If your organization has experienced financial difficulty in the past or received a less than perfect audit, you might still get federal grant funds but be designated by the government as a “high risk” grant recipient. If your organization is cash poor, a high-risk grantee designation will make things even harder because you’ll be placed on reimbursement funding status—a kind of funding purgatory. Reimbursement funding status means you must advance your own funds first and then get reimbursed when you submit documentation of spending.
Thousands of federal grant proposals are submitted each year. Around 80% will be rejected and around 20% on average will get funded. The required signatures on the federal Standard Form 424 face sheet and the companion “Standard Assurances” bind your organization to comply with each of the 23 assurances associated with receipt of federal funding.
In the world of grant proposals, the budget comprises as little as 5% or as much as 20% of the points you’ll be awarded in the federal review process. Yet, for many, preparing the budget and budget justification is the most troublesome and time-consuming part of the proposal development process.
When auditors assess your handling of grant funds, they’re not looking to ding you at every possible point with negative findings. Their job is to provide an official opinion about your financial statements that is unqualified, qualified, or disclaimed. An unqualified opinion means that your financial statements are free of material error and may be relied upon.
This is a preview from our latest Grant Management series article, Model Purchasing Policies and Procedures: A Guide for Nonprofits, Governments, and Tribal Organizations, available for purchase here.
Preface
I. Introduction
Welcome to Model Purchasing Policies and Procedures: A Guide for Nonprofits, Governments, and Tribal Organizations. It has been more than 30 years since any organization has issued something substantially new concerning procurement for use by governments and nonprofit organizations. The question is why now? There are four reasons.
The procurement rules governing purchases made with grant funds changed when the federal Office of Management and Budget (OMB) issued new Uniform Guidance on grant administration (the Super Circular) in late December 2014. The good news is that the one-year grace period the feds gave nonprofit organizations to comply with the new requirements has just been extended to two years.
Beginning in 2015, organizations that expend more than $750,000 in federal funding in any fiscal year will be required to retain an independent auditor to perform a Single Audit. Previously, $500,000 in federal expenditures triggered the Single Audit requirement. While the new threshold is a bit higher, federal funds in the form of grants, pass-through dollars, contracts, and loans add up quickly so be sure you’re ready. This brief primer explains how to select a qualified auditor and provides a simple check-list to guide your selection process.
When the new Uniform Guidance on grant administration is implemented as an interim final rule in late December 2014, the procurement rules governing purchases made with grant funds will change somewhat. Procedures must become more structured, and purchases above $3,000 will have to be accompanied by varying levels of documentation as the dollar value of purchases rises.
Understanding and implementing the new guidance on short notice will be difficult for many nonprofits. That’s why The Grantsmanship Center (the Center) has asked Henry Flood, our Senior Advisor for Grant Administration, to address procurement issues that are raising concern in the nonprofit community.
You're welcome to link to these pages and to direct people to our website.
If you'd like to use this copyrighted material in some other way,
please contact us for permission: info@tgci.com. We love to hear from you!
A follow-up study of 385 of our graduates found documented that they won grants totaling over $21 million within just six months of completing the 5-day Grantsmanship Training Program®. Our training produces results!
