Allowable Uses of Grant Funds
Expenses Should Match Your Scope of Work
Use the grant contract and the Scope of Work submitted to OSBM as a guide for what the grant funds can be used to pay for. If you want to use grant money for something you aren't sure fits the grant Scope of Work, contact your grant administrator for advice.
Don't Mix Grant Funds with Any Other Funds
Grantees must track and report on grant money separately from all other funds. If your accounting software can't track the grant funds separately, you should deposit the grant into a different bank account from your organization's other funds.
Using Grant Funds for Subgrantees
Grant recipients may subgrant grant funds to other organizations to help achieve the grant purpose. However, the original grant recipient must make sure subrecipients follow all spending and reporting requirements. You must report individual expenses by subrecipients.
If funds will be awarded to subgrantees, include this information in the Scope of Work and grant contract.
Interest Earned by Grant Funds
Grant funds can be kept in interest bearing accounts. You must report earned interest to OSBM. Interest must be used for the same purposes as the grant funds.
Grant funds should not be invested in brokerage accounts or other investments unrelated to the grant purpose.
Sales Tax Paid with Grant Funds
Tax exempt organizations may not use grant funds to pay sales tax. Only taxable entities may use grant funds for sales tax. See Reporting Sales Tax.
Using Grant Funds for Staffing Costs
Grant funds can be used for staffing costs only if the staff activity is directly related to the grant project. It's easiest to justify when the staff is 100% dedicated to the grant project.
Timesheets must be kept for efforts spent on the grant project and should include a description of activities completed. Timesheets must be signed by the manager for each pay period.
In addition, there is a statutory salary limit for state-funded positions in a nonprofit organization. The limit is $140,000 per year including salary, fringe benefits, and employer taxes.
For more information, see Managing Grant Funds in our Frequently Asked Questions.
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