Episode notes:

• Follow David on LinkedIn

• Learn more about BDO

• Get the details about aid to state and local governments

• Read through the newest version of CFR 200 Uniform Guidance

• Go back in time with Schoolhouse Rock’s “How a Bill Becomes a Law”

• Learn more about different types of government grants

• Check out the CARES Act and the Bipartisan Infrastructure Law (BIL) / Infrastructure Investment and Jobs Act (IIJA)

• See what funding is available at grants.gov

• Learn more about the Council on Federal Financial Assistance (COFFA) 

• Get the details about single audits

• Check out the National Grants Management Association (NGMA)

Transcript:

This transcript was automatically generated.

And it's something that it's been in place for about a decade now. Just, recently, the beginning of this month, October first, they, released an update that that went into effect October first.

But prior to, you know, the past decade, they had what the office of management budget used to call their circulars, and they were, you know, distinct focused on different industries or types of recipient organizations, and you had to check across numerous different documents and web links, right, to understand all of the rules. So, in twenty thirteen, the office of management budget worked in coordination with really the whole, you know, federal, agency infrastructure to consolidate all of that into just this one playbook that everyone was gonna follow. It applies across the board. And now it's your single stop shop to go and look at, okay, what are the rules? And both again, you know, it's divided into five subparts.

Subpart a is your general definitions and how to read this document. Subpart b is really focused on the the agencies themselves. Subpart c gives guidance both to agencies and recipient organizations really around, you know, the the, competitive process and the pre award activities.

And then some parts d and e are really focused on those organizations receiving the grants and what the expectations you need to have in terms of your processes and controls to manage that funding and the allowability of costs that you can charge back to the government for reimbursement.

And and it's to me, it's kind of a double edged sword. And and what I mean by that, David, is that on the one hand, there are a lot of rules and regulations and and compliance factors that are all part of two CFR two hundred. And so whether you're making a grant, whether you're seeking a grant, you really have to to dig into this guidance to make sure that you're following all the rules of the road. And it can be very, very complex, and a really arduous process to become an expert in all of these rules and regulations.

The other side of the double edged sword is that it removes a lot of ambiguity out there. And so if you're if you're a grant seeker, you have a clear path to understand what I have to do throughout the application process and throughout my grant execution process and throughout the closeout process. Right?

Yeah. It's certainly I mean, from from the government federal government's perspective, they're trying to provide as much transparency as they can for, you know, what their process looks like, the expectations they place on themselves and their agencies, but also for, you know, all recipients of these funds.

Because of that, you know, this applies to the smallest community based organizations who may be their first foray ever into federal financial assistance, and they, you know, have a very small award to, right, colleges, universities who may be spending over a billion dollars in research grants and, you know, do this day in and day out. And because of that, they have to make it both specific enough to tell you what the rules are, but, ambiguous enough to allow you to figure out how you're actually going to follow those rules within your own organization.

So it does take kind of a lot of understanding and nuance and time just to understand how is this gonna fit for me. But at the same time, unfortunately, right, those nearly all of those rules come into play with that first dollar you're spending. So there isn't a, you know, graduated scale or, you know, kind of a a way to ease yourself into it for most of those rules. And so it can become pretty complex and daunting, in many ways for, you know, organizations newer to the world.

Yeah. And so is that something that that BDO can help nonprofits or or, you know, like, public universities with in terms of, you know, if they're seeking grants or they've received a grant, like, you know, but we're not really sure exactly what we have to do to to follow all of the compliance rules. Like, can BDO assist with that?

Absolutely. Yeah. We're we're working with organizations. You know, many of our clients are those organizations who are are new to government grants or, you know, maybe they've had grants, but the risk profile has changed.

You know, they're starting to approach that threshold where now they're required to have the annual single audit, and someone's actually actually gonna be poking and prodding a little bit more at what they're doing than they had in the past.

And so while, you know, maybe I was okay thinking I can skate by previously, I'm now not so sure and and don't wanna jeopardize, what my organization may be doing or or future funding potential. So a lot of the work we do is is helping organizations kind of assess, their compliance readiness, looking at, you know, the policies and processes they have in place today and helping them come up with a road map and then execute against that to, you know, really put the necessary foundation and framework in place.

Either in addition to or in combination with that, we do a lot of training as well, both through, you know, working with organizations like Submittable to be able to have webinars out there, or, you know, through, focused kind of training programs for a specific organization that wants to bring us in and, you know, making sure their staff are up to speed and understand what the rules are, how we comply with those rules for our organization, and what the risks may be if we don't.

Alright. So we we won't get through the, like, hundreds of pages of rules of, uniform guidance on this podcast. But, earlier this month, there was a fairly significant update to those rules.

Can you walk us through what some of the key changes or enhancements to two CFR two hundred are?

Yeah. So the the Office of Management and Budget, which, you know, owns two CFR two hundred, was has really put a focus on trying to add enhanced consistency and just readability of the the guidance as well as continue to eliminate some of the the burdens or obstacles that grant recipients may face and feel. So they've made changes throughout the document and even to to certain parts of two CFR that are not considered the uniform guidance, but really trying to add some, you know, just greater visibility to what the expectations are. So they've made changes, instructions towards, an agency an agency publishes, here's money we have available for you to receive, they want it to be consistent agency to agency so that I, as a grant recipient, can know, okay.

If I'm looking at this funding opportunity notice, I can see here's where I would expect to see the description of who's eligible for it. Here's where I could see expect to see the description of what's the intent of the impact for this program. Here's where I can look to see how would I be evaluated if I want to submit. So just to get that consistency.

Later on, they've made changes to try to enhance, you know, again, remove some of the burden for recipients. So they've increased certain thresholds. So probably the biggest change that the industry is excited about is the de minimis indirect cost rate is being increased from ten percent to fifteen percent. So organizations who don't have a negotiated indirect cost rate can now claim up to fifteen percent, without any substantiation or negotiation, which doesn't sound necessarily that big or drastic, but really is a pretty big shift, from the government's perspective in terms of just what that means for real cost recovery for these organizations and reflecting and respecting that it takes a lot of administrative effort to run a grant program in an organization. They've made some similar changes. Right? The equipment threshold increased from five thousand to ten thousand dollars.

nd certain types of programs will do advance funding. But by and large, the the most common is, right, yes, you have to incur the expense yourself, and then you tell the government what those expenses were. That allows them to review and, you know, give a little bit more oversight onto the eligibility of those costs, and then they will reimburse you or refund you for the the outlay that you've made.

Yeah. So going back to that concept of equity then, like, it feels that if you are a smaller organization or you don't have the bank account to spend the money in advance and and request that reimbursement, it kinda feels a little inequitable in in that the process may be skewed more towards very large nonprofits or, you know, universities or other agencies that have the the cash in the bank to be able to to spend the money and then request a reimbursement, you know, compared to a grant from a private foundation or a corporate foundation where they essentially just give you all of the cash, you know, in one lump sum. Like, does that does that conversation around equity for smaller nonprofits come up very much in this space?

It's certainly a factor. And and as I mentioned, I mean, the government has mechanisms that can allow them to do more of that, you know, funding advance structure.

When if you're receiving an advance from the government, they still prefer it to be very time delimited. And so that right? If we're advancing you the funds, you should be getting them out the door very quickly and, you know, kind of a four to five day turnaround. So they don't want you to just be holding, you know, what is the government's money and, you know, collecting interest or whatever else you may be using it for.

But it does create challenges at times and, you know, it can be a a barrier to entry, if you will, for some of those smaller organizations, right, who don't have the backing. They may not have other sources of unrestricted funds or whatever other funding they may need to operate.

In addition to, right, as as we talked about before, a lot of times the compliance expectations and the the process and control needs are at a higher level to spend those government dollars. And so there's oftentimes, you know, a bit of an investment. Sometimes it's just time, but, you know, it's it's could be time, dollars, or and and other resources to be able to say, yes. I'm capable of spending government dollars. Please give unto me.

A lot of grant dollars on the government side are flowing to nonprofits for these altruistic, expectations. Like, you know, we're working towards achieving some some great thing that will make society better. So if I'm the state of Arkansas and I am reviewing grant applications, like, on the one hand, my my perspective is that I'm paying a lot of attention to all these uniform guidance rules, and I'm making sure that the nonprofit organization, you know, has ticked all the boxes that they're eligible, that they're capable of spending the money, capable of achieving whatever it is they say they're going to do. But beyond making sure that they're following all the rules, like, what am I thinking about if I'm the state of Arkansas and I wanna award a grant to a nonprofit organization?

Like, what's my decision process? Or what am I thinking about in terms of selecting one organization over another organization for those grant dollars?

Yeah. And it's it's a great question, and I I won't claim to have the silver bullet answer because it's gonna vary a little bit. But I think, you know, the the key point you hit on is, right, all of these things we're talking about, the the government calls them. Right?

They're financial assistance. They're not an acquisition. Right? An acquisition, I'm buying something for me just for me to use.

The the idea of this assistance is it's for the public good. It's for the public benefit. And so all of these programs should have a reason why we're developing them. And so I think for organizations, you know, that are looking at how do I make myself the most competitive or how do I best position myself to do that, It is making sure that you're not just telling them, hey.

I have, you know, the best accountant in the world who's gonna make sure I never have a single unallowable expense, but it's how am I using the dollars to make that impact and align with what's the goal of this program, or what are we trying to do? And, you know, the the government, be it the federal government or state and even, you know, local municipalities understand there are gonna be organizations better suited to serve a certain population, whether that's because of the geography or the type of work they do. And And so it's really telling that story, right, and taking the chance to show off a bit of, you know, flare and uniqueness for why am I the organization you would wanna pick and how, you know, what I do and the mission and impact that I'm making aligns with the impact you're hoping these funds will make.

So tell me a little bit about, like okay. So I'm a nonprofit organization. I received my grant from the state of Arkansas.

What are the expectations in terms of me reporting back to the state of Arkansas on, like, how I'm achieving the impact that I said I was going to achieve? So, clearly, I'm gonna be expected to provide a lot of financial related data back on, like, what I'm doing with the money. But what about, like, the actual impact that I'm achieving, like, with the money that the state of Arkansas gave me? Are there requirements and uniform guidance around, like, how I report back that actual impact that my organization is making in in my community?

Yeah. From a from a uniform guidance perspective, there's not beyond saying you have to comply with sponsor requests for information.

But usually, it's gonna be detailed in your grant award or for, you know, the specific agency or or government entity that you're receiving the funds for. They'll tell you, right, what does this look like in terms of both the timing and frequency of how often we want these reports and what information do we want you to tell us. The the federal government has shifted more towards, you know, this idea of transparency, not just in terms of where the dollars have flown and creating things like USA spending dot gov and other websites to show the the flow of funding, but also to get this impact reporting and monitoring and metrics of, well, how are we using the dollars? Where are they going towards? And kind of what are we able to do with it? But, unfortunately, there's not just a single answer of, yeah, you know, two CFR two hundred dot whatever section is gonna tell you exactly because it is gonna be unique to your your specific award.

Yeah. Alright. Well, that's my vote then on how we update uniform guidance for the next big go around is let's focus on defining some consistent ways of reporting impact on the work that that the nonprofit organizations are doing. I mean, god knows in the nonprofit sector, like, private philanthropy has not gotten this right for decades and decades, and every foundation, for the most part, still requires different ways of reporting, different KPIs, different metrics.

And and it's really extremely challenging to see if philanthropy is changing a system or changing the big picture. Like, what kind of impact, you know, ten organizations all working on the same focus area are actually achieving. So maybe it is. May may you know, maybe the government will come in and help fix fix this for everyone.

Yeah. And it's, it's it's interesting you say that because, you know, the the federal rule making process, again, to get on my Schoolhouse Rock, soap stand a little bit more again. You know, there's a process for, you know, OMB couldn't just say, hey. September fifteenth, we're gonna tell you that as of October first, something is new. Right? This process started months and months ago with, the first, you know, proposed rulemaking coming out, in I think it was October of twenty twenty three, that, you know, announced here all the things we've already spent time thinking about and what we plan to change and open it up for public comment for then, you know, them to get to the final rulemaking.

Part of that proposed rulemaking was, you know, not just consistency in financial reporting, which OMB has been able to say, you know, you can only ask for financial reporting information using a set of predefined o m you know, by OMB data elements.

But they actually were trying to get technical and programmatic reporting to also, you know, be required to follow only a certain set of standards.

That language actually came out in the final rulemaking that got published in April because so many of the agencies and programs, you know, raised raised their hands and said, hey. We can't say everyone is gonna wanna collect the same type of programmatic data all across the entire federal government infrastructure. Right? We have different types of things and what, you know, I, as potentially the EPA, cares about, is gonna be very different than what someone in department of education or department of justice wants to know. And we can't get to that single point of truth of, like, really what is that metric. So it's on their radar for sure. It's something where I expect maybe they'll continue to be conversation to try to move towards more of an alignment.

But it's just, I thought it was interesting that it is something, you know, initially, they tried to do and and had to kind of come off the table at least for this round of edits. Yeah.

And you have to give credit where credit is due. Like, the government typically does a pretty great job of collecting data, making it publicly available for insights and other types of reporting.

There are so many different data standards out there across the philanthropic landscape and across the nonprofit sector that it would be super helpful to have, you know, whether it's the government or some sort of agency come in and provide some guidance on, you know, ways of reporting consistently, up to a a common focus area, whether that's the SDRs or something. I don't know. But, yeah. Anyway, alright. Last question for you, David. So if I'm a nonprofit organization, I have never sought a government grant before. Like, what simple advice can you give me for getting started?

Call BDO. No. Not. See. Right? I think it is there there's a number of resources out there.

I mean, the starting with the federal government as the the sponsor. I mean, they obviously have a vested interest in you being able to spend these dollars correctly. So, you know, even starting at grants dot gov, not only does it have a listing of all the programs and funding that's available, has a great help site with, you know, a number of different trainings and, you know, webinars and other, information that you can look through to understand what does this mean. Right?

It's also particularly in the nonprofit space, one of the things I love working with nonprofit clients is they are very open to share. Right? They want to help other organizations achieve their mission as well. So, right, find friends or peers, you know, current or aspirational that are doing similar things to you and and have conversations.

And then lastly, I think it is, you mentioned NGMA.

You know, NGMA or or other industry associations have lots of information out there. Right? There's routinely, you know, publications, webinars, and other things where if this is something you're really going to go after, and you want to commit to and for many nonprofit organizations, right, this is one of the the most fruitful spaces to find revenue opportunities.

Spend the time to make sure you understand what you're getting yourself into because this, unfortunately, is not just something where you can be a a fly by night. I'm gonna collect some of these dollars and not have to do a lot of, of, like, work to do it.

Alright. David Clark from, BDO. This has been a riveting conversation around government grant making, and, typically, those two things don't go together. But you've done a fantastic job of making this, super interesting. And, I'm positive that many, many, of our nonprofit listeners are going to be, excited about diving into uniform guidance and figuring out how to get some of those, government dollars for their own programs. Thank you so much for joining me on Impact Audio today.

Absolutely, Sam. Appreciate you having me on.

It's always a bit humbling to hear how change happens in the public sector and how incremental it is. But I'm excited to see governments prioritizing transparency and clarity, and I'm glad to see those priorities reflected in the new uniform guidance.

Also, I feel lucky to know that there are people like David out there who revel in the complexity and can help the rest of us keep up. Thanks for tuning in to Impact Audio, produced by your friends at Submittable.

Until next time.