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Funding Sub-Grant Agreement

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FUNDING SUB-GRANT AGREEMENT

This Funding Sub-Grant Agreement (the "Agreement") is entered into as of by and between:

Grantee Name: — Address:

Subgrantee Name: — Address:

RECITALS

WHEREAS, Grantee is the recipient of funds awarded for the purpose of (the "Program"), and has authority to make sub-grants to third parties to carry out portions of the Program;

WHEREAS, Subgrantee has represented that it has the capacity and expertise to perform the activities described in this Agreement and has applied to receive a sub-grant to implement a portion of the Program;

NOW, THEREFORE, in consideration of the mutual covenants set forth below, the parties agree as follows:

1. SCOPE OF WORK

Subgrantee shall perform the tasks and deliverables necessary to carry out the portion of the Program described below. All work must conform to the standards and schedule set forth in this Agreement and any attachments incorporated by reference.

2. PAYMENT TERMS

Subject to the terms and conditions of this Agreement, Grantee agrees to provide funding to Subgrantee as follows.

If any payment due to Subgrantee is more than days late after an undisputed invoice or required deliverable, Grantee may assess a late fee of % per month on the overdue amount, or the maximum amount permitted by law, whichever is less. Grantee may withhold payments for noncompliance with reporting, documentation, or material terms of this Agreement.

3. TERM AND TERMINATION

This Agreement shall commence on and shall terminate on unless earlier terminated as provided herein.

Either party may terminate this Agreement for convenience upon days' prior written notice to the other party. Grantee may terminate immediately for cause upon written notice if Subgrantee materially breaches this Agreement and fails to cure the breach within such reasonable time as Grantee may specify given the nature of the breach. Upon termination, Subgrantee shall promptly deliver all work in progress and shall be entitled to payment for allowable costs incurred and documented through the effective date of termination, subject to set-off for damages or noncompliance.

4. CONFIDENTIALITY

Each party shall keep confidential all non-public information disclosed by the other party that is designated as confidential or that reasonably should be understood to be confidential under the circumstances ("Confidential Information"). Confidential Information does not include information that (a) is or becomes publicly available through no fault of the receiving party; (b) was already in the receiving party's legitimate possession prior to disclosure; (c) is rightfully received from a third party without confidentiality obligations; or (d) is independently developed without use of the disclosing party's Confidential Information.

The receiving party will use Confidential Information solely to perform its obligations under this Agreement, will restrict disclosure to employees, contractors, or agents with a need to know, and will employ at least reasonable safeguards to protect such information. If disclosure is compelled by law or valid order of a court or governmental authority, the receiving party shall promptly notify the disclosing party to permit it to seek protective relief.

5. REPORTING, RECORDS, AND AUDIT RIGHTS

Subgrantee shall maintain complete and accurate books, records, invoices, receipts and supporting documentation relating to expenditures and performance under this Agreement for a period of from the date of final payment. Grantee, its auditors, and any authorized funding source have the right to inspect and audit these records during normal business hours upon reasonable notice.

6. COMPLIANCE WITH LAWS; STANDARDS

Subgrantee shall comply with all applicable federal, state, and local laws, ordinances, regulations, and guidance in carrying out the Program, including procurement, labor, nondiscrimination, environmental and fiscal requirements. Subgrantee shall obtain and maintain all licenses, permits, and approvals necessary to perform the Work.

7. INSURANCE AND INDEMNIFICATION

Subgrantee shall, at its own expense, secure and maintain insurance coverage appropriate to the activities funded hereunder, including commercial general liability and workers' compensation where applicable, in amounts customary for similar organizations and risks. Minimum coverage amounts: General liability ; Workers' compensation as required by law.

Subgrantee shall indemnify, defend, and hold harmless Grantee and its officers, employees and agents from and against all claims, liabilities, losses, damages, and expenses (including reasonable attorneys' fees) to the extent arising out of Subgrantee's negligence, willful misconduct, or material breach of this Agreement.

8. GOVERNING LAW

This Agreement shall be governed by and construed in accordance with the laws of the State of , without regard to its conflict of laws principles.

9. ENTIRE AGREEMENT

This Agreement, including any attachments, exhibits, and documents incorporated by reference, constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions, whether oral or written. No amendment or modification of this Agreement shall be effective unless in writing and signed by authorized representatives of both parties.

10. MISCELLANEOUS

If any provision of this Agreement is held invalid or unenforceable, the remaining provisions will remain in full force and effect. Neither party may assign this Agreement without the prior written consent of the other, except that Grantee may assign to a successor entity that assumes Grantee's obligations. Notices under this Agreement shall be in writing and delivered to the addresses listed above or to such other address as a party may designate by notice.

Grantee

Printed Name:

By:

Date:

Subgrantee

Printed Name:

By:

Date:

Enter text✕

What a Funding Sub-Grant Agreement Is and When It Applies

A Funding Sub-Grant Agreement is a written contract where a primary grant recipient (the pass-through entity) allocates a portion of awarded funds to a subrecipient for specific activities or project components. It defines scope of work, budget and allowable costs, reporting and audit responsibilities, performance metrics, and compliance with the prime grant terms and applicable laws. The agreement creates downstream accountability between the pass-through recipient and the subrecipient while preserving the pass-through recipient's obligations to the original funder. Sub-grant agreements are common for federal awards, state grants, and private philanthropic funding.

Why a Clear Sub-Grant Agreement Matters for Compliance and Oversight

A clear Funding Sub-Grant Agreement allocates financial responsibility, reduces audit risk, and documents deliverables and allowable costs so both parties meet the prime award terms and federal requirements like uniform guidance.

Why a Clear Sub-Grant Agreement Matters for Compliance and Oversight

Typical Parties and Roles for a Funding Sub-Grant Agreement

Who prepares and who signs: the pass-through entity drafts the agreement and the subrecipient reviews and signs before funds are disbursed.

  • Pass-through grant administrators who manage prime awards and monitor subrecipient performance
  • Subrecipient program managers responsible for project delivery and financial reporting
  • Finance and compliance officers who verify budget items and audit readiness

Accurate role definitions and delegated authority in the agreement help minimize misunderstandings during performance, monitoring, and closeout.

Representative Signers and Their Responsibilities

Grant Administrator — County Office

The Grant Administrator reviews prime award terms, inserts flow-down compliance clauses, approves the budget, and coordinates monitoring activities. They are responsible for ensuring the subrecipient has required approvals and for retaining documentation for audit. The administrator signs to bind the pass-through entity.

Executive Director — Subrecipient

The Executive Director certifies the subrecipient's ability to perform, accepts funding terms, and ensures financial controls. They confirm truthfulness of certifications and commit to reporting and record retention obligations under the agreement.

Step-by-Step: How to Complete a Funding Sub-Grant Agreement

Follow these steps in order to prepare, approve, and execute a sub-grant agreement while preserving audit trails and funder flow-down requirements.

  • 01
    Draft Agreement: Insert prime award clauses, scope, budget, and reporting terms.
  • 02
    Internal Review: Obtain legal and finance review for allowability and compliance.
  • 03
    Subrecipient Review: Send to subrecipient for questions, revisions, and capacity assessment.
  • 04
    Execution and Distribution: Collect authorized signatures and distribute fully executed copies to stakeholders.

Typical Workflow from Award to Closeout

This high-level flow shows the principal stages and who typically acts at each point.

  • Award Receipt: Prime recipient confirms award terms and allocable budget.
  • Selection of Subrecipient: Pass-through entity performs due diligence and award decision.
  • Agreement Execution: Both parties sign the sub-grant agreement and exchange documents.
  • Monitoring & Closeout: Ongoing reporting, audits, and final financial reconciliation.

Configuring an Electronic Workflow for Sub-Grant Execution

When moving the agreement online, configure fields and routing to match review and approval steps.

Field Configuration
Signature Order Pass-through signs before subrecipient and fiscal officer
Authentication Use email link or SMS code for signer verification
Conditional Fields Show budget lines only if selected by program type
Document Retention Archive executed PDF and audit log for compliance

Technical Considerations for Digital Completion and Submission

Choose a platform that supports audit trails, secure storage, and role-based signing to meet funder requirements.

  • Document Formats: PDF and DOCX support preserves intent and formatting
  • Integrations: Connectors to Google Drive, Box, or NetSuite simplify filing
  • Authentication: Options: email, SMS, KBA, or stronger methods for higher risk

Verify the platform can produce a tamper-evident PDF with an audit trail including signer IP, timestamp, and action history for audits.

Security and Compliance Features to Expect

Encryption: AES-256 at rest; TLS 1.2/1.3 in transit
Audit Trail: IP address, timestamps, action log
HIPAA Support: BAA available for PHI handling
Access Controls: Role-based permissions and SSO
Certifications: SOC 2 Type II and ISO 27001
Accessibility: WCAG 2.0 Level AA compliance

Key Penalties and Risks of a Deficient Sub-Grant Agreement

Repayment Risk: Disallowed costs may require reimbursement
Audit Findings: Material weaknesses can trigger corrective actions
Funding Suspension: Prime award may be reduced or suspended
Legal Liability: Breach claims or contract disputes
Reporting Penalties: Late or inaccurate reports increase scrutiny
Operational Disruption: Delayed payments disrupt program delivery

Common Preparation Pitfalls to Avoid

  • Using vague scope language that creates performance disputes
  • Failing to flow down critical prime-award compliance clauses
  • Not matching budget lines to allowable cost categories
  • Missing signatures, inconsistent dates, or mismatched entity names

Key Deadlines and Typical Processing Expectations

Sub-grant lifecycle deadlines differ by funder; plan for execution, reporting, invoicing, and audit windows when awarding funds.

Agreement Execution Deadline:

Sign and return before first disbursement or specified start date

Interim Reporting Dates:

Quarterly or monthly reports as defined in the agreement

Invoice Submission:

Submit invoices within the timeframe stated for reimbursement

Closeout Submission:

Final technical and financial reports due at closeout

Audit Response:

Provide documents within funder-requested timeframes, often 30 days

How Sub-Grant Agreements Are Used in Practice

These concise examples illustrate common practical setups and outcomes for sub-grants.

Community Services Subgrant

A county awards funds to a nonprofit to run a community program, with quarterly reporting required.

  • The nonprofit delivers monthly output reports tied to milestone payments.
  • The agreement included audit access, allowed cost categories, and a defined closeout process; clear milestones prevented payment disputes and supported a successful program evaluation.

Research Program Subaward

A university passes along a federal research grant to a partner lab for a specific study.

  • The subrecipient must comply with federal procurement rules.
  • The agreement specified IP ownership, data sharing, and publication rights, and required the lab to maintain records for the prime award audit period.

Frequently Asked Questions and Common Issues

Answers to frequently asked questions about execution, signatures, notarization, and compliance for Funding Sub-Grant Agreements.


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