
Incorporate finance, grants management, legal, and program personnel in the planning and review that takes place during this initial development phase. Everyone involved in the administration of the award should be familiar with the rules and responsibilities outlined in the NOA. This should include the budget, narrative, and any major purchases or subrecipient awards that will transpire during the performance period.
Everyone invested in the program will want it to be a success. Take the time in the beginning to internally align finance grants management and program personnel with grantor expectations and deliverables — it will pay off throughout the life cycle of the funding.
Step 5: Update your Internal Controls, Policies, and Procedures
Review and maintain your organization’s internal controls, policies, and procedures to ensure that they follow Uniform Guidance, federal program regulations, and state laws. You may have completed this during the application phase but, if not, you should take the time to do it now. Pay close attention to your allowable cost, procurement, and subrecipient monitoring policies as those areas often have the most potential for audit findings.
Step 6: Set Up the Award in the Accounting System
Assign the new funding a unique identifier and input the approved budget into the tracking/financial system so that, as expenses are appropriately allocated to the award Budget vs Actual Reports can be generated.
Think about developing the account codes in a way that helps you generate quantifiable data for any reporting needs. Do you need to track quality improvement activities or client benefits separately from other activities? Consider setting up the financial system so that you have quantifiable data to include in those reports.
Managing a grant can be a complex undertaking. There is a lot of time and energy that goes into any program to make it successful. Although emergencies may still occur, following these six steps will establish a solid foundation and help you more efficiently and effectively deal with whatever comes your way.
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