By Lea Strickland
Focus Resources
RESEARCH TRIANGLE, NC – For grant recipients (both first time and experienced) understanding the scope of requirements associated with awards can be time consuming, complex, and confusing.
Many of the requirements associated with grants are embedded in the overall constitutional structure of the federal or state government and the legislative acts that created the specific agencies.
Add to that the agencies that have the ability to impose additional restrictions and requirements on grant recipients through specific grant agreements, and you have a multitude of requirements to identify and meet.
“Free Money” with a Cost
Many times businesses pursue grants as a “free” funding source without fully understanding the implications on the infrastructure and operations of the business, including recordkeeping, regulatory, and accounting system requirements.
The requirements and restrictions placed on organizations from the moment a grant is awarded can be quite extensive.
An organization that does not have (or has not planned for) business processes and systems to aid in compliance with the requirements related to government grants is often faced with a short amount of time to put adequate controls and systems into place.
Each grant agreement generally spells out any “special” terms, restrictions, or requirements that the organization needs to comply with that are unique to the specific award. However, the “usual and customary” requirements may be incorporated through reference to a specific regulation or may be “implied” through the grant application and award process.
Each organization receiving an award (or multiple awards through a single agency or multiple agencies) is responsible for understanding the scope of requirements, restrictions, and regulations they are accepting in return for the grant funding.
By signing a grant agreement, the signatory is accepting and acknowledging the organizations obligation to comply with ALL requirements, whether directly spelled out or incorporated through reference or practice.
For example, some grants may restrict the use of non-US citizens from participation in sensitive defense or homeland security projects. A certifications and representations (“certs and reps”) clause may be incorporated by reference and may restrict principal investigators (PI’s) and technical or support staff from coming from countries that are not allied with the US (e.g., North Korea, Iraq, Iran).
An organization that signs the grant agreement is bound to exclude from participation, access, or any involvement with the project any person(s) that fall into restricted categories. Failure to comply with that clause can result in debarment and/or being required to repay the grant (at a minimum).
To Go for the Grants or Not?
So how do you decide whether to pursue a grant or accept an award? Consider the following steps:
–Review applicable requirements of granting agencies
–Inquire about any possible additional requirements that may be placed upon a specific award (e.g., related to Homeland and National Security)
–Analyze the impact on implementing new systems or making changes to existing systems to comply with government grant compliance specifications:
Accounting
Human Resources
Recordkeeping
Reporting
Data security
Other infrastructure and processes
Grants are meant to aid organizations in covering some development costs related to proof of concept. They are not meant as a sole means of funding technology innovation or development, nor are they meant to fund research for the sake of research. Grants are meant as a means of supporting organizations efforts to identify, develop, and commercialize technology.
Grants can significantly impact:
Intellectual property ownership
Accounting
Human resources
Commercialization efforts
Physical asset ownership
Other systems and processes
Take time to evaluate your existing operations and understand the ramifications and advantages to pursuing grants as a funding source BEFORE you apply for your first grant. If you have already applied, then take time before accepting the award to understand what changes your existing organization will need to implement if you receive the award.
If you have applied for your first grant and have just begun establishing your business, seek out experienced companies and experts to aid you in formulating your business’ infrastructure and system. If you are an experienced grant recipient, you may want to consider having a review of your current processes and system to look for opportunities to improve operations and reduce cost of compliance.
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