Grant Compliance Checklist for Nonprofits

Grant compliance isn't just about avoiding audit findings—it's about being a trustworthy steward of funder resources. This checklist covers the key compliance areas every grant-funded nonprofit should address.

Pre-Award Compliance

Before accepting a grant, ensure you can comply:

Organizational Readiness

• Financial systems adequate for grant tracking
• Staff capacity to manage the grant
• Policies in place (procurement, travel, personnel)
• Insurance coverage meets requirements
• Registration current (SAM.gov for federal, state registrations)

Grant Agreement Review

• Terms understood by all relevant staff
• Budget is realistic and complete
• Match requirements can be met (if applicable)
• Reporting deadlines are calendared
• Restrictions are understood and acceptable
• Prior approval requirements identified

Financial Management

Cost Principles (2 CFR 200 for Federal)

All costs charged to grants must be:

• Allowable — Permitted under grant terms and regulations
• Allocable — Benefit the grant proportionally to the charge
• Reasonable — What a prudent person would pay
• Consistent — Treated the same across grants

Allowable vs. Unallowable Costs

Generally Allowable:

• Salaries and wages (with documentation)
• Fringe benefits
• Travel (per policy and grant limits)
• Supplies directly used for grant
• Contractual services (with proper procurement)
• Indirect costs (per rate agreement)

Generally Unallowable:

• Entertainment
• Alcohol
• Lobbying
• Fundraising
• Fines and penalties
• Bad debts
• Contingency provisions
• General advertising
• Goods/services for personal use

Budget Management

• Budget approved before spending
• Spending within categories (or approval for changes)
• No overspending total award
• Prior approval obtained for budget changes (if required)
• Cost transfers are timely, justified, documented

Documentation Requirements

General Documentation

Every expense needs:

• Invoice or receipt — Original documentation
• Proof of payment — Check, bank statement, or EFT confirmation
• Purpose documentation — Why the expense was needed
• Grant coding — Which grant is charged
• Approval — Appropriate authorization

Personnel Documentation

• Timesheets for all staff charged to grants
• Time certifications signed (at least semi-annually)
• Position descriptions match actual duties
• Effort reporting matches charges
• Salary reasonableness documentation

Travel Documentation

• Prior approval (if required)
• Business purpose documented
• Receipts for all expenses
• Per diem compliance (if federal)
• Mileage logs for personal vehicle use
• Comparison to alternatives (if required)

Procurement Documentation

For each purchase over threshold:

• Competition documented (quotes, bids)
• Selection rationale explained
• Conflict of interest certification
• Contract or purchase order
• Price reasonableness analysis

Federal Grant Requirements

If you receive federal funds (directly or as pass-through):

Uniform Guidance (2 CFR 200)

• Written policies addressing:
  • Allowable costs
  • Cash management
  • Conflict of interest
  • Procurement
  • Travel
• Indirect cost rate documented
• Property management procedures
• Subrecipient monitoring (if you make subawards)

Required Certifications

• Lobbying certification (grants over $100K)
• Debarment certification
• Drug-free workplace certification

SAM.gov Registration

• Registration current (must renew annually)
• UEI number obtained
• Banking information current

Reporting Compliance

Financial Reporting

• SF-425 (Federal Financial Report) submitted on time
• Reports match general ledger
• Cash draws reconciled to expenditures
• Budget-to-actual variances explained

Programmatic Reporting

• Progress reports submitted by deadline
• Outcomes data accurate and verified
• Activities documented throughout the period
• Photos/evidence collected as required

Timely Submission

Report Type	Typical Deadline
Quarterly financial	30 days after quarter
Progress reports	Per agreement
Annual reports	90 days after year
Final report	90 days after end

Property and Equipment

Tracking Requirements

• Inventory system for equipment over $5,000
• Tags or labels on equipment
• Physical inventory conducted (at least every 2 years)
• Location of equipment documented

Disposition

When grant ends:

• Written approval for disposition method
• Fair market value obtained if sold
• Proceeds handled per grant terms
• Documentation of disposition

Subrecipient Management

If you make subawards:

Pre-Award

• Risk assessment conducted
• Award document includes required terms
• CFDA number passed through
• Indirect cost rate documented

During Award

• Monitoring plan implemented
• Financial reports reviewed
• Technical reports reviewed
• Site visits conducted (if required)
• Issues addressed promptly

Closeout

• Final reports collected
• Expenditures reconciled
• Audit status verified

Record Retention

Federal Grants

Retain records for 3 years after final report submission, or longer if:

• Litigation or audit pending
• Records relate to real property or equipment

All Grants

Keep:

• Grant agreements and amendments
• All financial records
• Supporting documentation
• Reports (all versions)
• Correspondence
• Audit workpapers

Audit Preparation

Annual Preparation

• Reconcile all grant accounts
• Review for compliance issues
• Prepare supporting schedules
• Organize documentation

Single Audit (if $750K+ federal expenditures)

• SEFA prepared accurately
• Major programs identified
• PBC list items prepared
• Prior findings addressed

Internal Controls

Segregation of Duties

• Authorization separated from recording
• Custody separated from recording
• Reconciliation by independent party

Approval Requirements

• Expense approval thresholds defined
• Journal entry approval required
• Budget change approval process
• Signature authority documented

Review Processes

• Monthly grant budget review
• Quarterly compliance review
• Annual policy review

Compliance Calendar

Monthly

• Reconcile grant expenses
• Review budget vs. actual
• Enter all transactions
• Update encumbrances

Quarterly

• Submit required reports
• Review compliance status
• Document grant activity
• Update risk assessments

Annually

• Update policies as needed
• Renew registrations (SAM.gov)
• Audit preparation
• Staff training refresh

At Grant End

• Final financial reconciliation
• Final reports submitted
• Property disposition
• Records organized for retention

Common Compliance Pitfalls

Documentation Gaps

Problem: Can't support charges Prevention: Document at time of transaction

Cost Transfers

Problem: Moving costs to avoid deficits Prevention: Charge correctly initially, justify any transfers

Time Reporting

Problem: Estimates instead of actuals Prevention: Contemporaneous time tracking

Procurement Shortcuts

Problem: Skipping competition requirements Prevention: Follow policy regardless of urgency

Missed Deadlines

Problem: Late reports Prevention: Calendar and reminders

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