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.
Subaward agreements
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.
Subaward reporting
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.
Subrecipient monitoring
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.
In conclusion
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.
Grants Works is a federal grant consulting and training firm based in Atlanta, GA. We are federal grant administrators, grant accountants, and grant writers who have obtained or managed over $300 million in federal grants from 20+ federal agencies as a recipient, subrecipient, and pass-through entity.
We are experienced federal grant specialists who have supported our nonprofit, university, for profit, and local government clients as they find, obtain, manage, and comply with federal and other government grants.
Federal GrantIQ Training Series is a three-module, self-paced training program designed to help grant professionals, accountants and other finance professionals, fundraisers, and consultants understand the fundamentals of federal grants, stay compliant, and protect funding. The program is certified by NASBA, CFRE, and GPCI.
