Compliance Issues

Grantees must be in compliance with any previous grant report requirements in order to be eligible to receive new OSF grant funds. Program staff must make reasonable efforts to obtain overdue reports from the grantee, and OSF will withhold future payments to the grantee until the missing reports are received. In addition, if grant funds are not expended for the stated charitable purposes, OSF has the option to seek the return of such funds or grant an extension of the grant period.

In addition, OSF may terminate the grant and require a return of all funds paid to the grantee. This requirement should be included in the “Rescission/Termination” language of the grant agreement.

OSF has a duty to investigate when it appears that all or part of a grant might have been diverted or used for prohibited purposes. OSF must take all reasonable steps to recover the diverted funds and withhold any further payments. For the U.S. funding entities, OSF must demonstrate to the IRS that it has a clear procedure in place if it discovers that there has been a misuse of the funds. The phrase "all reasonable and appropriate steps" includes legal action when appropriate. Legal action need not be taken if such action would in all probability not result in the satisfaction of execution of a judgment. Noncompliant grantees should be put on the Do Not Fund list (see section on Do Not Fund List).

Reviewing Reports

Program staff and grants officers should review reports and consider whether they are satisfactory from a programmatic sense and whether the funds have been expended in accordance with the activities and objectives outlined in the approved narrative proposal and budget.

Common issues with reports include the following:

Financial report issues:1) The grantee has made a calculation error in their financial report. 2) There is an issue with the exchange rate used. 3) The grantee applied grant funds to an expense that was not included in the originalbudget or which was not pre-approved by OSF staff. 4) The grantee shows unspent funds and the grant needs to be extended or remaining funds need to be returned.

Narrative report issues:Commented [ERP1]: Link here1) The grantee has not provided adequate feedback on the project implemented.2) The grantee has included language that raises concerns about lobbying or campaign intervention activity on the part of the grantee.

When funds from U.S. sources are expended through an ER grant, the following points need a more detailed examination:

Grantees will often overstate the reach of their work and imply that OSF funds helped achieve certain legislative victories. The grantee may use language that raises concerns about lobbying or campaign intervention. However, when asked for clarification, the grantee will confirm that he/she did not engage in prohibited activities. Either an email from the grantee or a revised report can serve as clarification on lobbying or campaign intervention concerns.

There are, unfortunately, times where it is confirmed that the grantee engaged in prohibited activities. In these cases, the grantee will be asked to refund the grant funds spent on the prohibited activities to the relevant foundation within the OSF network. For grants made from OSI-Budapest using a mixture of U.S. and non-U.S. funds, there may be the possibility to recode the grant, thereby obviating the need for the grantee to return funds to OSI-Budapest.

Re-granting: If re-granting occurs, program staff needs to confirm that a sub-grantee checklist was completed or can be followed after the fact; if not, the grantee will need to cover these costs with other funds or return the grant amount used for this activity. A full description of the policies relating to re-granting in the ER context can be found here: Exercising Expenditure Responsibility when Re-Granting U.S. Foundation Funds.

Capital Equipment (totaling more than 750 USD per item): Grantees under ER cannot purchase capital equipment over $750 per item. If in the review of a financial report it is found that a grantee has purchased an item over $750, the grantee should be asked if the item expense can be covered through other sources of funding. If not, equipment reporting should be added to the grant record, and the expense should be should be discussed with legal to determine how long reporting will be required.

Grants to Individuals: The grants-to- individuals rules apply whenever money is awarded to an individual for his or her benefit (e.g., providing funding to an individual for travel to a conference or training). These awards cannot be funded with a U.S. Sourced grant. On the other hand, a grantee providing funding to anCommented [ERP2]: LinkCommented [ERP3]: Linkindividual to perform a service for the grantee for the benefit of the grantee (e.g., a consultancy or an employee attending a conference or training on behalf of his or her employer) is not included in these rules, and thus can be funded with U.S. Sourced funds. The rules for grants to individuals and how to indicate such awards in a budget are explained here: Grants to Individuals within Expenditure Responsibility Grants.

An ER grantee can only award grants to individuals (with the exception of humanitarian aid) if the private foundation OSF entity funding the initial grant has grants-to-individuals procedures registered with the IRS (currently only the OSI-NY entity and not FPOS.) If granting to individuals occurs in an ER grant funded by OSI-NY, it should be investigated to see if procedures substantially similar to those of OSI-NY were followed (the procedures that OSI has registered with the IRS are relatively common-sense procedures, so it isn’t implausible that a major institution, like a university, might coincidentally comply with them). If not, then the grantee will be asked to cover the expense through other funds. No individual grantmaking can be funded through an ER grant from FPOS.

For more information regarding ER see the U.S. Sourcing Guidelines for Prospective and Current Grantees.

Lobbying activities, political campaign activities The “Lobbying” rules prevent any U.S. sourced funds from being used to support certain efforts toinfluence legislation, as defined in U.S. tax law. The European OSF funding entities may decide to make grants for lobbying activities, but may not fund such activities from U.S. sourced funds. The lobbying rules are explained in more detail here: Lobbying - Brief Summary.

Most grant issues can be resolved through discussions between the grants officer and program staff. However in the case of lobbying or campaign intervention concerns, it may be necessary to review the issues with Grants Management senior staff or the Legal department in order to determine if action must be taken.


Helga Nagy

additional text after first paragraph needs to be edited and rephrased (too many 'in addition's for example)

Helga Nagy

paragraph on lobbying is superfluous or inserted to the wrong place.

Insert regranting guideline link underr re-granting paragraph.
Financial report issues: explain exchange rate calculation problems in two sentences (weighted average , historic exchange rates)

Helga Nagy

change equipment amount to 1,500.00 USD

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