While not all grant awards require an organizational match, many do. As a grant-active organization, it is wise to examine all grant documents to be certain of the commitments being made. Despite what many believe, grant money is not free money.
Organizational Commitment to Grant-Funded Programs
Many grant awards require a cash or in-kind match from the organization. Occasionally, federal funding agencies indicate that a match is optional; organizations that can provide one often receive bonus points during the scoring process. Foundation funding sources often require organizations to demonstrate their commitment to the project for which they are seeking funding in the form of matching funds.
Organizations may not realize that a match is required because there has been staff turnover, the grant writer gave an inaccurate portrayal of the organization in the grant proposal, or organizational leaders did not read the entire proposal/grant agreements and corresponding organizational responsibilities. A funding source considers all of these reasons unacceptable. Once the organizational authorized signatory has signed a grant agreement, the organization is responsible for the terms it contains.
Due to the time that elapses between an application and a grant award, it is possible for an organization’s financial status to have changed significantly, so much so that they become unable to meet the match requirement. In such situations, it is important for the organization not to accept the grant award if they cannot fulfill their financial obligations. To reduce the incidence of not being able to provide a match, many federal funding agencies utilize a pre-award letter. This letter acknowledges that time has elapsed since the original application and since any commitments to the project were made. Specific questions are asked by the funding source, including, “If a grant is awarded, will you accept?” and “How will you meet your match responsibilities?”
Organizations have a great deal of flexibility in how they meet match commitments. The one stipulation with federal grant awards is that the match must come from nonfederal dollars; this restriction includes all federal funds – even those that are pass-through grants to the organization. It should also be noted that most federal agencies require the organization to spend their share, document the spending, and submit the documentation prior to receiving any of the awarded grant funds.
Organizations may have some flexibility within their operating budgets. These funds may be used as a match for grant funds. Other strategies to meet a required cash match may include:
- Obtaining foundation grant funding
- Seeking financial contributions from organizational supporters
- Engaging in fundraisers that are specifically designated as a match for the grant
Fundraising, for example, has worked well for many local fire departments that apply for funding through the Department of Homeland Security’s Fire Act Grant Program. This grant provides funding for a fire apparatus, equipment, and training essential to fire departments. The grant requires a cash match, and the population of the recipient organization determines the match percentage. Often, fire departments will hold fundraisers during the course of the year to fulfill the match requirement.
Many funding sources permit in-kind matches. While in-kind matches allow for a great deal of flexibility, it is important to document the match throughout the grant performance period. Furthermore, while no actual cash transaction occurs, a cash value is assigned to an in-kind match, and all the tracking and back-up requirements of a cash match also apply. In-kind matches can include staff time, program space, administrative costs, and supplies, as well as contributions to the project made by collaborators. Always reference the funding instructions since the agency may specify certain thresholds or specific types of in-kind matches that may be used. When in doubt, consult directly with the funding agency.
If your organization finds itself facing an unexpected match commitment, the first step to solving the dilemma is to re-read all grant documents in your grants management system to determine the type of match required and what may be used as a match. Next, contact the program officer responsible for the grant program. Explain the situation and offer possible solutions. Many agencies will work with you. Remember, the funding agency wants your program and your organization to succeed since your success is their success.
- Matching Funds Required: Outsmarting a Catch 22 has more suggestions on how to meet your match.
- Matching Funds: Two Words That Prevent You From Applying?