Increasing the Capacity of Individuals, Families and Communities

Sub-Award Management

Determining Your Sub-Award Process | Step 2: Reviewing and Selecting Sub-Awardees

Step 1: Soliciting Applications

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D. Taking Preventative Measures to Ensure Accountability
As an intermediary, your organization is responsible for making sure all Federal funds provided through sub-awards are managed and monitored to ensure compliance with Federal requirements and regulations. You must also ensure the funds are used in the manner for which they were approved. If sub-awardees violate Federal requirements, the requirements specified in their sub-award or otherwise improperly use the funds they receive, you as the grantor as well as the sub-awardee may both be subject to legal action. If a sub-awardee uses its funds fraudulently, it could be subject to criminal prosecution.

The following is a brief overview of a few major legal obligations and issues regarding grantees’ use of Federal funds. Since as an intermediary you likely will be making sub-awards to faith-based and community organizations, some of these issues specifically involve matters that arise when faith-based groups receive Federal funds.¹⁷

Financial reporting requirements – To make sure that grant funds are used properly, organizations that receive Federal funds must file regular financial status reports based on the requirements of the individual grant. As a Federal grantee providing sub-awards, you will need to complete and compile financial reports on your sub-awardees and submit those on a regular basis on Standard Form 269. Accordingly, your sub-awardees will need to submit financial reports to you, consistent with the categories listed in SF 269, to be included in your regular report.¹⁸

Support of only non-religious social services – A sub-awardee cannot use any part of a direct Federal grant to fund “inherently religious" activities which can include religious worship, instruction or proselytization. Instead, organizations may use government funds only to support the non-religious social services they provide. This doesn’t mean the organization cannot have religious activities. However, they cannot use taxpayer dollars to fund them.

Services open to all eligible persons – If an organization takes Federal money, it cannot discriminate against a person seeking help who is eligible for the service. Religious organizations receiving public funds for a service that they are providing cannot serve only persons of their faith and turn others away. In addition, the faith-based organization may not require those they serve to profess a certain faith or participate in religious activities in order to receive the services they provide for the Federal government.

Employment hiring rights – There is no general Federal law prohibiting faith-based organizations that receive Federal funds from hiring on a religious basis. However, certain Federal laws and regulations, as well as state and local laws, may place conditions on the receipt of Federal funds. As this topic is far too complicated to discuss in this guidebook, you may want to review the information and guidance provided in the White House Faith-Based and Community Initiatives’ document, Protecting the Civil Rights and Religious Liberty of Faith-Based Organizations: Why Religious Hiring Rights Must Be Preserved. In addition, you may want to consult a lawyer to learn about specific requirements that apply to faith-based sub-awardees concerning employment hiring rights.

The following provides some ideas on how your organization can take preventative measures, starting with soliciting applications, to help ensure the organizations that receive awards comply with Federal requirements and regulations.

• Include a clear explanation of all requirements and regulations in the RFP application packet and in supporting documentation.
• Provide pre-award training on components such as the Federal requirements and regulations as well as reporting requirements, monitoring requirements, etc.
• Make a site visit to the selected applicants (prior to finalizing an award) to ensure that all submitted documentation is correct and that the applicant understands the requirements associated with receiving the award. If this is not possible, consider a conference call with organizational leadership (executive director, board president, etc.) to discuss their organization, the grant application, proposed project and grant requirements. (This and the following bullet points will be discussed in more detail later in the guidebook.)
• Design a monitoring plan to oversee the sub-award project and spending of sub-award funds. Develop a memorandum of agreement to be signed by all sub-awardees outlining sub-award requirements for grantees.
• Develop intervention procedures to be implemented by your organization with the grantee if problems arise. Communicate those procedures to all sub-award candidates or include them in the memorandum of agreement.

Be sure to invest in a well-planned and well-thought-through solicitation process. It will yield strong candidates for sub-award consideration as well as strong grantees to help achieve your overall program goals.

Checklist for Soliciting Applications   Create your RFP packet Design a strategy to distribute your RFP Develop a plan to provide T/TA support for applicants Determine the preventative measures your organization will implement

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Determining Your Sub-Award Process | Step 2: Reviewing and Selecting Sub-Awardees