This is the eighth section in our thirteen part series on “The Busy Person’s Guide to Grant Management.”
HOW DO YOU DISPOSE OF PROPERTY PURCHASED FOR A FEDERAL GRANT?
All good things must come to an end. Maybe you have finished up all your Grant work, or there have been other changes that mean the property that was purchased with Federal funds is no longer needed.
The first step in the disposal process is for the Grantee to ask the Awarding Agency for disposition instructions. Now’s your chance to turn the tables on your Federal Agency and get to bug them for a change! You may be amazed at how hard it is to get disposal instructions, and how long it takes to actually get a decision. To paraphrase my kids: “Have you decided yet? Have you decided yet?”
The Busy Person’s Guide to Property Disposal
Based on the instructions you receive from the Awarding Agency, (OK, I am assuming you have actually heard back from them) there are three things that can happen. The property may be:
- 1) Retained
- 2) Sold
- 3) Transferred
In general, if the property is sold or retained, the Federal Government must be paid a share of the value of the property. The amount that must be paid is based on the Awarding Agency’s percentage of participation in the original purchase.
Three ways to dispose of Real Property
When it comes to real property, there are three primary options for disposing of real property.
- Method #1: The Grantee retains title to the real property after compensating the Federal Government for their share of the fair market value.
- Method #2: The Awarding Agency will direct the Grantee to sell the property. Similar to the first method, the Awarding Agency is entitled to their share of the proceeds of the sale after actual and reasonable costs of fixing up and selling the property are deducted.
- Method #3: The Awarding Agency can direct the title to be transferred to the Federal Government or an eligible third party.
In contrast with the first two methods, in this case, the Grantee or Subgrantee will be paid their percentage share of the current Fair Market Value of the property.
In all the cases, the Federal Government either gets their percentage share of the value, or gets the real property after paying the Grant Recipient for their share of the value.
What about Equipment?
When equipment is no longer needed for the original project or program, it may be re-deployed or transferred to another project or disposed of. (Remember the Federal definition of equipment includes tangible personal property with a cost of over $5000.)
How is Equipment re-deployed?
There is an order of priority which is usually followed for re-deploying the equipment.
- Priority #1: The equipment is re-deployed to be used in an activity sponsored by the Agency that originally funded the purchase.
- Priority #2: The equipment is re-deployed to be used in an activity sponsored by another Federal Agency.
The Awarding Agency should provide instructions on where to send un-needed equipment.
What if Equipment is disposed of instead of re-deployed?
If the equipment is to be disposed of as opposed to re-deployed, then the requirements for disposal depend on the current per-unit Fair Market Value.
- Equipment less than $5000 current Fair Market Value (FMV)
If the per-unit current Fair Market Value of the equipment is less than $5000, generally, the Grantee may dispose of, or retain or sell the equipment with no further obligation to the Awarding Agency. - Equipment over $5000 current Fair Market Value (FMV)
If the equipment has a current Fair Market Value over $5,000 at the time the equipment is no longer needed by the program or project, then the Grantee may retain or sell the equipment for use in a non-Federal activity if the Awarding Agency is compensated for their share of the current Fair Market Value.
What do I do with supplies?
Again, what to do with supplies depends on the total current Fair Market Value. Here’s the breakdown:
- Supplies: Total residual inventory is less than $5000 current FMV
If the total value of the remaining supplies is less than $5000 current Fair Market Value, generally, the disposal does not require instructions from the funding Agency. Check your Award terms and conditions to be sure. - Supplies: Total residual inventory is greater than $5000 current FMV
If the supplies and other expendables are not needed for any other federally sponsored activities, the Federal Government should be compensated for its portion of the proceeds from the sale or the non-Federal use of the supplies.
P.S. Here’s even more free information.
Check out the Property Disposal Video Lesson.
Length: Approx. 3 minutes
Get your own very cool, one page “Quick Reference Guide: Property Disposal.”
(Just click on the link to download the .pdf file.)
This is the eighth section in our thirteen part series on “The Busy Person’s Guide to Grant Management.”
Act now to join other Grant professionals in getting the latest Compliance Warriors and MyFedTrainer.com bonus resources as they become available.
We do not share your information with others. That’s the bottom line. Privacy Policy