It’s a nightmare grant risk scenario!
Picture grant funds flying out the door with seemingly little or no oversight.
(Remember the “bad” part of the ARRA funding days in 2009? See any similarities between the CARES Act and ARPA funding?)
The stories in the press certainly give the impression that good grants frequently go bad.
Witness grant risk headline after headline talking about grant mismanagement and the latest Inspector General report.
To paraphrase Nobel Prize-winning singer/songwriter Bob Dylan: “The times they are a-changing.”
The grant regulations in 2 CFR Part 200 require federal agencies to take a proactive approach to grant risk by evaluating applicants prior to awarding federal funds to minimize waste, fraud, and abuse of taxpayer dollars.
And this requirement also focuses federal funding agencies on assessing the likelihood of the appropriate level of performance by grant recipients.
Grant Risk: Federal Awarding Agencies Look Before Leaping
So if you want to get more federal grant dollars in the future, get ready for more up-front scrutiny by the federal awarding agencies.
The risk assessment is just one of the many changes happening with the grant regulations contained in 2 CFR part 200, aka the Uniform Guidance.
Risk Assessment: Here are 10 Things to Check
The grant regulations in 2 CFR Part 200 call for federal agencies to establish a framework for evaluating grant risk but stop short of giving grant recipients a checklist to follow.
Do you feel like that leaves you guessing what is required?
Fortunately, the Uniform Guidance provides several tips on the main areas.
Let’s take a look at ten things for grant recipients to focus on:
- Does your organization have sufficient quality management systems and the ability to meet the management standards required of grant recipients?
- What level of monitoring is already in place with other federal agencies or pass-through entities?
- Do you make a strong case in your application highlighting your ability to deliver on the objectives of the funding opportunity?
- How experienced is your staff, or do you have a lot of new personnel or changed systems?
- What has been your history of performance for federal awards and subawards?
- Does your organization consistently submit all required reports in a timely manner?
- What is your history of compliance with prior award terms and conditions?
- What is your organization’s experience with the financial management standards for federal awards?
- What are the results of audits, such as findings and questioned costs
- Is the organization on a stable financial footing?
These areas of grant risk will help you focus the application process on your grant readiness.
Grant Risk: Past Performance = Present Risk
There are several aspects of the risk assessment that we all can agree are essential for federal awarding agencies and pass-through entities who are also required to perform this review on their sub-recipients.
Here are a few common criteria:
• Financial stability of the grant applicant
• Quality of management systems in place
• Solid history of performance on past awards
As you can see, organizations with past success in grant management and performance are better positioned to receive more awards in the future.
But after agreement on these basic measurements, the consistency of the assessment methods diverges wildly.
Pass-through Entities Also Have Grant Risk Responsibilities
If you are a pass-through entity, you get to step into the shoes of the Federal Government and review the grant risk posed by your subrecipients as well!
Essentially your organization “steps into the shoes” of the federal awarding agency to ensure subaward funds are flowing to a subrecipient willing and able to comply with the federal regulations and the terms and conditions of the subaward.
This part of the regulations means the pass-through entity should evaluate grant risk to determine the appropriate level of monitoring needed for the subrecipient throughout the subaward period of performance.
Grant Recipients Beware
Federal awarding agencies vary widely in their interpretation of the risk assessment requirements.
So when you consider applying for additional federal funding, look at the guidelines for your specific funding agency, or you may be surprised when they view things differently.
But regardless of the individual federal agency specifics, well-trained program staff, strong internal controls, and successful performance of the award objectives will give you the edge for future funding.
It’s a fact.
Great grant management never goes out of style!
Ready to Deepen Your Understanding of Federal Funding?
Would you like to be a better grant writer or manager?
Deepen your understanding of procurement and the single audit for federal grants?
We have another grant training seminar coming soon.
Click here to get all the details!
Hope to see you there!
Rachel Werner, MPA, GPC, PMP
MyFedTrainer Principal, Compliance Champion