February 17, 2021

Smart Management of Government Pass-through Grants

Managing federal pass-through grants can be an excellent way for state or county government to facilitate more funding for their region. Read on to learn more about how to manage these funds, as well as the special reporting requirements you may be subject to.

Whether you are the sub-recipient of a pass-through grant or the government entity distributing them, the grants management of these government programs requires extensive record-keeping and data reporting, as well as enhanced security. A contemporary, cloud-based grants management software for government can help you achieve these high standards, and more — allowing for a pass-through grants management and disbursement system that gets much-needed government funds where they need to go. 

What is a pass-through grant?

Pass-through grants are federal funds that are granted to state governments (and, occasionally, local governments, such as city and county offices). These funds then “pass through”  the state office and are distributed to local offices and organizations, such as cities, counties, towns, and tribal organizations, as well as nonprofit or nongovernmental organizations whose work is aligned with the funding government’s program. These local offices and organizations are known as “sub-recipients.”

The purpose of a pass-through grant is to carry out the work of a large federal program on smaller, local levels. These governments rely on the expertise of state offices to distribute funds to the right sub-recipients. A current example can be the millions in CARES Act funding that began trickling down from the federal government during 2020, passing through states and counties as relief grant programs to eventually reach local businesses struggling during the COVID-19 pandemic.

In another example, the Georgia Coastal Management Program (GCMP) administers Coastal Incentive Grants to local organizations that align with their mission to protect the area’s natural resources. These grants are funded by a federal program, and pass through the GCMP to local sub-recipients. 

How do state, city, and county government offices use pass-through grant funding?

As a pass-through entity, your role is to determine which local offices and organizations should receive federal assistance. These sub-recipients should work toward accomplishing the mission and goals of the larger governmental organizations allocating the funds. The federal office granting the funding may provide you with a list of standards or requirements that sub-recipients must fulfill in order to receive a pass-through grant. These standards will be important to consider when constructing your grant program, creating applications, and, ultimately, your grants management process

Once you have awarded a pass-through grant, it’s important to understand that both you and the sub-recipient will likely need to adhere to the policies set by the government office funding the grant. You can also expect additional oversight. It’s best to set these expectations early for your sub-recipients, and to document all funds dispersed, to whom, and the specific activities and achievements. 

Are there reporting requirements when managing pass-through grants?

Once you have defined your sub-recipients, managing a pass-through grants program may require an enhanced level of accounting and data collection. You will need to keep detailed records and expect to be audited. Be sure to check in with both the federal and state entities who are funding the grant so that you know exactly which data and grant metrics to record. 

In addition, you’ll want to regularly report on the sub-recipient’s impact. Ideally, you’ll be able to tell a story about how the funds you disbursed allowed local offices and organizations to do impactful local work in the community on the federal government’s behalf. This type of reporting is not only necessary for government accountability, it allows every organization to shine along the way — creating opportunities for future funding of important local work. 

Managing federal grants always requires attention to detail. However, disbursing pass-through grants can be an especially complex task, meaning that you’ll need a range of modern grant management software features in order to ensure success and save grantmaking staff time. 


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