casemark/grant-agreement

Grant Agreement

Drafts enforceable U.S. grant agreements transferring funds with conditions, protecting grantor oversight while giving grantees clear operational parameters.

Prerequisites

Gather before drafting:

1. Grantor — legal name, state of formation, EIN, entity type (private foundation / corporate / public charity / government), signatory + authority source
2. Grantee — legal name, DBA, jurisdiction, EIN, tax classification (501(c)(3) / governmental / fiscal sponsor / foreign org), signatory
3. Grant terms — amount, currency, disbursement type (lump sum / installment / milestone), grant period dates
4. Project scope — purpose, objectives, deliverables, timeline, geographic scope, itemized budget
5. Special flags — private foundation (triggers IRC § 4945); foreign grantee (equivalency determination or expenditure responsibility); government pass-through funds (2 CFR Part 200)

Quick Start

1. Collect prerequisites and identify special flags
2. Draft sections 1–10 below, scaling reporting/audit to grant size
3. If grantor is a private foundation → include expenditure responsibility agreement (Exhibit D)
4. If foreign grantee → add equivalency determination or expenditure responsibility election + OFAC screening
5. Attach exhibits and circulate for review

Output Structure

1. Parties & Recitals

Grantor block: Legal name, formation state, address, EIN, entity type, authorized representative + title + authority source.

Grantee block: Legal name, DBA, jurisdiction, EIN, tax status (cite determination letter date), address. Fiscal sponsor → identify all three parties with explicit obligations. Foreign org → note equivalency or expenditure responsibility election.

Recitals: Establish: (a) grantor's exempt purpose or CSR rationale; (b) grantee qualifications; (c) selection process; (d) relationship is a grant — not loan, contract, JV, or service exchange; (e) legal authority (board approval, payout compliance).

2. Grant Amount & Payment

| Element | Terms | |---|---| | Total amount | Numerals and words; specify currency | | Disbursement | Lump sum / installments / milestone tranches | | Conditions per payment | Reports approved, deliverables met, compliance confirmed, matching funds evidenced | | Budget modification | ≤10% line-item variance: grantee discretion; >10% or category change: prior written approval | | Unexpended funds | Return within [30] days of term end or carry-forward with written approval |

3. Permitted & Prohibited Uses

Permitted:

• Direct costs: salaries (grant-allocated FTE %), equipment, supplies, travel, consultants
• Indirect/overhead: [specify % or fixed cap]
• Subgrants: prior written approval required; key terms must flow down

Prohibited:

• Political campaign activity (IRC § 501(c)(3) absolute bar)
• Lobbying beyond permissible limits (track against § 501(h) election)
• Private benefit or inurement to insiders
• Capital campaigns or endowment (unless expressly authorized)
• Activities jeopardizing either party's exempt status

4. Conditions & Ongoing Obligations

Pre-disbursement checklist:

• Current IRS determination letter or equivalent
• Certificate of good standing
• Itemized budget with narrative justification
• Work plan with milestones
• Insurance evidence (GL + D&O with minimum limits)
• Executed conflict-of-interest policy
• Board resolution authorizing grant acceptance
• Expenditure responsibility agreement (private foundation grantors — IRC § 4945(d)(4))

Ongoing covenants:

• Segregated accounting for grant funds
• GAAP-compliant records; retain [3–7] years post-term
• Maintain licenses, permits, accreditations for funded activities
• Comply with all applicable law
• Maintain insurance; name grantor as additional insured where appropriate
• Acknowledge grantor per recognition guidelines (acknowledgment ≠ endorsement)
• Prior written approval for: key personnel changes, scope modifications, subgranting, budget reallocations above threshold

5. Reporting & Monitoring

| Report | Frequency | Due | Content | |---|---|---|---| | Financial | Quarterly/semi-annual | [X] days post-period | Expenditures by category, cumulative totals, variance narrative (>10%), compliance certification | | Programmatic | Same | Same | Activities, progress vs. objectives, challenges, outcomes, plan modifications | | Final | Once | [30–90] days post-term | Full reconciliation, outcomes vs. objectives, lessons learned, sustainability plan, IP inventory | | Audit | Annual (if required) | [120–180] days post-FY | CPA audit per GAAS; triggered if grant > [$50k–$100k] or org revenue > [$750k] |

Monitoring rights: Site visits ([X] days' notice; no notice if fraud suspected), on-demand book/record inspection, payment suspension for reporting delinquency.

6. Intellectual Property & Confidentiality

• IP ownership: grantee-owned / grantor-owned / joint / public domain — specify
• If grantee retains: grantor gets royalty-free license for specified purposes
• Mutual confidentiality; survives termination

7. Termination

For cause ([15–30]-day cure unless incurable):

| Incurable (immediate) | Curable (with cure period) | |---|---| | Fraud or intentional fund misuse | Reporting delinquency | | Criminal conviction of key personnel | Insurance lapse | | Loss of 501(c)(3) or required status | Budget overrun without approval | | Bankruptcy or dissolution | Key personnel departure without notice | | OFAC/sanctions violation | Minor scope deviation |

Automatic triggers: Bankruptcy, dissolution, loss of exempt status, prohibited change of control.

For convenience: [30]-day written notice; grantee retains properly expended funds.

Post-termination: Return unexpended funds within [30] days + final accounting. For-cause → grantor may demand return of all funds. Surviving provisions: record retention, audit cooperation, confidentiality, IP, indemnification.

Grant-funded assets: Specify disposition — return to grantor / transfer to designated nonprofit / grantee retains for charitable use.

8. Standard Provisions

| Provision | Terms | |---|---| | Governing law | [Grantor's state]; no conflict-of-laws | | Venue | [County/District], [State] — exclusive | | Disputes | Negotiation [30 days] → Mediation (shared cost) → Litigation or AAA Arbitration | | Indemnification | Grantee indemnifies grantor for third-party claims from grantee's acts/omissions | | Assignment | Grantee: prohibited without consent. Grantor: may assign to successor | | Relationship | Independent parties; no partnership, JV, agency, or employment | | Amendment | Written, signed by both parties | | Integration | Entire agreement; supersedes prior negotiations | | Severability / Waiver | Standard; waiver must be written | | Counterparts / Notices | E-signatures valid; certified mail / courier / confirmed email |

9. Exhibits

• A — Project Description, Objectives & Deliverables
• B — Approved Budget by Category
• C — Reporting Templates
• D — Expenditure Responsibility Agreement (private foundations only)
• E — Insurance Requirements

10. Signature Blocks

Each party: entity name, signatory name, title, execution date, authority reference.

Pitfalls & Checks

• IRC § 4945 (private foundations): Expenditure responsibility mandatory if grantee is not a U.S. public charity — requires pre-grant inquiry, written agreement, and IRS reporting
• Foreign grantees: Must elect expenditure responsibility or obtain equivalency determination; screen against OFAC/sanctions lists
• Government pass-through: 2 CFR Part 200 Uniform Guidance applies; include required award terms [VERIFY with agency]
• Lobbying: Cannot fund lobbying without tracking; § 501(h) election sets permissible limits
• Single Audit threshold: $750,000 federal expenditures annually [VERIFY — subject to regulatory update]
• Proportionality: Scale reporting/audit to grant size; full audit on small grants deters qualified grantees
• State registration: Some states require charitable solicitation registration for grant-funded activities; advise grantee to confirm