Getting ready for federal grants

This guide is for small charities thinking about a first federal grant, or federal money that comes through a state, county or city. After reading, you'll know what to set up before you apply and in what order, how to find opportunities, what rules come with federal money, and how to decide whether it's worth it for you now.

If you've never written a grant application, start with grant writing basics. For the budget, see grant budgets.

Step 1: SAM.gov and your Unique Entity ID

SAM.gov (the System for Award Management) is the federal government's registration site for organizations that receive federal money. Registering gives your charity a Unique Entity ID (UEI), the number the government uses to identify you.

What the official sites say:

• It's free. Grants.gov says plainly that it's free to register. Never pay a company to register or renew for you.
• A UEI alone isn't enough to apply. SAM.gov says you can get a UEI without completing a full registration, but if you only get the UEI, you can't apply directly for federal awards. SAM.gov adds that for some activities, such as reporting as a subawardee, you may only need the UEI, so check what each funder needs.
• Allow time. Grants.gov says to allow up to 10 business days for SAM.gov registration to become active, and that it can take weeks or months if your information can't be verified.
• Renew every year. SAM.gov says you must renew your registration every 365 days to keep it active.

Make sure your legal name and address match your IRS records exactly before you start. Our guide to researching foundations has more on avoiding registration scams.

Step 2: Grants.gov and who does what

Grants.gov is where you find and apply for most federal grants. Grants.gov says you can't start applying there until your organization is registered in SAM.gov. Then:

1. Your organization's main contact in SAM.gov, called the E-Business Point of Contact (EBiz POC), creates a Grants.gov account using the same email address as in SAM.gov.
2. The EBiz POC adds an organization applicant profile using your UEI.
3. The EBiz POC gives other people roles. The Authorized Organization Representative (AOR) can submit applications for the charity. There are other roles too, such as Workspace Manager.

Name at least two people who can log in, so one person's vacation or departure doesn't stop an application.

Finding opportunities

• Grants.gov search lists federal funding opportunities. Read the eligibility section first: many programs are only for governments, schools or larger organizations.
• Your state, county or city often passes federal money through as smaller grants or contracts, with simpler applications. Ask the agencies that work in your field.
• Larger nonprofits that hold federal grants sometimes pass part of the work to smaller partners (see subawards, below).

The research section of our directory lists useful search tools.

The federal rules in plain words

Most federal grants follow the Uniform Guidance, the rules in Title 2 of the Code of Federal Regulations, Part 200 (2 CFR 200). Your award's terms come first, but these are the basics.

Allowable costs

Under 2 CFR 200.403, a cost charged to a federal award must, among other things:

• be necessary and reasonable for the project and allocable to it,
• follow any limits in the rules or the award,
• be treated consistently with how you treat the same kind of cost elsewhere,
• follow generally accepted accounting principles, and
• be adequately documented.

In practice: keep receipts, timesheets and invoices for everything you charge, and charge only what the project really needs.

Indirect costs and the de minimis rate

Indirect costs are shared costs that support all your work, like rent, insurance and bookkeeping. The glossary defines indirect costs. Under 2 CFR 200.414(f), an organization without a negotiated federal indirect cost rate may charge a de minimis rate of up to 15 percent of modified total direct costs (a defined subset of your direct costs). You don't need documentation to justify it, you can use it indefinitely, and once you choose it you use it for all your federal awards until you choose to negotiate a rate. You must charge each cost consistently as either direct or indirect, never both.

Buying things: procurement

Under 2 CFR 200.318, you must have written procurement procedures for buying goods and services with federal money, keep an eye on contractors, and keep written standards of conduct on conflicts of interest. No employee, officer, agent or board member with a real or apparent conflict may take part in choosing or managing a contract paid for by the award. 2 CFR 200.320 sets out informal methods for small purchases and formal methods for larger ones. Write down how you chose each supplier and why the price was reasonable.

Records

Under 2 CFR 200.334, keep all records for a federal award for three years from the date you submit the final financial report, or longer if there's litigation, a claim or an audit that started before then.

The Single Audit

Under 2 CFR 200.501, an organization that spends $1,000,000 or more in federal awards in its fiscal year must have a single audit (or, in limited cases, a program-specific audit). Below that, it's exempt from the federal audit requirement for that year, but its records must still be available for review. See audits and reviews.

Is it worth it for a small charity?

Federal grants can be large and multi-year, but they come with real work: registrations to keep current, written policies, careful timekeeping and detailed reports. Before you apply, ask:

• Do we have bookkeeping that can track this grant separately, and someone to do it?
• Can we afford to spend money first and wait to be paid back?
• Do we have written procurement and conflict of interest policies?
• Does this program really fit our mission, or are we chasing money?

If most answers are "not yet," that's fine. Build the systems first, and start smaller.

Subawards: a gentler start

Under 2 CFR 200.1, a subaward is an award from a pass-through entity (an organization that received the federal award) to a subrecipient, to carry out part of the federal project. Many of the same rules apply to subrecipients, and the pass-through entity oversees your work and reporting. A subaward lets you build a track record and your systems with less risk.

Federal grants readiness checklist

• Check that your legal name and address match IRS records
• Register in SAM.gov yourself, for free, and get your UEI
• Set up Grants.gov with an EBiz POC and at least one AOR
• Put SAM.gov renewal dates on the calendar
• Adopt written procurement and conflict of interest procedures
• Set up bookkeeping that can track one grant separately
• Decide whether to use the de minimis indirect rate
• Plan to keep grant records at least three years after the final report
• Consider a subaward before applying directly