Grant Geek

Budget “No No’s”


Two Things Never (or Almost Never) Allowed by Federal Funders, Part 1

Creating a budget for a federal grant submission can be a daunting task for organizations that are newly formed or green about the process—and for seasoned pros as well. There’s no shame in your unease, my friend. This is something you’ll never completely master. Just when you get it down, the rules will change. Expect it. Accept it. Get on with it—and above all, stay informed.

The two budget line items that this article addresses are alcohol and capital expenses (land acquisition and construction). But first a little background.

In December of 2013, The Office of Management and Budget (OMB) issued the Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards in the Federal Register, which is a daily publication of the U.S. federal government that issues proposed and final administrative regulations of federal agencies. OMB became effective for all nonfederal entities in December of 2014. The purpose of this legislation is to improve transparency and accountability with regard to federal spending, in addition to reducing abuse, waste and fraud. Big Brother for the federal grant world, if you will.

Alcohol. The Golden Rule.

This one is pretty simple. Think in terms of what your tenth grade biology teacher would have said if he found you and Mandy Finkelstein “networking” for the upcoming science fair with a bottle in the back supply closet. It doesn’t matter how brilliant the outcome would have been. You and Mandy would have been smacked on the back of your hands with a ruler and sent to the office. Well, in the world of federal grants, you would receive a major smack down from Uncle Sam. Using taxpayer dollars to imbibe in alcohol is a No-No. Stick to iced tea and mineral water during those networking functions.

Alcohol. The Exception.

Across the board, alcohol is unallowable as an entertainment expense, but allowable if within the scope of an approved research project for funders such as the National Institute of Health (NIH).

Capital Expenses for Land Purchase or Construction. The Golden Rule.

No individual or for-profit organization can receive taxpayer grant funds to purchase land or construct building that they will profit from, no matter how philanthropic their intent. This includes housing for low-income individuals, veterans, and the homeless. When partnered with a nonprofits as a sub-contractor, for-profit entities may be eligible for federal grant dollars to fund programs that assist these populations, or rental expenses within said programs, but not infrastructure. With all of this being said, however, it’s always smart to get in touch with the funder’s program officer and talk with them about your vision. Not only will they give you the definitive scoop on capital expenses of this nature, they may be able to recommend other venues.

Capital Expenses for Land Purchase or Construction. The Exceptions.

As usual, there are exceptions to the rule—on both the federal and state levels. Some of the exceptions include preservation and essential community facilities. Land can be purchased when preservation is the funder’s goal, such as the preservation of historic Civil War battle fields, for example. Natural resources and recreational land are secured through the National Park Service (NPS) and Department of Natural Resources (DNR). Land acquisition is also common for transportation-related projects via the U.S. Department of Transportation (DOT).

There is also capital funding available through the U.S. Department of Housing and Urban Development (HUD) for public housing authorities to construct, rehabilitate, or purchase facilities for early childhood education, adult education, and/or job training programs for public housing residents based on an identified need.

While the aforementioned funding is generally reserved for different levels of government, nonprofits may have opportunities for land acquisition or facilities through U.S. Department of Agriculture (USDA) programs, such as their Community Facilities Grant, Rural Business Enterprise Grant Program (RBEG), Rural Community Development Initiative and Rural Economic Development Loan and Grant (REDLG).

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