One of the Grant Management questions we get the most mail on is the difference between a subrecipient and a vendor.
Subrecipient vs. Vendor: What name is being used?
This causes no end of confusion because the terms subrecipient, subgrantee, subawardee are used interchangeably by grantees and federal agencies alike.
Similarly, you’ll often see the term subcontractor used to describe a vendor relationship.
Why can’t this be simple?
Unfortunately, determining which relationship exists is often a shade of gray instead of black and white.
It is particularly confusing when the relationship includes performing services on the grant.
The definitions seem to change from agency to agency and from grant to grant.
Here are 7 ways to spot a subrecipient
#1 Do they manage eligibility requirements?
If the organization receiving the funds will be responsible for determining who is eligible to receive benefits from the funding-it’s probably a subrecipient relationship.
#2 Do they have to meet project milestones?
If the organization has to meet certain goals of the Federal program in order to receive payment-it’s probably a subrecipient relationship
#3 Do they make decisions for the project?
If the organization will be making decisions for the project that the grantee would normally make if they were doing the project-it’s probably a subrecipient relationship.
#4 Are they required to comply with Federal program requirements?
If there are Federal program requirements that the organization must adhere to while completing the project-it’s probably a subrecipient relationship.
• Apply this one carefully because there will always be certain administrative and special grant conditions that would apply to both subrecipients and vendors
#5 Are they carrying out a grant funded program?
If the organization uses the Federal funds to carry out the objectives of a grant funded program as compared to just providing goods or services for a program-it’s probably a subrecipient relationship
#6 Are they the primary beneficiary of the Federal funds?
If the organization is the primary beneficiary of the federal funds awarded to them instead of just passing them through to purchase goods and services needed to carry out the project’s mission-it’s probably a subrecipient relationship.
#7 Are they eligible to receive Federal funds?
This one can be missed in the discussion. Make sure the organization is eligible to receive Federal funds.
No suspended or debarred or otherwise excluded organizations are allowed to be subrecipients.
Don’t forget agency terms and conditions can trump all these guidelines.
If the award terms and conditions prohibit using subrecipients-you don’t have a subrecipient relationship.
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Lucy Morgan CPA, MBA
CEO, Compliance Warrior