Domain: Grant Guidance
The first CGMS domain NGMA names is Grant Guidance, and this course files pre-award work under it. Everything that happens before an award is signed, publishing a funding opportunity, deciding who is eligible, assessing applicant risk, and building a defensible budget, sets up every problem or success that follows. Get pre-award wrong and no amount of good post-award management fixes it; a budget built on unallowable costs, or an award made to an applicant who could not actually deliver, causes trouble years later at closeout and audit.
A notice of funding opportunity, NOFO (also called an NOFA, a request for applications, or an RFA depending on the funder), is how a federal agency, or a pass-through entity like a state or GCHS itself acting as a subgrantor, announces that money is available and describes who can apply, for what, and by when. A NOFO typically states the funding priorities, the eligible applicant types, the amount of funding available, the application deadline, and the criteria reviewers will score applications against. For GCHS, a NOFO might arrive from HUD for a CDBG or HOME set-aside, from a state agency, or from a private foundation, and reading it carefully before committing staff time to an application is a Grant Guidance skill in its own right: a well-written application to the wrong opportunity wins nothing.
Eligibility is more than fitting the funder's list of eligible applicant types. Under 2 CFR 25.200, a federal notice of funding opportunity must require each applicant without an exemption to be registered in SAM.gov before it submits an application, to keep that registration current and active while an application is under consideration or an award is active (reviewing and updating it at least annually), and to include its unique entity identifier, the UEI, in each application. Federal agencies also may not make awards to parties that are debarred, suspended, or otherwise excluded (2 CFR part 180, referenced in 200.206). Checking that the registration is active and current well before a deadline is one of the cheapest ways to protect an application.
Before a federal agency makes an award, 2 CFR 200.206 requires it to review the applicant. It first checks government-wide data, such as the Do Not Pay information and, when the federal share is expected to exceed the simplified acquisition threshold, the responsibility and qualification records in SAM.gov. It then carries out a risk assessment, considering items such as the applicant's financial stability, the quality of its management systems, its history of performance on federal awards, its audit reports and findings, and its ability to implement the requirements that come with federal awards. The risk criteria the agency will evaluate must be described in the notice of funding opportunity. When the agency decides to make the award, it can address the assessed risk with specific conditions under 200.208, such as paying by reimbursement instead of advance, requiring more detailed financial reports, adding project monitoring, or adding prior approvals, rather than refusing the award outright. Knowing that this review happens is useful for GCHS both as an applicant (a clean audit history and solid financial systems make the process smoother) and as a pass-through entity when GCHS itself subgrants funds and has to risk-assess its own subrecipients, covered further in lesson 6.
Once an award is in hand, the budget has to be built (and later executed) on costs that are actually allowable under 2 CFR 200. Section 200.403 sets out the criteria a cost must meet to be allowable under a federal award. It has to be necessary and reasonable for the performance of the award and allocable to it (meaning it benefits the award in proportion to the benefit received, not dumped onto a grant just because the grant has funds available); conform to any limitations or exclusions in the cost principles or in the award; be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the organization; be accorded consistent treatment (a cost cannot be charged as a direct cost if a cost incurred for the same purpose in like circumstances has been charged as an indirect cost); be determined in accordance with generally accepted accounting principles; not be included as a cost, or used to meet the cost sharing, of any other federally financed program in the current or a prior period; and be adequately documented. Paragraph (h) adds a timing rule: costs must be incurred during the approved budget period, except that administrative closeout costs may be incurred until the final report is due. Every one of those criteria has to be met, not just some of them; a cost that is reasonable but not properly documented is still unallowable. Section 200.406 adds that applicable credits, such as purchase discounts, rebates, refunds, and insurance recoveries that relate to allowable costs, must be credited to the award.
"Reasonable" is not just a feeling. Section 200.404 gives it a working definition: a cost is reasonable if it does not exceed an amount that a prudent person would incur under the circumstances prevailing when the decision was made to incur the cost. Factors that bear on reasonableness include whether the cost is generally recognized as ordinary and necessary for the organization's operation or the proper and efficient performance of the award, the restraints imposed by sound business practices, arm's-length bargaining, laws, and the award's terms, market prices for comparable costs in the geographic area, whether the individuals involved acted with prudence in light of their responsibilities, and whether the cost deviates from the organization's established written policies and procedures. This matters at budgeting time, since a budget line that looks reasonable on paper still has to be defensible against these factors if it is ever questioned in a monitoring visit or an audit.
A grant budget translates the proposed scope of work into dollars, usually broken into standard categories: personnel, fringe benefits, travel, equipment, supplies, contractual costs, and indirect costs (or "other" and construction categories where relevant). Every line has to trace back to the scope of work, an evaluator or a monitor should be able to look at any budget line and see why it is necessary to deliver what the award promises. Costs also have to be allocated correctly between direct costs (costs that benefit one specific award and can be identified specifically with it) and indirect costs (costs that benefit multiple programs or the organization as a whole, like a portion of rent or a shared finance department, and cannot be readily assigned to one award without an allocation method). Indirect costs get their own detailed treatment in lesson 3, alongside the rest of the cost-principles material under 2 CFR 200 Subpart E, since the mechanics of an indirect cost rate are involved enough to deserve their own lesson.
1. What is a NOFO?
2. Under 2 CFR 200.206, what must a federal awarding agency do before making an award?
3. Which section of 2 CFR 200 sets out the factors affecting allowability of costs?
4. Which of the following is NOT one of the 200.403 allowability factors?
5. What does "allocable" mean when applied to a cost under 2 CFR 200?
6. What is the working definition of a "reasonable" cost under 2 CFR 200.404?
7. What is the difference between a direct cost and an indirect cost?
8. Why should a grants manager read a NOFO carefully before committing staff time to an application?
9. A cost is allowable, reasonable, allocable, and consistently treated, but the organization kept no documentation showing how it was calculated. Is it allowable?
10. What does 2 CFR 200.406 require for rebates, discounts, and refunds on a cost charged to an award?
11. GCHS is deciding what standard budget categories to use for a new grant application. Which of the following is a typical standard category?
12. What can an awarding agency do with the results of a 200.206 risk review, short of denying the award outright?
13. Under 2 CFR 25.200, what must a federal notice of funding opportunity require of an applicant that has no exemption?
14. According to 2 CFR 200.206(b), where must the risk criteria a federal agency will evaluate be described?