Sunday, October 11, 2009

A Grant Contract Isn't a Suggestion

I saw this article on Charity Channel and knew I had to "reprint" it! The truth is that you really do need to expend grant funds just as you promised you would. It may be tempting to apply grant funds to pressing needs, but if you want to get a second or third grant, the grantor has the right to know exactly where you spent every dime. Additionally, even if it is a one-time gift, the grantor has the right to ask for re-payment of funds if the money was not spent as was promised in the grant application or contract. Read and heed. Bunnie

A Grant Contract Isn't a Suggestion
by Rebecca Shawyer, Director of Grant Administration at Brazosport College

Throughout my career I have noted that far too often, program staff and administrators discuss and debate the meaning of the words "grant contract." What does this term really mean? Is it really a binding contract? Why can’t we buy that new computer we need? After all, we have grant funds left over.

Sadly, in the past I have found that some of my colleagues honestly believed that once grant funds have been received and deposited into the agency’s banking account, they were free to dip into them for any expenditure associated with the relevant grant project. As grant professionals, we know differently; and, it is our job to educate our colleagues before there is a problem.

So, what is a contract? The dictionary lists a variety of definitions for the word contract. Two that pertain to grant contracts are as follows: (1) “an agreement between two or more parties for the doing or not doing of something specified”; and, (2) “an agreement enforceable by law.” (Source:

“An agreement between two or more parties for the doing or not doing of something specified.” Hmm, this sounds quite clear. It doesn’t mention the possibility of loop holes or wiggle room. It clearly states “for the doing or not doing of something”. So why do program staff, accounting offices, and administrators offer think that it is acceptable to spend funds in ways not included in the grant contract?

I think that the answer is quite simple. Grant professionals oftentimes find themselves playing the role of a compliance officer because they failed to educate their organization and colleagues about the strict nature of any grant contract. It is our responsibility to take the time to fully explain contractual limitations prior to the signing of a contract.

I believe that this educational process should begin at the time grant proposals are being developed. In fact, I have found that it is crucial that everyone (including the president or CEO) clearly understands that the written proposal including its implementation plan, outcome objectives, evaluation plan, and budget will become an addendum to any future grant contract awarded. This is true for private foundation, corporate donor programs, and government agency awards.

Thus as I lead my college’s grant development teams, I consistently and constantly remind them that our eventual performance will be rated on that which they state will be done in the proposal narrative. In order to facilitate the development of ambitious but attainable goals and objectives, we develop a progressive program logic chart that clearly shows the relationship between program activities, minimum process objectives, staffing plan, equipment and supply purchases, and anticipated outcomes.

As we develop our grant applications, their attention is focused upon three primary issues:

The proposed program plan – With a contract award, the granting agency or foundation will expect that the proposed plan detailed in the application will be implemented as described with a minimum of changes. It will be assumed that as professionals, the program team has developed and proposed an implementation plan and strategies that are based on recognized and best practices in their field. If the team proposes to achieve that which is not truly attainable, it is likely that the organization will not be able to meet its contractual obligations if an award is received. If this happens, the organization could be endangering future grant awards and be putting itself in a position that requires the repayment of grant funds.

The budget – The budget needs to be realistic, accurate, and well thought out. After a contractual agreement has been reached, many funders will allow only minimal changes to the budget. Funds must be used for expenditures specifically listed in the proposal. For example, if the requested budget allocates $25,000 in salary expenses for direct service personnel, the agency may not pay administrative fees with these funds (unless the funder provides prior written approval of the change). For this reason, program teams should give as much attention to how the requested funds are being distributed as they give to the rest of the proposal. If funds are not properly allocated, the organization could find itself without adequate funds to cover key costs required for optimal implementation. If this happens, the funding agency will expect the grantee to find the needed funds elsewhere.

Equipment and supply purchases – Without prior written approval, equipment and supplies (such as computers, laptops, furniture, inkjet cartridges, etc.) cannot be paid for with grant funds unless they were included in the proposed budget. Additionally, if it was proposed that computers be purchased with the grant funds, these same funds cannot arbitrarily be switched to pay for new furniture.

After all, a grant contract is not a suggestion. Any grant professional that has ever survived a funder’s audit knows that it is in fact “an agreement enforceable by law.”

Contact Rebecca Shawyer at Rebecca.Shawver at BRAZOSPORT.EDU

1 comment:

  1. Yow. I can't believe -- I guess I'm the last Pollyanna? -- that anyone could be so brazen about grant funds that they imagine they can do whatever they like with them. But I do realize there seem to be many more people far less literal-minded than me, in the nonprofit world these days. A small new group in my local area was recently given a very large sum by a donor who styles itself as a grantmaker now. In my opinion, neither the giver nor the recipient know what they are about. It seems a lost art, today, that of setting goals and measurable objectives. I hope that's more of a reflection of my local community than of the wider world! Grantmakers should know what they are a part of, both legally and ethically -- trustees should seek to learn how grants restrict funds and so on -- and even a volunteer board member needs to do at least some studying of basic business law. If we knew what we were doing, maybe there would be more effects on our communities' needs, of those programs that look so good on paper!