Straight answers about grant compliance

A Negotiated Indirect Cost Rate Agreement (NICRA) sets the percentage an organization can charge federal awards for shared overhead costs like rent, utilities, and administrative staff, negotiated with a cognizant federal agency based on your actual cost history (2 CFR 200.414). If you don’t have a NICRA, you can instead elect a de minimis rate of up to 15% of Modified Total Direct Costs without needing to justify or document it (2 CFR 200.414(f)). Once you elect the de minimis rate, you can use it indefinitely until you choose to negotiate a formal rate instead.

Time & Effort Documentation is the record-keeping system that shows staff salaries charged to a federal grant match the work actually performed, not just budgeted estimates (2 CFR 200.430). Records must be part of your official system, reflect actual activity, and be supported by internal controls that catch and correct discrepancies. Missing or budget-only documentation is one of the most common audit findings for grant recipients.

A monitoring visit is how a funder or pass-through entity confirms your organization is meeting program requirements and using funds as approved (2 CFR 200.329 and 200.332). Reviewers typically check financial records, time and effort documentation, procurement files, and progress toward stated goals and objectives. The best preparation is keeping those records current year-round and doing a quick internal review against your approved budget and workplan before the visit date.

Equipment is tangible property with a useful life of more than one year and a per-unit cost of $10,000 or more (or your organization’s lower capitalization threshold, whichever applies) (2 CFR 200.1, 200.313). Supplies are everything else — tangible items below that cost threshold, regardless of how long they last, including most computing devices. The distinction matters because equipment requires inventory tracking and disposition procedures that supplies do not (2 CFR 200.314).

Yes — federal awards require you to report how actual accomplishments compare to the goals and objectives approved in your award, and performance metrics are the measurable indicators that make that comparison possible (2 CFR 200.301 and 200.329(b)). Consistently meeting or explaining variances from your metrics demonstrates accountability to your funder. Falling short without explanation can affect your standing for continued or future funding, so tracking progress throughout the year — not just at reporting time — is worth the effort.

Aligning expenses to budget means every cost charged to a grant should match the categories and amounts in your approved budget, or fall within any allowed flexibility. When actual spending starts to deviate meaningfully from the approved plan, that’s typically a signal a budget revision is needed (2 CFR 200.308). Staying aligned protects you from disallowed costs and awkward conversations during a monitoring visit.

Allowable costs must be reasonable, necessary, properly allocated to the award, and consistently treated across your organization (2 CFR 200.403–200.405). Unallowable costs — such as alcohol, entertainment, fines, or lobbying — can never be charged to a federal award regardless of how the expense is described or coded. When in doubt, the safest approach is to check the specific cost item against the Uniform Guidance’s cost principles before charging it.

Most significant changes to your project’s scope, objectives, or budget require prior written approval from your awarding agency or pass-through entity before you make the change (2 CFR 200.308). Requests are generally submitted in the same format as your original application, unless your funder has approved an alternative format such as an online system or email. Submitting early — before costs are incurred — is the best way to avoid disallowed expenses later.