Grant Geek

Getting Ready for Grants, Part 3: Writing Compliance into Your Programs

by Resource Associates @ grantwriters.net

Grant Questions? Let’s talk. info@grantwriters.net 505-326-4245

It’s all very exciting, isn’t it?  You’ve found a government grant and, if awarded, it will literally pay your nonprofit to go out and accomplish its mission.  Government grants are often larger and last longer than your average private foundation grant.  However, the compliance documents are thick, maybe even thicker than a New York City phone book.  Figuring it out can be a very daunting task.

A recent grant award notice issued by the United States Department of Health and Human Services listed the mandatory documents related to a grant award. These documents relate to the instructions, rules and regulations connected to a grant award:

  • The Request for Proposal
  • Grant Application
  • Notice of Award (yes, it referenced itself)
  • 2 CFR 200
  • HHS Grants Policy Statement
  • Appropriations Act
  • Section 106g of the Trafficking Victims Protection Act
  • Federal Financial Accountability and Transparency Act
  • All Standing Executive Orders
  • 2 CFR 25.110 – Central Contractor Registration and DATA Universal Number System (DUNS)
  • 45 CFR 75.113 – Disclosures re: Violations of Criminal Law
  • 45 CFR Part 87 – Equal Treatment for Faith-Based Organizations
  • 45 CFR Part 75 – Uniform Administrative Requirements
  • Cooperative Agreement Terms & Conditions
  • Instructions for Requesting Payment
  • Financial Reporting Requirements
  • Programmatic Reporting Requirements
  • File Naming Protocol
  • Property Reporting Requirements
  • GrantSolutions User Account Access
  • Fraud Alert

Given the award, the recipient of this grant obviously made a very good case for funding. The recipient also made a very good impression on the funders, and convinced them they are capable of executing the proposed scope of work as described in their grant application.  But what applicants and reviewers often gloss over is compliance. That is, until it is an issue of concern.

One way to protect yourself from compliance concerns is to conduct annual audits. If you’ve received a grant (or any federal contract for that matter) in excess of $750,000 in any given year, it will be required you hire an independent, certified, federal grants auditor.  Auditors use their own regulations to test grant expenditures for compliance and assess risk.  Unfortunately, they often come with a hefty price tag, costing many thousands of dollars. Despite the cost, auditors can still miss compliance issues.  So be prepared and if a funder asks for copy of your policies and procedures along with a copy of your general ledger, make sure you’ve spent every dime correctly and within the boundaries of all of the rules and regulations, and you have the backup documentation to prove it.  Unfortunately, not knowing the rules is no excuse for breaking them.  If you’ve purchased something with grant funds which isn’t allowable, you’ll have to pay it back.  Kicker is, if you’ve done it for a long time, criminal charges may even ensue.

Imagine leading a nonprofit, winning a huge grant, executing the project, spending down a million dollars and closing out the grant with great success.  (Go You!)  A year later, a disgruntled employee leaves the organization saying you hired your sister to serve as Project Director.  What’s more, you paid your sister as an independent contractor. My readers with experience in grant compliance are nodding to themselves, smiling their wry little smiles, and finishing the story for me in their heads.

You see, there’s a conflict of interest. 2 CFR 200 prohibits undisclosed conflicts of interest, and your funder could demand the whole of your sister’s contract back, regardless of whether or not she did the work. Now, if your HR department and Board of Directors independently interviewed all of the applicants, and the decision to hire your sister was made without your vote (to mitigate your personal conflict of interest), you might be ok. If your proposal stated the Project Director would indeed serve as an independent contractor, you might be ok, as well. But the best thing you could’ve done, was: 1) write your sister into the proposal as an independently contracted Project Director, disclosing the apparent conflict of interest and making a case for her assignment to the position, and, 2) to again disclose the apparent conflict of interest and steps taken to mitigate it to your Project Officer after the award was received. Knowing exactly what conflicts of interest are, notifying your funders, and keeping record of all of it are key to staying in compliance with state and federal grant requirements.

But, conflicts of interest aren’t the only compliance concern. Grant guidance has pages upon pages of allowable and unallowable costs, rules regarding moving funds from one category to another, and making changes to your proposed project. There are also pages upon pages regarding what you as an organization requires of your staff. In fact, many organizations simply won’t apply for federal and state grants because they feel they simply can’t assure compliance with all of the funder’s terms and conditions.

But – nonprofits and public agencies don’t have to forgo these vital funding sources for this reason.  Federal and state grant makers know compliance is mandatory and compliance costs money.  So, write compliance into your programs.  Use grant funds to hire a compliance expert, or to routinely train staff.  Use grant funds to pay for the program’s share of your annual audit, as well.  Ensure the roles and responsibilities of your staff include compliance, and ensure you’ve made enough time in their schedules to receive regular training and perform regular compliance checks.

For more information about what to expect when you win a grant, view our Free Webinar: Planning for Success, What Happens After You Win a Grant or contact Resource Associates for onsite training and more information at: 505-326-4245.


Rachel Nawrocki, Director of Client Funding

Rachel brings over 25 years’ experience in nonprofit excellence, program development, training, evaluation, and grant project management to Resource Associates’ Outreach Team.  She’s an expert in many areas of capacity building and works with each client and its community partners to assess eligibility, program compatibility, and capacity for grant pursuits.  She also specializes in sustainability. This means her clients are coached on how to continue programs without the reliance on soft monies while actively pursuing all potential grant and other funding opportunities to build new and existing initiatives. Ms. Nawrocki comes to Resource Associates having managed a broadly-scoped human services nonprofit at which she lead the development of 73 grant-funded projects raising $35 million in funds over 9 years. Rachel has served as the Vice President of Cultural Resources Management Consultants, the Director of Human Resources at Consolidated Constructors, and has worked as a professional fundraiser for the National Wildlife Federation in Washington, D.C.  If you feel you have hit a glass ceiling when it comes to growing or sustaining your organization and its good work, consider Rachel your innovative solutions provider.


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