Creating a Subaward Plan

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A subaward plan is useful beyond being a requirement for your Federal program. It provides structure for your program. Developing one requires you to think deeply about your purpose and the activities likely to help you reach your goals. It forces you to design ways to ensure accountability, and ways to measure results. You will find it is a document you will frequently consult as you implement your subaward program.

Why create a subaward plan?

Because a Federal subaward program involves the granting of Federal funds from a Federal grantee to sub-recipients, most if not all Federal grant programs involving subawards require grantees to develop and submit subaward plans for approval to the program's Federal program officer. The program announcement for the grant program usually contains the information and elements required for the subaward plan. Additional information may be supplied by the Federal program officer to help intermediaries develop plans that meet Federal guidelines and requirements as well as particular grant program purposes.

The Department of Health and Human Services and other Federal agencies offer grant programs for intermediary organizations that include subaward plans as a part of the application and program implementation requirements. These Federal grant programs usually require the intermediary organizations to sub-grant significant portions of the award to eligible local faith-based and community organizations, and to outline their plans to provide subawards in their grant applications – in other words, these Federal programs require a subaward plan.

Check your rules and regulations.

In developing a subaward plan for a Federal funding program, it is essential to know the governing rules and regulations concerning Federal grants and sub-grants. General rules and regulations regarding Federal grants and sub-grants from the Department of Health and Human Services (DHHS) can be found in 45 CFR Part 74. Other Federal agencies have similar governing legislation listed in various titles of the Code of Federal Regulations. Every intermediary organization that has received or desires to receive grants from a Federal agency should become familiar with the Code of Federal Regulations for that particular agency, not only for information regarding subawards but also for guidance on Federal grant management.

Federal agencies and the corresponding titles of the Code of Federal Regulations.

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There are six key components of a subaward plan.

1. Determine your purpose. The first step in developing your subaward plan is to determine the reason or purpose underlying the effort.  In other words, why will you conduct a subaward program?  What impact do you want to have on the community?  What change in the organizations receiving awards do you want to see take place?  

To identify your purpose, you will need to determine what you want to accomplish and how it fits with the goals and outcomes defined in your grant proposal.  Be sure to review the Federal or other program announcement for any information on the purpose of the subawards from the funder’s perspective.  Also, if you have already submitted a grant proposal, be sure to review that proposal for guidance and consistency in developing a purpose statement.

A purpose statement usually contains the following elements:

  • Whom you will work with or serve
  • What you will do for them
  • What you expect to be the result or outcome of your work together.

An example is the purpose statement developed by the Christian Community Health Fellowship (CCHF), a national network of Christian health professionals and others concerned about the health care needs of impoverished communities in the U.S. CCHF identified the purpose of their subaward program as assisting "faith-based and community health care organizations to become operationally effective and financially viable providers of community-oriented primary health care in underserved communities and populations." Another intermediary organization stated that the purpose of its awards was to advance community and faith-based organizations' efforts by building their capacity, increasing their efficiencies, and expanding their scope of services.

When creating purpose statements it is helpful to:

  • Keep your end in mind.
  • Act as a visionary, and dream a little.
  • Ask yourself what would improve your community, or those you serve.
  • Consult potential subawardees to learn what their desired outcomes would be.
  • Make your purpose statement consistent with your organization’s mission.

2. Decide which types of grants to offer. Once you've determined your purpose, it's time to look at the type - or types - of grants you want to offer to be consistent with that purpose. The “type” of grant will reflect the intended end result(s) of the subawards – a grant to develop an organization’s infrastructure might be an Organizational Development Grant, while a grant to help an organization expand their services to another community might be called a Service Expansion Grant.

To decide on the types of grants you’ll offer, you might ask yourself the following questions:

  • Which organizations is my program targeting for grants?
  • What are some typical needs of these organizations?
  • What activities are likely to help these organizations attain the results stated in the purpose statement?
  • What size grants do these organizations have the skills and resources to use wisely?
  • What size grant can help the most?
  • How many grants can my organization manage and track effectively?

3. Choose your target organizations. In developing your plan, it is important to determine what types of organizations you will target to receive subawards.  As you focus on specific types of organizations, you are better able to plan outreach efforts, manage the flow and review of proposals, provide the right training and technical assistance specifically designed for those organizations, and achieve the purpose of your subaward plan.

Before you start to identify the specific type or types of organizations, be sure to check to see if there is any guidance on the issue in the program announcement or in guidelines/directives from the Federal program office (or other funder).  For example, the program announcement for the U.S. Department of Labor's Office of Disability Employment Policy's Intermediary Grants for Mentoring Youth with Disabilities stated that intermediary organizations may issue subawards to community or faith-based organizations that: “have social services as a major part of their mission; are headquartered in the local community to which they provide services; have a total annual operating budget of $300,000 or less; or have 6 or fewer full-time equivalent employees.”

Likewise, HHS’s Administration for Children and Families’ 2009 Strengthening Communities Fund announcement asks that applicants give priority for subawards to organizations “who document they are working with agencies responsible for administering the ACF TANF program (Temporary Assistance for Needy Families)…. whose annual budgets do not exceed $500,000….[and who are] implementing program(s) that address the broad economic recovery issues present in their communities, including helping low-income individuals secure and retain employment, earn higher wages, obtain better-quality jobs, and gain greater access to state and Federal benefits and tax credits.”

As you think about the organizations you will target, there are a few things that you may want to consider as potential criteria for eligibility for subawards:

  • Faith-based and community-based organizations – Are you planning to make awards available to both faith-based and community-based organizations? 
  • Size of the organization – (determined by the number of staff or size of the budget.)  Do you want/need to specify a certain size of organization?
  • Nonprofit status – Are unincorporated organizations eligible? For-profit entities? Only those with IRS nonprofit determinations (e.g., 501 (c) 3 and 501 (c) 4 organizations)?
  • Age of organization – Is it important to target new or emerging organizations? Or are those with experience more likely to achieve the program’s purpose?
  • Service areas – Do you want to target organizations in a particular service area, consistent with your organization’s mission and/or with the priorities of your Federal or other funder?
  • Geographic location – Do you want to designate a particular location--neighborhood, city, state, and region? Or do you want to designate organizations in a particular type of location (e.g., urban, rural, suburban)?
  • Funding history – Do you want to target organizations that have not received Federal funds or other large grants in the past?
  • Partnerships – Are partnerships of organizations, collaboratives, or alliances eligible for grants?

4. Decide on the total amount of grants, number of grants, and amount of grants to offer. After you have decided on the types of grants you will be offering and the organizations that are eligible, the next step is to determine the total amount you will offer in subawards, the number of subawards you plan to offer, and the amount of each award.

If you are in the process of applying for a grant or have received a grant, it is likely that you have determined the total amount you plan to distribute in subawards.  The Federal Program Announcement for your particular grant program also may also provide guidelines for the total amount. 

Yet, you still must decide how many subawards you will offer and how much you will provide to each subawardee. Consider the following questions as you make this determination:

Number of Awards

  • How many subawards can your organization effectively distribute and monitor during the budget period? 
  • What kind of additional training and technical assistance will the subawardees need in order to succeed?  Will your organization be able to provide that level of support for the proposed number of subawardees?

Amount of Individual Awards

  • What size grant amount(s) will make a difference to subawardees?
  • What size grant amounts will subawardees be able to manage effectively? 
  • What size grant amount is appropriate for the particular grant type(s) that you are considering?  (If you are considering more than one type of grant, then you may want to consider different grant amounts for each grant type.)
  • What size of grant is needed to help an organization achieve the goals stated in your purpose statement?

5. Determine your grant period. You will need to decide how long subaward organizations will have to use and spend their funds.  First, be sure to ask your program officer if there are any guidelines or directives for you to follow.  If so, you will need to make your decision based on those guidelines.  A note on timing for Federal awards: Federal subaward funds generally are spent within the same Federal fiscal year in which they are granted.  If circumstances do not allow for adequate time to spend the funds within the same Federal fiscal year, then you may want to extend the budget period to within the calendar year or within a 12-month period from notification of the subaward.  Just be sure that the budget period you set for spending subawards meets all the Federal requirements for your particular grant. 

6.  Create an Outreach Plan.  An outreach plan is a key component of your subaward plan. In it you will define how to inform eligible organizations about your program and about how to apply for grants.