Contingent Grants

Historically, multi-year grants have been difficult to make because of the annual budget cycle and the need to accrue the full value of a grant in the year of award. To address this issue, GM worked with Legal and Finance to craft contingent language that can be included in a grant letter indicating an intention to fund at certain levels in future years without it constituting a firm commitment that would require accrual. In these grants, typically the first year of the grant is awarded outright, and payments in subsequent years are contingent upon OSF’s internal approval procedures. Sometimes programs want to make a more complicated arrangement, with subsequent years containing a mixture of contingent and outright payments. This should be discouraged, as these kinds of complicated scenarios usually end up confusing everyone, although it can be allowed if a program insists and makes a convincing case for such an arrangement.

Amounts are accrued based on the Payment Type of every payment associated with the grant. Standard payments are accrued when the grant automatically updated to Approved/Accrued status, while Contingent payments are not.

A contingent portion of a grant requires the approval of a program director to release the contingency following the review and approval of a set of interim reports and the receipt of a work plan of the remainder of the project from the grantee. A new letter is produced and sent to the grantee informing them that the contingency is released and confirming the requirements of the grant.

The normal practice is for an entire year’s projected contingent payments to be released from contingency at one time (but not necessarily paid at one time). Exceptions can be made but should be discouraged, as it creates considerable administrative burden to produce multiple grant agreements in any given year on the same grant.

If any portion of a grant is designated as contingent this amount must be reflected in the “Contingent Amount (In USD)” field on the proposal record in the system. Additionally, when setting up contingent payment records the Payment Type field should be “Contingent” and the Contingent Criteria Status field must be set to “Not Met”. The contingent portion of the grant will only be accrued when the Contingent Criteria Status field is updated to “Met”, which should happen just prior to processing the payment.

For more information, please see “Types of Contingent Grants” appendix.

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