Federal Funding 101: The Basics - ABA YLD 101 Practice Series

By Chris Fortier

You have a client who wishes to expand a program to reach more people or has a public construction project in the future that they have no chance of financing by themselves. Your client turns to you to figure out how to ask for funding from either your state or the Federal Government. The Federal Government gives five types of funding to outside entities: 1

  1. Research grants - These are given to assist the federal government discover facts, explore, revise, or apply theories.
  2. Development grants - These are given to assist the federal government demonstrate a theory.
  3. Project grants - These are given to further the purpose of stated legislation. Federal agencies have discretion to select project, grantees, and award amount.
  4. Block grants - These are given to states for a particular purpose.
  5. Formula grants - These are given to specified grantees dependent on indicators outlined in the legislation creating the funding.

Most grants either are in the Block or Formula categories. The type of grant will determine application procedures for funding and future audit procedures for compliance.

Many opportunities exist for funding and many businesses seek to help out small businesses and non-profit agencies find this funding. As their attorney, your client has come asking you what needs to be done. You want to make that your client looks respectable during the process as too many bad applications or poor audit records may jeopardize future funding requests. Here are what you and your client have to do:

Before you fill out the application:

Who is your client and what are they doing?
Is your client an individual (contractor)? A local government? A state agency? A private company? Certain funding programs allow non-profit groups to apply while others restrict to school divisions, localities, or even state agencies. Other programs even allow individuals or for profit companies to receive funding. Is your client a pass-through entity or a sub-recipient? The agency's rules still apply as to compliance audits should your client receive funding.

Also find out which federal (or state) agency can help you out. A good resource for finding grants is http://www.grants.gov, which is a catalog of federal programs. Also watch the Federal Register ( http://fr.cos.com/) announcements section, where funding programs are announced.

Determine if the project spans multiple jurisdictions.
Does the project span multiple counties, cities, or towns? Are multiple landowners involved? If so, you want to get each party involved with the process. Does the federal agency require one application per project or one per jurisdiction or property owner? Furthermore, you may need their signatures in order to have the application considered.

Make contact with the funding agency and your representatives.
Start a dialogue with the granting agency or even the local congressional delegation. Ask questions to specify what the agency means by a particular sentence. If the agency is of no help, congressional case workers may be of help. They may even be able to help with a recommendation. Any contact, tips, or additional information may guide you to making a better application.

Ensure that there is a community need for the project being funded.
Think in terms of the project as opposed to the money. Federal grantors want to see a clear, convincing case that fits within the criteria for funding. Remember, Congress and the federal agency have an objective they want to accomplish. You and your client must remember this and cater your arguments to show that your project accomplishes this objective. Usually, the funding program has a web page giving more information about the objective.

Ensure your client has the proper organization structure to withstand compliance audits.
What about policies for civil rights? Employee protections? Research limitations? Safety policies? Consider the client's workplace climate as to whether the client can meet compliance regulations. Some funding grants have lots of compliance regulations that your client will be required to meet. This may require your client to spend money outside of or before the application to ensure that they fall within the regulations. Reports will have to be filed as to how these regulations are being met. Most governmental clients should have these policies already in place but private clients may not have these.

Plenty of applications never make initial review because they arrive late. If you are submitting an application to a federal agency by regular mail, ensure that you mail your application at least two to three weeks in advance of the deadline. Many federal agencies have screening for foreign substances that takes around two weeks to process. If possible, file the application electronically.

When Filling Out the Application:

Ensure that all spaces are filled in, even if this includes "N/A"
Many applications go through an initial screening to see if necessary materials are included and the application is properly filled out. If something is missing from the package or a space is not filled in, your chances of receiving funding could be severely hampered.

Designate a contact person who knows about the process and your client.
Make sure the name, address, phone number, and e-mail are listed on the application. Also, choose a person who knows your client's operations or has access to the people who work for your client that will be able to answer questions promptly. This person should have a background with grant law and compliance issues. If not, train someone with your client to cover minor/daily/weekly/monthly matters in addition to major matters. Some programs will have many requirements and benchmarks that will require someone who devotes a major portion of their job to fulfilling compliance benchmarks for the funding program.

Do not "fill space" on the application.
Find examples of successful applications to see what they have done, particularly how the narrative statements are written. Some initial application evaluation processes will include the "laugh test" with the narratives. Your application needs to show a serious need. Can someone who knows nothing about your organization or local area read your application and see the serious need for your client?

Figure out the situation with matching Funds on the State, Local, or Private Levels.
Some funding programs may require that your client (if a government) dedicate matching funds for the project. Even if your client's program may not require matching funds, showing secured matching funds on an application shows that you are serious in making your application work. Clearly indicate in your application where these matching funds are coming from and how they will be used.

Write a realistic, clear, easy to understand budget
Admit it. When you have written budgets as part of requests for money from your Student Bar Association or Student Government Association, you would occasionally inflate the numbers under the adage that the Student Bar would be making cuts anyway. The Federal Government expects evidence to back your figures up and wants to see how you apply your revenues to your expenses, so you may not be able to get away with this adage. Congress has granted your granting agency with only so much money and the agency has to divide it up on an acceptable nationwide basis.

Show all expenses accurately and also emphasize any additional revenues that your client may have coming in. Indicate personnel and material needs and format the budget so that an outsider to your organization can read it. This budget will also be the basis of upcoming audits ensuring that you are spending the money in the matter that you promised the agency in your application, which makes requesting the right amount of money important.

Be specific on the application.
Explain in clear, concise detail how your client's project fulfills the criteria. Such details allow the evaluators to focus on what your client wants them to focus on: the program itself. Nothing makes a greater impact than a statement that provides the right amount of information succinctly.

After You Have Deposited the Check (Audits and Issues):

Problems or questions? Contact the agency that funded your client.
Most agencies have compliance people on staff to respond to inquiries and problems that your client and other grantees have encountered. Many times, they are enthusiastic to respond to your inquiry. They are a resource to assist you execute their, and your, objectives through your products or services to the community. When contacting the agency, know which issues are the matter of the federal government as opposed to those of the state government. Offer possible answers and courses of actions to help the agency help you.

On the other hand, if the government contacts you, cooperate. Usually your client will be given an opportunity to correct the problem before enforcement actions have to be taken.

Maintain solid accounting records, show in the accounting that the federal funds went EXACTLY to the purpose of the funding.
Expect an audit about once a year. Known as Single Audit, the agency will visit your case on average of once a year to ensure that the objectives of the program are being met. These audits will happen to state governments, local governments, and non-profit organizations. Drill into your client's mind that they are spending Federal taxpayer monies and not their own monies. In overall financial statements to shareholders, stakeholders, or even internal records, ensure that your client is showing that federal funds are being spent directly to the program or project that your client applied for funding to. The audit professionals in the Federal Government work to see that your client's funding has been spent properly. Proper accounting records make these audits go smoother.

Keep all documents you had in your application and any updates to those records
Keep everything documented in your application plus any documents you needed to draft for your client in step 5. These records will be needed in audits to ensure that your client is in compliance with federal law.

Advise and follow up with client about deadlines for performance evaluations or agency check-ups.
Keeping the lines of communication open minimizes surprises for your client and headaches for you. Monitor your client's financial statements and figure out possible "bumps in the road" for your client so that they may think about these issues before they become issues. Encourage a positive relationship between the government and your client. Show your client's positive results to your state or federal representatives and to the funding agency. Advising your client to write thank you letters and press releases allows everyone to get credit for the results.

Opinions shown here are solely those of the author and not in any way affiliated with or to be seen as the opinion of the United States Government.

1 A Guide to Funding Resources, U.S. Department of Agrigculture, Rural Information Center, found at: http://www.nal.usda.gov/ric/ricpubs/fundguide.html#THE%20FUNDING%20PROCESS
2 Guide to Funding Resources
3 Other Requirements for OJP Applications, U.S. Department of Justice Office of Justice Programs, found at http://www.ojp.usdoj.gov/funding/otherrequirements.htm
4 Tips for Developing Successful Grant Applications, U.S. Environmental Protection Agency, found at http://www.epa.gov/enviroed/granttips.html
5 OMB Circular A-133 Compliance Supplement March 2006,  Office of Management and Budget, found at: http://www.whitehouse.gov/omb/circulars/a133_compliance/06/06toc.html
6 Other Requirements for OJP Applications, U.S. Department of Justice Office of Justice Programs, found at: http://www.ojp.usdoj.gov/funding/otherrequirements.htm


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About the Author

Chris Fortier is Chair of the ABA Young Lawyers Division's Public Utilities, Telecommunications, and Transportation Committee for the bar year 2006-2007 and Young Lawyer Liaison to the Section of Public Utilities, Communications, and Transportation Law. He is admitted to the Virginia and Washington, DC bars.

101 Practice Series: Breaking Down The Basics

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