Let’s look at the term “Award” for federal grant recipients.

A federal “award” means grants, cooperative agreements, cost reimbursement contracts, and other agreements between the federal government and a non-federal entity such as a:

• State Government
• Local Government
• Indian Tribal Government
• Non-profit Organization
• Institution of Higher Education (IHE)

Here is the definition from 2 CFR Part 200 (also known as the Uniform Guidance) with emphasis added:

Federal award has the meaning, depending on the context, in either paragraph (a) or (b) of this section:

(a)(1) The Federal financial assistance that a non-Federal entity receives directly from a Federal awarding agency or indirectly from a pass-through entity, as described in §200.101 Applicability; or

(2) The cost-reimbursement contract under the Federal Acquisition Regulations that a non-Federal entity receives directly from a Federal awarding agency or indirectly from a pass-through entity, as described in §200.101 Applicability.

(b) The instrument setting forth the terms and conditions. The instrument is the grant agreement, cooperative agreement, other agreement for assistance covered in paragraph (b) of §200.40 Federal financial assistance, or the cost-reimbursement contract awarded under the Federal Acquisition Regulations.

(c) Federal award does not include other contracts that a Federal agency uses to buy goods or services from a contractor or a contract to operate Federal Government-owned, contractor-operated facilities (GOCOs).

(d) See also definitions of Federal financial assistance, grant agreement, and cooperative agreement.

2 CFR Part 200 (aka the Uniform Guidance” Definitions in §200.38 Federal award.

Watch Out for These Award Criteria

Financial assistance means there is a financial component that provides support or stimulation to accomplish a public purpose.

Awards include grants and other agreements in the form of money or property in place of money by the Federal Government to an eligible recipient.

The term “award” does NOT include the following:

• Technical assistance, which provides services or advice instead of money
• Other assistance in the form of loans, loan guarantees, interest subsidies, or insurance
• Direct payments of any kind to individuals
• Contracts that are required to be entered into and administered under procurement laws and regulations.

When is Federal Funding is Not a Federal Award or Subaward?

The advent of stimulus funding saw the expansion of some terms we infrequently heard in federal grant regulations, specifically “beneficiary” and “incentive payments.”

In the past, incentive payments were things like gift cards for attending opioid treatment meetings.

These types of payments had to be tightly controlled, de minimis in nature, and approved in advance by the funder to be considered allowable.

With ARPA, we saw incentive payments for getting vaccinations and other forms of payments with fewer restrictions than pre-pandemic.

Now with the infrastructure bills, we are seeing an expansion of the term “incentive payments with big dollars for electrical companies to switch to green technology.

Read more at https://www.energy.gov/gdo/hydro

Similarly, pre-pandemic beneficiaries were typically individuals who received the benefit of the federal award.

With ARPA, we saw incentive payments for getting vaccinations and other forms of payments with fewer restrictions than pre-pandemic.

So organizations that in the past might have been subrecipients to funding, like health care organizations treating COVID-19 patients, were classified as “beneficiaries” of the funding when the states distributed funding to support the public purpose.

Here’s why it matters…

Beneficiaries typically do not comply with 2 CFR Part 200 as a subrecipient would.

That means that large amounts of federal funding can go out to non-individuals with very few rules or compliance requirements.

Will this expansion of the terms “beneficiaries” and “incentive payments” cause an increase in misspent grant funds?

Time will tell.

Note: If you find the terms grants, awards, contracts, subawards, subrecipients, and vendors confusing, check out my article and infographics at What’s in a Name: 5 Tips to Spot Subrecipients