Do Not Fund Process

Most types of grants include a requirement to submit narrative and financial reports. Exceptions include matching gifts, charitable event fund grants, and general support grants. The IRS sets explicit minimum reporting requirements for grants to individuals and expenditure responsibility grants. Failure to provide those reports requires a prohibition of funding to those types of grantees. U.S.-sourced grants to public charities and all grants referred to overseas entities do not have a statutory basis for includingCommented [ERP7]: Linkreporting requirements. However, it is the view of the general counsel’s office and a common industry position that financial-statement or IRS auditors could reasonably expect us to produce any reports obligated in our grant agreements. (This is an argument for encouraging programs to stick to statutory minimums or only require elective reports that they intend to pursue and read.)

Historically, GM efforts concerning grantee reports consisted of patiently reminding programs about overdue reports and developing electronic reports and alert reminders to track outstanding reports. In 2004, GM in New York instituted a policy of withholding payments to grantees that had overdue reports on any OSF grants. In 2006, GM in New York received approval from management to institute an annual grant closeout process. It was agreed that any grantee may be subject to funding prohibition for failure to provide missing reports, excepting large international organizations or universities with multiple autonomous field offices, colleges, or other program units. This annual Do Not Fund process was implemented in Budapest in 2013.

The Do Not Fund process is a post-fiscal year activity targeting recipients of grants ended during the prior year who have not submitted reports. Program directors receive an initial email from the GM director that outlines the process and includes an initial listing of their targeted grants. Program staff is expected to contact grantees at least twice, creating notes in Foundation Connect for each contact.

Special reports were created to enable programs to independently review their progress in securing overdue reports and then reviewing them and requesting the grants officer to close them. While these reports are based on grant end date, sometimes grants have reports due months or even a year after the end date. Those grants are manually excluded from the final recommended DNF list. Some grants have grant end dates extended through a formal modification if they are not able to conclude activities and report based on the grant terms. Final notification letters are sent from GM alerting each grantee of the impending funding prohibition and requesting reports by the end of the month. These letters are attached to the FC record for that grant. A list of DNF recommendations is prepared with the FC record of each remaining grantee vetted to confirm the accuracy of the designation. Program directors are alerted of which of their grantees will be recommended and sometimes appeal for more time for a particular grantee. That is given at the discretion of the GM director. This list is then provided to OSF’s president and is usually accepted outright. Occasionally, grantees with which we have a special relationship or large decentralized grantees are exempted from DNF status. The FC org records include a Do Not Fund checkbox that is selected for these grantees, which blocks subsequent payments in FC. A Do Not Fund note is also created in the org record. The specific grant record is then updated to closed status and a note added there about DNF status. Missing reports under that grant record are set at noncompliance status.

Occasionally, a DNF grantee approaches OSF for renewed support. DNF status is revocable if the grantee provides the missing reports on old grants. When there has been a significant time lapse or turnover at a grantee organization it is sometimes not possible to reconstruct missing reports. In those cases, the director of grants management and the general counsel’s office can determine to rescind DNF status based on a memo from the program indicating what basis they have for concluding that the grantee will this time comply with reporting and other grant requirements. That memo should become part of the FC record for that grant. Prohibited ER and U.S.-funded individual grantees are not eligible for renewed support unless missing reports are submitted, due to IRS restrictions.


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