Subrecipient agreements: Overview, definition, and example
What is a subrecipient agreement?
A subrecipient agreement is a contract between a primary recipient of a grant or contract (the "pass-through entity") and another organization (the "subrecipient") that will carry out part of the work funded by the grant or contract. This agreement outlines the roles, responsibilities, and expectations of the subrecipient, including how the funds will be used, reporting requirements, and compliance with applicable laws or regulations. Subrecipient agreements are commonly used in situations where the primary recipient cannot complete all aspects of the project on its own and needs to rely on another entity for specific tasks.
For example, a nonprofit receiving a federal grant might enter into a subrecipient agreement with a local community organization to deliver services under the grant. The agreement would detail the community organization’s responsibilities, how funds are to be used, and how they must report back to the nonprofit.
Why are subrecipient agreements important?
Subrecipient agreements are important because they establish clear expectations and guidelines between the primary recipient and the subrecipient. They ensure that all parties understand their roles and responsibilities and that the grant funds are used appropriately and effectively. Subrecipient agreements also help ensure compliance with federal, state, or local regulations, preventing misuse of funds and protecting both the pass-through entity and the subrecipient from legal or financial issues.
For businesses or nonprofits receiving grant funds, having well-structured subrecipient agreements is essential to managing projects efficiently, meeting regulatory requirements, and maintaining accountability in the use of grant resources.
Understanding subrecipient agreements through an example
Imagine a large public health organization receives a federal grant to conduct a health awareness campaign. This organization might enter into a subrecipient agreement with smaller, local clinics to help carry out the campaign’s activities. The subrecipient agreement would define the clinics' responsibilities, such as outreach efforts and reporting data back to the public health organization. It would also ensure that the clinics comply with all relevant federal regulations on fund use and reporting.
In another example, a university receives a research grant and partners with a laboratory at a different institution. The university would create a subrecipient agreement with the lab to ensure they understand the scope of their work, how grant funds should be spent, and the reporting and compliance requirements they need to meet.
An example of a subrecipient agreement clause
Here’s how a subrecipient agreement clause might appear in a contract:
“The Subrecipient agrees to use the funds provided under this agreement solely for the purpose outlined in the grant and in accordance with applicable federal and state regulations. The Subrecipient shall submit quarterly progress reports and financial statements to the Recipient, ensuring transparency and compliance with all requirements of the Grant Agreement.”
Conclusion
Subrecipient agreements are essential for defining the roles and responsibilities of entities involved in grant-funded projects. They ensure that funds are used appropriately and that all parties comply with legal and regulatory requirements. By outlining the expectations for the subrecipient, these agreements help prevent misuse of funds and promote transparency, accountability, and successful project completion.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.