Let’s start by defining a passthrough entity.
A passthrough entity (PTE) is a non-federal entity that provides a subaward to a recipient to carry out part of a federal program. If you are a PTE of a federal grant, there are prescribed requirements you must adhere to.
In addition to meeting the funding objectives of the grant, ensuring your grant-funded expenses as a primary recipient are allowable, budgeted, allocable and reasonable, and submitting timely financial, program, and other reports, you are also responsible for your subawardees.
Identifying and selecting subawardees
All subawards must receive federal authorization. The authorization can come in the form of the approval of your application and application budget that “sufficiently described” potential subawardees, a program-specific authorization of specific subawards, or a post-award authorization. PTEs must also conduct risk assessments to ensure subrecipients being selected meet certain governance and other standards.
Whether it’s called a contract, a subrecipient agreement, or simply a subaward, passthrough entities must adhere to specific requirements when creating subawards. In addition to specific information, PTEs may also impose additional requirements in its subawards that will help it meet its own obligation to the federal agency. It’s important to understand that because a subawardee will “carry out a part of a Federal award” with federal funds, the federal requirements flow down to the subawardee.
Some PTEs are not aware that they must also report certain subawards to the federal government following a specific process and within a specific timeline. Note that this is in addition to any request to federal officials for post-award authorization to extend a subaward.
It may also come as a surprise to PTEs that they also must monitor their subawardees to ensure the funds are being used for the authorized purpose and the subawardee’s overall contribution to the project is in compliance with relevant laws, regulations, and award terms. Based on the outcome of any monitoring conducted by the PTE, there may also be post-monitoring activities. One of the ways a PTE can enhance subawardees’ readiness to carry out a subaward is to provide training and technical assistance.
As a fiscal consultant on site monitoring visits, subrecipient monitoring was an area of concern for some grantees. After reviewing grantees’ applications, subaward documents, any available relevant policies and procedures, and other documents, my site visit reports laid out the compliance gaps, cited regulations, and identified areas of improvement. Prior to launching Grants Works, I worked at a large nonprofit and my team and I oversaw subawardee compliance.
If you are a PTE and you need to provide training to your staff or to your subawardees, Grants Works currently provides customized training for its clients. We also provide on demand training through Grants Works Academy. In fact, our popular Federal Grants Management Training Series has been rated 4.5 out of 5 stars by over 340 public health officials in the United States, Puerto Rico, U.S. Virgin Islands, and other territories. We cover passthrough entity requirements in the training series and offer our bonus training—Learn About the Responsibilities of Passthrough Entities.
To find out how Grants Works can help your organization manage federal or other government grants, including federal grants, contact us.