This is the fourth section in our thirteen part series on “The Busy Person’s Guide to Grant Management.”
SHOW ME THE MONEY! ISN’T THIS WHY WE WANTED A GRANT?
Whether you are one of the lucky Grant recipients who’ve been set up to get Grant funds advanced to your bank, (How sweet is that on the cash management side of the house?) or you’re getting your costs reimbursed after the fact. Being able to draw your Grant funds without hassles or hiccups is critical to the smooth operations of all Organization • both large and small. (Not to mention pretty darn important for keeping our paychecks from bouncing.)
The Busy Person’s Guide to Drawing Grant Funds
Do you know how to get your money?
Most Organizations receiving Federal Grants receive Grant funds through one of two methods. The two methods are:
- 1) “Cash Advance” method
- “2) Reimbursement of Funds” method
State and Local Governments may use a third method called the “working capital advance payment.” This method may be used when the Federal Agency determines that the Grant Recipient can’t meet the requirements for the “advance” payment method, and the “reimbursement” payment method is not feasible.
States may also have special arrangements regarding payment management and timing of cash transfers. These arrangements generally require that transfers be consistent with program purposes, applicable law and Federal funds transfer procedures.
How willing are you to get paid?
Cash Advance is the preferred method for all Federal Agencies if the Grant recipient maintains or demonstrates the willingness to maintain the Financial Management System Standards.
The “reimbursement” payment method is used when the Grantee doesn’t meet the requirements for getting Grant funds advanced to them. This is a bummer because it means you have to pay for everything first and then get reimbursed by the Federal Government. Oh yes, advance is much, much better.
Most of the regulations on drawing Grant funds relate to Grantees who are using the “advance” payment method.
Do you make these mistakes? Here’s a list of what-not-to-do when drawing Grant funds.
Recipients must have a process that minimizes the time between receiving cash advances from the U.S. Treasury and the actual disbursement of funds by the Recipient for program or project costs.
Grant recipients must limit their funding requests to the minimum amounts needed to support the program or project.
Next, the funding amounts must be used to carry out only the purpose of the approved program or project.
These requirements mean:
- 1) Don’t draw Grant funds you don’t need for the project or program.
- 2) Don’t draw Grant funds way before you actually need them.
- 3) Don’t draw funds to support unrelated work.
- 4) Don’t overlook the requirement to have a process (include a written procedure) to minimize turnaround time for Grant funds draws and subsequent payments to vendors.
What about Subgrantees?
When you get a Federal Grant, you have additional responsibilities for watching what your Subgrantees (also known as Subawardees) are up to. Grantees must monitor Subgrantees to ensure that they also conform to substantially the same requirements for timing of advances and disbursements. No excess money for them either!
What if I have multiple Awards?
Advances for multiple Awards should be consolidated to cover anticipated cash needs where this is possible.
An example of when consolidation would not be possible is if multiple agencies or multiple payment methods are used from the Awarding Agencies.
How often can I request Grant funds?
Recipients are authorized to request funds at least monthly. Recipients can certainly request more frequently than monthly.
The Bottom Line
The goal in these requirements is to support a quick turnaround of cash from when it leaves the US Treasury until it is used to pay for expenses on the Federally sponsored project or program. The “advance” payment method should not be used to fatten the bank account of your Organization at the expense of the Federal Government. Trust me, they check this stuff when they come to visit. Be prepared. Better yet, be compliant!
What are the regulations for my Organization?
The Administrative Requirements for your type of Organization includes sections on Cash Management for Grant recipients. It is a good reference if you have more questions on Grant Management topics. Here are the regulations for your type of Organization:
- State, Local and federally recognized Indian Tribal Governments, should reference OMB Circular A-102, and the Grants Management Common Rule.
- (Individual Federal Agencies and departments codify the Grants Management Common Rule requirements with their own set of regulations contained in various “CFR” citation numbers)
- Both Non-profit organizations and Institutions of Higher Learning should use regulation 2CFR Part 215. These regulations used to be contained in “OMB” Circular A-110.
Copies of the regulations can be found at: http://www.whitehouse.gov/omb/circulars_default
P.S. Here’s even more free information.
Check out the Drawing Grant Funds Video Lesson.
Length: Approx. 3 minutes
Don’t miss your own very cool, one page “Quick Reference Guide: Drawing Grant Funds.”
(Just click on the link to download the .pdf file.)
This is the fourth section in our thirteen part series on “The Busy Person’s Guide to Grant Management.”
Want to find out more?
You can find out more about the various payment methods for Federal Awards in these online courses:
For State, Local and Tribal Governments:
http://www.myfedtrainer.com/2011/1240-payment-management/
For Non-profit Organizations:
http://www.myfedtrainer.com/2011/1040-payment-management/
For Institutions of Higher Learning:
http://www.myfedtrainer.com/2011/1140-payment-management/
These courses cover Payment Management, specifically:
- 1) Control Requirements in the Payment Management Standards
- 2) Payment Methods that are used by Agencies to remit funds
- 3) Types of payments that may be included in cash requests to your agency
- 4) Requirements for where account funds can be placed
P.S. These individual courses are marked down to only $49 for a limited time.
Buy now for the best pricing.
For State, Local and Tribal Governments:
http://www.myfedtrainer.com/2011/1240-payment-management/
For Non-profit Organizations:
http://www.myfedtrainer.com/2011/1040-payment-management/
For Institutions of Higher Learning:
http://www.myfedtrainer.com/2011/1140-payment-management/
