Sharing your federal money with other agencies? Do your homework first

Jul 22, 2021

With the recent and continued influx of federal funding, you might make more subawards than in the past. (A subward is providing your grant funds to other agencies to carry out a portion of the grant program.) Passing along your money to others doesn't relieve you of grant compliance requirements – it actually adds responsibilities for you to monitor your subgrantees (referred to as “subrecipient monitoring”). Since this is a frequent area reviewed in our audits, here are a few tips and resources to keep in mind:

1. Evaluate the nature of the relationship before you enter into a contract

Before you enter into any agreement or disburse any funds, you'll want to determine whether the third party is a contractor or a subgrantee, or in technical terms, a subrecipient. If they are a subrecipient, then you must communicate certain things about the federal award in your contract. You might need pre-approval from your grantor to make subawards. If they are a contractor, then procurement rules apply. The determination of contractor or subrecipient is a critical first step. Be sure to document your analysis and conclusions!

Read more about this in The Uniform Guidance:

  • 200.1 Definitions for Contractor and Subaward
  • 200.331 Subrecipient and Contractor Determinations

2. Make sure your contract has all the required language

You are known as a pass-through entity when you share your federal funding with other entities. Your contract with the subrecipient must include information about the federal award, including the Assistance Listing number. This is so the subrecipient knows these are federal funds and can act accordingly. It also must communicate the grant requirements and the expectation to provide you access to financial records.

Read more about this in The Uniform Guidance:

  • 200.332 (a) Required information to provide for subawards

3. Document a risk assessment for each subaward

When you make a subaward, you have to monitor the receiving agency to be sure they use the money for authorized purposes. In order to develop an appropriate monitoring plan, you need to evaluate the risk that something could go wrong. The guidance gives you examples of what to consider.

Read more about this in The Uniform Guidance:

  • 200.332 (b) Evaluate each subrecipient's risk of noncompliance

4. Document your monitoring activities

Your monitoring must include certain minimum actions, including following up on known problems, and any additional steps you feel are necessary. For example, you need to evaluate and follow up on the results of other audits and on-site reviews.

Read more about this in The Uniform Guidance:

  • 200.332 (d) Monitor the activities of the subrecipient as necessary

Additional resources for subrecipient monitoring

As always, if you have specific questions, it's best to reach out to your grantor for additional guidance on how to monitor any subawards. Your grantor may have tools they'd like you to use. If they don't, check out these tools developed by the Association of Government Accountants (AGA):

We can also help!

While your grantor is the best source for information about a federal program, you can also submit technical questions about federal awards to our HelpDesk in the client portal.

For training on grant compliance, see Washington Finance Officers Association non-conference training schedule.

If you have other questions, comments or suggestions, feel free to email us at