Cost allocation can quickly become complicated. Organizations must determine which programs benefit from shared costs, select reasonable methods for distributing those costs, maintain documentation supporting those decisions, and revisit their methodologies as operations change.

In our webinar with NGMA, Cost Allocation in Practice: Building Defensible, Compliant, and Practical Approaches, we discussed how organizations can move beyond simply performing an allocation calculation and develop an approach that is reasonable, consistent, and supportable. In practice, the strongest methodologies are also documented and consistency applied.

Below are three key takeaways from the presentation.

1. Start With Who Benefits

One of the foundational principles of cost allocation is the “relative benefits received” standard in 2 CFR 200.405. When a cost benefits multiple programs or activities, the starting question should be simple: Who benefited from the cost?

From there, organizations need a reasonable way to measure that benefit. Just as important, they need to identify all activities that benefited, not only the programs or awards with available funding. 2 CFR 200.405 requires all benefiting activities, including unallowable activities, to receive an appropriate allocation of indirect costs.

Funding availability is not an allocation methodology.

There is no single allocation driver that works for every type of cost. Square footage may make sense for facilities costs, while full-time equivalents may be appropriate for certain human resources costs. Other shared costs may be allocated based on labor hours, transaction volume, clients served, system users or another measurable factor.

The key is the relationship between the cost and the allocation basis. An allocation driver should not be selected simply because the data is easy to obtain or because one program has available funding. Organizations should be able to explain why the selected methodology reasonably reflects the benefit received and why all appropriate beneficiaries were included in the calculation.

Reasonable also does not mean unnecessarily complicated. A highly sophisticated methodology provides little value if the organization cannot reliably obtain the data needed to apply it or if staff cannot consistently perform the calculation.

2. A Reasonable Allocation Still Needs to Be Defensible

A methodology can make perfect sense and still be difficult to defend if the organization cannot demonstrate how it was applied.

For each allocation, organizations should be able to answer four questions:

• What cost is being allocated?
• Who benefited?
• Why was this allocation basis selected?
• What documentation supports the calculation?

Consider a methodology that states, “Shared administrative costs will be allocated fairly among benefiting programs.” The intent sounds reasonable, but the methodology leaves significant room for interpretation. What does “fairly” mean? Which programs are included? What allocation driver should staff use? Where does the underlying data come from?

A documented methodology should provide enough direction that it can be applied consistently. Supporting records may include general ledger reports, payroll or timekeeping records, invoices, transaction reports, facility information, program activity data, calculations, and approvals. Documentation should support not only the calculation itself, but also the reliability of the source data used to drive the allocation.

Consistency also applies to classification. Under 2 CFR 200.403, costs incurred for the same purpose in like circumstances should not be treated as direct costs in one instance and indirect costs in another without a supportable difference in circumstances. If treatment differs, the organization should be able to explain and document why. A useful test is this: Could someone who did not prepare the allocation review the file a year later and understand what was done, why it was done, and recreate the calculation?

If the answer is no, the organization may have a documentation problem even if the original calculation was reasonable.

3. Cost Allocation Is Not “Set It and Forget It”

A methodology that was reasonable when it was developed may not remain reasonable forever.

Organizations change. Programs begin and end. Staffing levels shift. Offices move. Technology changes. Services may be centralized or decentralized. Each of these changes can affect who benefits from shared costs and whether an existing allocation driver continues to reflect that benefit.

Organizations should establish a regular process for reviewing their methodologies, but the calendar should not be the only trigger. Significant changes in operations, programs, staffing, facilities, systems, or funding should prompt organizations to ask whether the existing approach still makes sense.

Training and technology can help make that process sustainable. Staff need to understand both the fundamentals of cost allocation and how those principles are applied within their organization. Technology can reduce manual data entry, automate recurring calculations, identify missing information or unusual changes, and create a more consistent review process. But automation does not replace judgment or internal controls: organizations still need to validate source data, review allocation rules, investigate unusual results, and retain evidence of review and approval.

The goal is not to build the most sophisticated cost allocation process possible. The goal is to build one the organization can apply consistently, support with reliable information, and maintain as circumstances change.

Final Thought

Cost allocation will often involve judgment, but that judgment must operate within the federal cost principles. Organizations are required to be able to support the costs charged to federal awards, including demonstrating that costs are allocable, consistently treated, and adequately documented.

That means being able to connect the dots from the shared cost to the programs or activities that benefited, to the allocation method selected, and ultimately to the amounts charged.

A good exercise is to take one shared cost and follow it from beginning to end. Can you identify who benefited? Can you explain why the allocation driver was selected? Can you trace the calculation back to reliable source data? Could someone else recreate the allocation from the documentation? And would the methodology still make sense if funding availability were removed from the decision?

If the answer to any of those questions is no, that is an area of the cost allocation process that may need additional attention.

Missed the live presentation? This and all other on-demand webinars are available in Grants Management Academy, NGMA’s education portal. (Member login required)

Strong grantor-grantee partnerships that are optimally effective require that both parties bring their full attention to the relationship. You may ask, “What does this look like in real life?”  A mutually beneficial funding relationship includes each party invested in:

• Understanding the goals and challenges of the other party and adding value around them
• Having hard conversations when necessary
• Honoring/valuing each party’s unique role in the partnership

Let’s get even more practical! Below are a few ideas for partnership-strengthening interactions between grantors and grantees, best done in smaller groups, such as a group including the primary programmatic and fiscal contacts for the grantor and grantee for a particular award: 

1. Both parties develop Top Five lists to better understand each organization and their key considerations. Any relationship requires shared understanding, and this is a great way to build toward that. Grantor and grantee should share the following with each other:

• • • Top five organizational goals
    • Top five goals related to a particular grant project
    • Top five concerns about a particular grant project

Top Three lists can work, too, but I think five goes more below the surface.

2. Both parties consider and bring the following to a future meeting: What are things we need to discuss that we haven’t yet discussed? Consider barriers to success, concerns, compliance challenges, progress toward outcomes, and needed support, and even unmet expectations. Don’t let not knowing the most impactful and clear way to say something keep you from having an important conversation.
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3. Both parties share the “hats” they wear, or would like to wear, in the funding relationship and in their work around the grant in general. Examples of “hats” one might wear include co-strategizer, monitor, planner, project manager, overseer, organizer, listener, professional juggler, etc. Once you share these, both groups can discuss and consider ways they can add value and support in the roles played by the other party.

Are you involved in any similar conversations in funding relationships you are in?  If so, great! But if not, I encourage you to think about steps to foster better communication in your funding relationships. In my NGMA webinar presentation, Risk Assessment as a Strategic Grant Partnership Tool, I discussed how risk assessment, a key activity in the grantmaking process, can serve as a launching point for activities that build more collaborative and successful grant relationships.

Risk assessment in the grants environment is a systematic process to identify, analyze and evaluate factors that may affect the successful achievement of a grant’s objectives including programmatic objectives and compliance requirements. When used appropriately, risk assessment helps a partnership between a grantor and grantee to flourish.

I’ll underscore that the funder must intentionally engage toward collaboration, setting a standard and expectation for this type of relationship, for it to work best.

Examples of what collaboration looks like, from a funder’s perspective:

Pre-Award Funder Actions:

• Set a high standard in risk assessment. It shows the grantee what is important to you and that you care about grantee/project success.

High standards + high funder touch works well. High standards + low funder engagement creates challenges.

High scrutiny by the funder in the pre-award environment may be a different approach than what some applicants are used to, but it underscores your commitment to collaboration, support and grantee success.

• Use risk assessment for teaching moments. Pinpointing areas to address in risk assessment though discussions, answering questions, and feedback to applicants/grantees are instrumental to a successful program.
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• Learn grantee training and technical assistance needs and customize a grantee/portfolio approach using what you learn.
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• Avoid and/or mitigate the risk of problems. When risk assessment leads you to require more, or to require certain things in pre-award, explain this and provide the grantee a path to fewer conditions on the award or less scrutiny in your oversight.
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• Be open to alternative approaches suggested by the applicant that will still meet your needs as the funder when considering required pre-award conditions or specific conditions on awards.

Post-Award Funder Actions:

Remaining vigilant regarding performance and compliance matters leads to:

• Strong performance and results
• Clear communication
• New award conditions to protect the success of the relationship
• Productive engagement with the grantee
• Responsive training/technical assistance
• Catching problems early

When addressed collaboratively, all of these things strengthen the funder-grantee partnership

In closing, consider the following:

Grantors: Set the example for strong partnership, which helps grantees know you operate collaboratively.

Grantees: Respond to your funder’s efforts to make the relationship more effective. If they are not leaning toward a collaborative effort, I encourage you to lead an intentional conversation sharing your wishes to work in a more collaborative way.

Grantors and Grantees: Consider how you can approach risk assessment and the award in general with a mind toward strong partnerships, intentionally fostering collaboration toward success! List practical steps and ideas you can implement to push the relationship in this direction. You’ll be glad you did!

Missed the live presentation? This and all other on-demand webinars are available in Grants Management Academy, NGMA’s education portal. (Member login required)

I recently spoke to NGMA members about a subject near and dear to my battle-scarred heart: Getting grants people and finance people to speak the same language across their respective hallways and tasks. I’ve spent 30 years and raised $400+ million while living between these two departments, and I can tell you with confidence, I am not an expert. I am, however, a survivor with tales to tell.

If you missed my presentation, below are five takeaways worth carrying with you long after the webinar recording expires.

1. Somewhere in your building, a bilingual champion is hiding in plain sight.

Every organization has at least one person who speaks both grants and finance relatively well. Or, at a minimum, there’s a beautiful soul who is brave enough to admit they don’t know everything and regularly seeks help. Find that person. Recruit that person. Train up that person. Buy that person coffee.

I became my organization’s accidental translator (or “grants-lator”) purely because I had a business degree, a love of writing, and what I can only describe as a permanent “more work for me” face. You don’t need a title change to become the bridge. You just need to be willing to walk across it.

2. Triage your communication gaffes like they’re actual emergencies, because they are emergencies.

Lost paperwork. Mystery purchase orders. Veteran staff who treat their budget like a mystery novel that they are in no hurry to finish. None of this is new, and none of it fixes itself with a strongly worded, overly long email. The fix starts with a simple question: Is this a quick correction, or does it need an actual organizational investment? Naming the difference out loud is half the battle. Yes, we can pretend the monthly 3 p.m. Friday reporting crisis is a personality quirk of the grants office. It isn’t. It’s a recurring process problem both sides can fix together.

3. Outstanding customer service goes in both directions.

Here’s my favorite personal confession: I can talk circles around 2 CFR 200, yet I still butcher a purchase order. Why? Because no one ever lets me buy anything! I never get to practice.

If you’re the finance person rolling your eyes at a grant person’s paperwork, ask yourself whether you’ve shown them how it’s supposed to look or whether you’ve just been quietly grading them on a test they didn’t know they were taking. Cross the hall. Put on your customer service hat. Teach and support in kind and discreet ways, or in small groups where employees may be more comfortable. Create a buddy system where colleagues support each other. Practice does make perfect.

Gladly accept and answer questions. Period. Someone’s seeking your help. Cherish the trust they have in you.

4. Force the conversation; literally schedule it.

Email is not communication. If your organization’s entire cross-departmental relationship exists in a Slack or Asana thread that nobody reads, you don’t have a communication strategy, you have a paper trail. Small group meetings, one-on-ones, staff meetings with a “grants management minutes” segment, and new forms rolled out at Taco Tuesday (you bring the tacos) all work because they force actual humans to talk instead of firing off strongly worded, reply-all messages.

5. Use humor, because no one crosses the bridge for stuffy people.

Finance has a reputation for being buttoned up, and grants folks have a reputation of being anxious paperwork gremlins. Somehow both reputations are both fair and exhausting. A little humor goes a long way toward making people feel safe enough to ask the “dumb” question before it becomes an expensive mistake. Smile. Laugh. Tell the story about the beach ball. Donuts work, too.

None of these strategies require a system overhaul, a new org chart, or a task force with a catchy acronym. They require people willing to admit there’s a problem and do something slightly uncomfortable about it, like walk down the hall or jump on a three-minute call instead of hitting send. The Office of Management and Budget (OMB) agrees: Information and communication are core components of internal control, not an afterthought, and not an accident.

But honestly, you didn’t need a federal circular to tell you that the silent treatment between grants and finance was going to cost somebody money eventually. You’ve probably already experienced it. The question is, what are you going to do about it? We all have some bridge building left to do.

Missed the live presentation? This and all other recorded webinars are available in Grants Management Academy, NGMA’s education portal. (Member login required)

The Office of Management and Budget’s (OMB) proposed revisions to the Uniform Guidance (2 CFR Part 200), published in the Federal Register on May 29, represent one of the most significant overhauls of federal grants management in years. With a compressed 45-day comment window (closing July 13, 2026) and a target effective date of October 1, 2026, these changes could reshape how federal awards are structured, awarded, and managed beginning in Federal Fiscal Year 2027.

The proposed revisions to the Uniform Guidance signal a fundamental shift in how 2 CFR Part 200 is positioned and enforced across the federal government. Most notably, OMB is moving away from framing the Uniform Guidance as “guidance” and instead solidifying it as the Uniform Grants Regulations using the current formal rulemaking process. For recipients, this means compliance expectations will become more standardized and less flexible, as the rule is elevated to a single, government-wide regulatory framework for all new awards beginning in FY 2027. However, legal challenges to this seem likely.

At the same time, the proposal significantly expands oversight throughout the entire grant lifecycle, introducing greater scrutiny both before and after awards are made. On the front end, enhanced merit review processes and expanded risk assessments will evaluate not just technical merit, but also organizational integrity, affiliations, and alignment with federal priorities. On the back end, recipients will face tighter controls over subrecipient monitoring, cash management, and documentation, along with new requirements such as E-Verify participation and more detailed payment justifications. Perhaps most notably, agencies are granted broad discretionary authority to terminate discretionary awards if they no longer align with program goals or evolving priorities, with limited avenues for appeal.

Finally, the revisions more explicitly tie the use of federal funds to defined policy priorities and restrictions, expanding the scope of what constitutes compliant program activity. New provisions address areas such as foreign collaborations, use of funds in connection with administrative priorities, free speech considerations, and broader statutory policy requirements, while also adjusting procurement standards and cost principles. These changes require recipients to think beyond financial stewardship and consider whether program design, partnerships, and operations align with federally established policy boundaries.

With more than 37,000 comments submitted as of late June 2026 and growing fast, along with the potential for litigation, the final rule may evolve and most likely be delayed. Until OMB issues a final rule sometime in late summer, these proposed changes remain tentative. However, recipients and subrecipients should stay informed and be prepared to make changes once an updated Uniform Guidance is issued.

Missed NGMA’s live webinar on the proposed updates on June 17, 2026? Visit Grants Management Academy to view the recording.

Members: Access to this and all other NGMA courses is included in your membership! Log in now

Non-Members: Log in/create an account and choose one of two purchase options: 

• Option 1: $49 | Recording only
• Option 2: $174 | Recording + one-year access to all courses in Grants Management Academy

Subrecipient partnerships are essential to advancing research and delivering impactful programs, but they also introduce risk. As emphasized in NGMA’s May 2026 webinar, You’re Still on the Hook: The Real Costs of Weak Subaward Oversight, federal oversight expectations are clear: While recipients may delegate work, they cannot delegate responsibility.

Drawing on federal regulations, audit findings, and real-world examples of why oversight falls short, the presentation provided practical strategies for organizations to help protect their funding, reputation, and program success.

Three takeaways from the presentation:

1. Accountability Always Stays with the Prime Recipient

The most important concept in subrecipient management is also the simplest: Ultimate accountability remains with the prime recipient.

Even when a subrecipient is responsible for carrying out a portion of the award, the prime recipient retains full responsibility for all financial and programmatic outcomes. When compliance issues arise—whether due to unsupported costs, mismanagement, or failure to meet program goals—it is the prime recipient that must respond, resolve the issue, and potentially repay disallowed costs.

This dynamic fundamentally shapes how oversight should be approached. Subrecipient monitoring is not simply a compliance exercise. It is a risk management function designed to protect the institution, its funding, and its reputation.

2. Weak Oversight Has Real Financial and Programmatic Consequences

Subrecipient oversight failures are not theoretical; they are consistently identified in audit findings across federal programs. Recent audit reports issued by federal oversight bodies highlight common breakdowns, including failure to conduct risk assessments, inadequate review of subrecipient audit reports, and insufficient monitoring practices, and included findings with:

• Unallowable and unsupported costs resulting in substantial questioned costs
• Inaccurate classification of subawards versus contracts, leading to missed compliance requirements
• Inadequate monitoring that undermines program performance and accountability

Weak oversight can also result in missed program goals, reduced transparency, and increased scrutiny from funding agencies—ultimately putting future funding at risk.

3. Effective Oversight Requires a Proactive, Risk-Based Approach

Strong subrecipient oversight does not happen by accident. It requires intentional, documented, and risk-based processes across the lifecycle of the subaward.

Effective practices begin before the subaward is issued, with meaningful due diligence that evaluates a subrecipient’s financial systems, internal controls, and past audit results. Importantly, this process should go beyond collecting information to verifying that key controls actually exist and function as expected.

Once a subaward is established, oversight should include:

• Tailored terms and reporting requirements aligned to identified risk
• Ongoing monitoring of financial and programmatic performance
• Regular review of audit results and follow-up on any findings
• Clear documentation of monitoring activities and corrective actions

Critically, effective oversight is not one-size-fits-all. Federal guidance emphasizes the importance of adjusting monitoring activities based on the level of risk presented by each subrecipient. High-risk subrecipients require more intensive oversight, while lower-risk partners may warrant a lighter approach—but in all cases, monitoring must be purposeful and documented.

Final Thought

Subrecipient partnerships are critical to delivering federal programs, but they require thoughtful oversight to manage the risks they introduce. By understanding the accountability framework, recognizing the real consequences of weak oversight, and implementing proactive, risk-based practices, organizations can better safeguard federal funds and strengthen program outcomes.

At the end of the day, regardless of how experienced your partners may be or how strong your relationships are, one principle remains constant: You’re still on the hook.

Missed the live presentation? This and all other recorded webinars are available in Grants Management Academy, NGMA’s education portal. (Member login required)

As the American Rescue Plan Act (ARPA) State and Local Fiscal Recovery Funds (SLFRF) program moves into closeout phase, it’s clear that closeout success is determined long before the final report is submitted.

NGMA and Hagerty Consulting partnered on a webinar presentation to help ensure a successful SLFRF closeout. Below are key takeaways from the presentation for recipients and subrecipients navigating the SLFRF closing stages. While this information focuses on SLFRF, the principles shared are broadly applicable for federal grant closeout.

1. Spending the Money is Not the Finish Line

Awareness of the expenditure deadline (and the specific instances of variation from that deadline) is essential but is only the starting point of compliance, not the end. Treasury’s closeout process confirms that funds are spent and reported, but audits, data reviews and follow-up inquiries continue long after a closeout certification is submitted. SLFRF closeout triggers a five-year record retention period, during which Treasury, the Government Accountability Office (GAO), or the Treasury Inspector General may request records. Organizations that “finish strong” are those that can clearly track where every dollar went, reconcile reported data back to their general ledger, and explain why each cost was eligible. In short, reporting done does not mean compliance done.

2. Audit Readiness Comes Down to Systems, Not Intentions

Let’s highlight a “48-hour test,” which is: If an auditor requested complete SLFRF documentation with two days’ notice after the person who organized it was no longer with the organization, could your organization deliver it? Many audit findings are not caused by bad actors or misuse of funds, but by fragmented documentation, informal practices or controls that existed on paper but not in daily operations. Audit-ready organizations have standardized documentation systems, clear ownership of compliance responsibilities and controls that operate in real time rather than at closeout. Additionally, if justification, approvals and reconciliations live only in email threads or people’s heads, the file is not audit‑ready, regardless of how confidently staff remember the decisions.

3. The Real Outcome of Closeout is Institutional Capacity

SLFRF closeout is not just about SLFRF. The controls, governance, reconciliation practices, and documentation systems required to close this award cleanly are the same ones that auditors will expect on every future federal grant. Organizations that treat closeout as a one‑time cleanup exercise miss the opportunity to convert years of effort into durable grants management capacity and often repeat the same findings later under a new program.

Bottom line? Finishing strong requires planning ahead. Organizations that actively manage time risk, build documentation for external review, and treat closeout as capacity‑building, will exit SLFRF not just compliant, but stronger than when they entered.

Missed the webinar? This and all other recorded webinars are available in Grants Management Academy, NGMA’s education portal. (Member login required)

Nicole Ward and Benjamin Shay are senior managing associates with Hagerty Consulting, a firm that partners with clients to safeguard their people, operations and communities before, during, and after disasters.

The U.S. Government Accountability Office (GAO) has estimated that, for fiscal years 2018 through 2022, the U.S. government’s total direct annual financial losses will range from $233 billion to $521 billion. ^[1] This staggering amount encompasses various types of fraud, including grants.

Primary Stage of Fraud Occurrence

The majority of fraudulent activities transpire after the award is granted, specifically during the active award phase (also known as post-award), when the award has been conferred, work is in progress, and financial transactions are ongoing. Granting agencies utilize a range of procedures and tools to identify fraud during this post-award period; however, these measures are predominantly reactive rather than proactive.

Lack of Structured Fraud Data Compilation

Given the wide variety of grant fraud, agencies may encounter different types of fraud across grant programs. Some of the common categories of fraud encountered are:

• Program fraud
• Procurement fraud
• Misallocation of funds
• Nepotism

Diverse, disconnected, unstructured data on fraud originating from multiple sources and in incompatible formats is lost without a standardized storage and reporting framework. The type and nature of the fraud, along with other associated details, aren’t captured in a format that can be used to perform future checks against grantees.

Closeout Evaluation: Data with a Strong Purpose

Closeout evaluation isn’t merely a report or a formality to be completed. It is a powerful tool that captures comprehensive feedback on the grant. When used as intended within the specified timelines, it serves as a one-stop shop for highlighting the grantee’s operational, financial, and behavioral performance on the grant, which ultimately helps prevent future grant fraud. By capturing potential red flags in a structured format across these categories, the evaluation clearly documents deviations from standard grant management procedures. The recommendations below are not exhaustive, but are intended to guide practical, detailed action for documenting abuse, fraud, or waste concerns in a structured, consolidated format.

• Financial Indicators:
  • Spending arrangement (especially at award end)
  • Reallocation of funds without conforming to procedures
  • Frequent budget revisions
• Operational Indicators:
  • Poor and/or missing documentation, patterns indicating false deliverables
    • These two forms of fraud illustrate tactics used to obtain willful gains
  • Deviations in reporting requirements and monitoring results
  • Unverifiable/false reporting on outcomes
    • In the case of “Feeding Our Future,” multiple entities were created to open Federal Child Nutrition Program sites throughout Minnesota, falsely claiming to serve thousands of children within days or weeks of formation
  • Behavioral Indicators:
    • Repeated late submissions, multiple resubmissions, and corrections of documents
    • Irregular conduct or inconsistencies observed on a consistent basis
    • Unresolved issues or concerns with overall performance

A grant applicant’s past performance can be evaluated either manually or using newer technologies, such as Artificial Intelligence (AI). A standardized format leveraged by AI can perform a quantitative risk analysis. It can generate risk scores for each grantee based on its analysis of the evaluation categories.

To conclude, well-structured, properly completed closeout evaluations not only facilitates the closure process but also serve as vital input for assessing the grantee in future grant applications. Using the grantee’s Unique Entity ID (UEI), agencies can review previous closeout evaluations and generate a summary of past performance and related metrics to evaluate the grantee’s future proposals. This creates a complete cycle in which closeout evaluations inform the risk assessment during the pre-award phase.

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Bharadwaj (B) Raghuram, PMP, CSM, is a program manager at I&I Software Inc. with more than 20 years of experience in the private and public sectors. He currently advises state and local governments, with a focus on program and technology transformations, particularly the modernization of grant initiatives. His current work emphasizes improving grant programs through AI-powered fraud detection and prevention. He may be reached at bharadwajraghuram7@gmail.com
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[1] Fraud Risk Management: 2018-2022 Data Show Federal Government Loses an Estimated $233 Billion to $521 Billion Annually to Fraud, Based on Various Risk Environments – GAO-24-105833 – Published: Apr 16, 2024. Publicly Released: Apr 16, 2024, 2.

Joey DeSantis and William Treanor of EY were a part of NGMA’s monthly webinar series. In their presentation, How to Get Sub-Awardees to Understand and Follow the Rules: A Lifecycle Approach to Uniform Guidance Compliance, they offered practical strategies for ensuring sub-awardees understand and comply with federal, state and organizational regulations. This article summarizes key takeaways from their presentation.

Access the recording through Grants Management Academy, NGMA’s education portal.

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Over the last year, grant professionals have been operating in a more uncertain environment than usual. Funding pauses, program terminations, legal challenges, and updated federal guidance have created real pressure for both prime recipients and their sub-awardees. In this climate, expectations around sub-awardee oversight have continued to increase, even as capacity remains strained.

Based on recent discussions with grant professionals, three themes consistently stand out when it comes to strengthening sub-awardee oversight in today’s environment.

1. Sub-Awardee Oversight Starts Earlier Than Many Organizations Think

Many compliance issues traced back to sub-awardees do not originate during project execution. They begin much earlier, often during pre-award or onboarding, when expectations are not clearly communicated or risks are not fully assessed.

Recent policy changes and audit findings reinforce the importance of treating oversight as a lifecycle responsibility. Risk assessments, eligibility verification, flow-down of requirements, and documentation of expectations all need to happen before funds are released. Waiting until reporting problems or audit findings surface makes issues harder—and more expensive—to correct.

Organizations that invest time upfront tend to spend less time later responding to findings, negotiating corrective actions, or repairing strained relationships with sub-awardees.

2. Many Compliance Issues Reflect Capacity Gaps, Not Resistance

In practice, most sub-awardee challenges are not caused by a lack of willingness to comply. They are caused by limited staffing, competing priorities, and unfamiliarity with federal requirements, especially among smaller organizations or first-time recipients.

When oversight is framed purely as enforcement, it can lead to pushback, delays, or breakdowns in communication. When it is paired with clear guidance, onboarding support, and targeted technical assistance, outcomes tend to improve for everyone involved.

Grant managers frequently see better results when they focus on helping sub-awardees understand what is expected, why it matters, and how to meet those expectations within their existing capacity.

3. Risk-Based Monitoring Is More Effective Than One-Size-Fits-All Oversight

Not all sub-awardees pose the same level of risk, and monitoring approaches should reflect that reality. A risk-based framework allows organizations to focus attention where it is most needed, rather than applying the same level of scrutiny across the board.

Effective monitoring programs typically include regular desk reviews, periodic site visits for higher-risk partners, follow-up on audit findings, and clear documentation throughout the grant period. Just as important, they build in opportunities to adjust monitoring as circumstances change.

This kind of structured approach helps organizations identify issues earlier, use oversight resources more efficiently, and demonstrate due diligence if questions arise later.

Looking Ahead

Sub-awardee oversight is becoming more visible, more scrutinized, and more consequential. Federal agencies, auditors, and the public all expect stronger accountability across the full chain of grant funding.

For grants professionals, the goal is not simply to avoid findings. It is to create oversight practices that support compliance while allowing programs to operate effectively. Organizations that take a proactive, risk-informed approach are better positioned to meet that challenge—especially in an environment where uncertainty is likely to continue.

For the National Grants Management Association (NGMA) and the Association of Government Accountants (AGA).

On August 7, 2025, the White House issued Executive Order 14117, Improving Oversight of Federal Grantmaking, which introduces sweeping reforms to how federal grants are awarded, reviewed, and monitored. This article outlines the key provisions of the order, explores its implications for grants and financial professionals, and highlights the critical role of professional associations such as the National Grants Management Association (NGMA) and the Association of Government Accountants (AGA) in navigating this transition.

Key Provisions of the Executive Order

The Executive Order directs federal agencies to take several concrete steps to improve the integrity and impact of grantmaking. Each agency must now appoint a senior official responsible for reviewing new discretionary grant announcements to ensure they align with the Administration’s national priorities. This added layer of oversight is intended to bring greater consistency and strategic focus to funding decisions. In addition, federal agencies are required to implement more rigorous and transparent review processes. While this promotes fairness and clarity for applicants, it may also result in delays or compressed timelines for funding announcements and awards.

Additional key provisions include directing the Office of Management and Budget (OMB) to revise the Uniform Guidance to simplify application requirements. This simplification is intended to improve access for under-resourced communities that have historically faced barriers to apply. Further provisions include requiring agencies to update grant agreements to include termination provisions, allowing funding to be discontinued if projects no longer align with federal goals. While this introduces flexibility for agencies, it also creates uncertainty for recipients. Another provision directs agencies to require specific authorization and justification for fund drawdowns, shifting the burden of accountability to the front end of the funding process. This change is intended to prevent misuse of funds before it occurs, rather than relying solely on post-award audits.

Overall, this Executive Order signals increased scrutiny of programs perceived as ideologically driven or lacking in measurable impact. Grants professionals should be prepared to defend the relevance, rigor, and replicability of their proposed work.

Implications for Grants and Financial Management

These reforms are designed to enhance transparency, accountability, and strategic alignment in federal grantmaking. For professionals in grants and financial oversight roles, the implications are wide-ranging.

Applicants can expect clearer guidelines and more predictable review processes, which will help them better understand funding priorities and compliance expectations. However, the increased scrutiny may also mean that applications and drawdown requests will be evaluated more rigorously, particularly in terms of alignment with national objectives and demonstrable outcomes.

While the revisions to the Uniform Guidance are intended to streamline the application process, the transition period may introduce delays as agencies adjust to new procedures. The inclusion of termination provisions in grant agreements introduces a new level of flexibility for federal agencies—but also requires recipients to remain agile and responsive to shifting federal priorities.

Importantly, the Executive Order encourages agencies to broaden their recipient pools, with a focus on including first-time applicants. This could increase competition but also opens the door to new partnerships and innovative approaches to program delivery.

Strategic Recommendations for Grant and Financial Professionals

To navigate this evolving landscape effectively, grants and financial professionals should adopt a proactive and strategic approach. It is critical to start preparing in advance of funding announcements. Maintaining a portfolio of grant-ready projects—complete with impact data, performance metrics, and potential partners—can significantly streamline the application process. It’s also essential to keep your SAM.gov registration current, renewing it well before expiration which can avoid any potential administrative delays.

When crafting funding proposals, ensure that your narratives are tightly aligned with both the specific funding opportunity and broader administration priorities. Use the scoring criteria provided in the notice to guide your content, and make sure your narrative clearly supports measurable outcomes and aligns to the budgeted activities. Proposals should be written in plain language, avoiding jargon and emphasizing clarity and accessibility—reflecting the federal government’s renewed focus on readability. It is critical to stay alert to changes in funding opportunity announcements, even for recurring programs. Treat each opportunity as new and carefully review the language and structure to ensure your application aligns with updated priorities.

Indirect cost rates are another area to closely watch. Lower rates are increasingly preferred, and capped in many cases, so it is imperative to work with your grants or finance office to understand your current rate and explore options for strategically reducing the rate. Ensure directly allocable costs are not in your cost pool out of convenience.

Accountability of performance outcomes is more important than ever. Applications should include measurable benchmarks for success and demonstrate a commitment to evidence-based practices. Citing open science principles, replication studies, or third-party validations can strengthen your case and align with federal expectations. Post-award compliance will no longer rely solely on financial progress reporting. Financial and programmatic reporting systems must be strengthened to support real-time performance tracking. Federal agencies will expect more than just financial compliance-they will want to see evidence of impact.

Finally, consider expanding your network of partners. The Executive Order encourages broader participation in federal grantmaking, which may increase competition but also presents opportunities for new partnerships and innovation. Collaborating with new or non-traditional organizations may enhance your performance outcomes and increase your competitiveness in a broader recipient pool.

The Value of Professional Engagement: NGMA and AGA

In today’s rapidly evolving grants and financial management landscape, staying connected to professional associations is not just beneficial, it’s essential. Two organizations stand out for their leadership, resources, and community: the National Grants Management Association (NGMA) and the Association of Government Accountants (AGA).

Since 1978, NGMA has served as a cornerstone for grants professionals across all sectors—federal, state, local, tribal, nonprofit, higher education, and the private sector. NGMA provides full lifecycle grants management training, professional certification through the Certified Grants Management Specialist (CGMS) credential, and continuing education opportunities. Members benefit from access to the Grants Management Body of Knowledge (GMBoK), a robust calendar of webinars and sector meetings, and a vibrant community forum that fosters peer learning and support. NGMA is committed to promoting best practices and professional excellence in grants management, helping members stay ahead of regulatory changes and funding trends

Meanwhile, AGA, founded in 1950, is the leading association for government financial management professionals. With a mission to advance accountability, transparency, and performance in government, AGA empowers its members through training, certification, and leadership development. The Certified Government Financial Manager (CGFM) credential is a hallmark of professional excellence in public sector finance. AGA also plays a key role in shaping policy and promoting ethical standards through its code of ethics and strategic initiatives. Members gain access to a national network of professionals, thought leadership, and tools that support career growth and good government practices

Together, NGMA and AGA offer a powerful combination of expertise and community. Engaging with both organizations allows professionals to bridge the worlds of grants and financial management- ensuring compliance, maximizing impact, and advancing their careers. Whether you’re navigating Uniform Guidance, managing indirect costs, or leading performance audits, these associations provide the knowledge, tools, and support to succeed.

Conclusion: A Joint Call to Action

This Executive Order represents more than a policy update—it’s a call to action for grants and financial professionals to lead with strategy, integrity, and adaptability. By aligning practices with the new federal framework, professionals can continue to secure critical funding, support community priorities, and contribute to a more transparent and effective federal grantmaking system.

Connecting to both NGMA and AGA will empower you to stay ahead of policy shifts, share best practices, and uphold the highest standards in grants and financial management as the federal landscape evolves. Leveraging the collective knowledge and support of both organizations will ensure you can navigate these federal changes with confidence—ensuring that public funds are administered effectively, transparently, and in service of the greater good.

Stacie Massey is Deputy Director of Grants and Financial Reporting at the Ohio Office of Budget and Management. Stacie has over 25 years of public sector experience in previous roles at the Ohio Public Employees Retirement System, Ohio Auditor of State, Ohio Department of Public Safety, and Ohio Emergency Management Agency.