If a project has multiple funding sources, which funding source governs protocol controls?

Although the Uniform Grant Guidance, 2 CFR 200, generally governs all federal grants, there is no universal governing protocol for projects with multiple federal funding sources. Every federal funding source has its unique award terms and conditions that govern the use of funds for recipients, which municipalities should analyze carefully in concert. Where funding overlap (known as “braiding” or “braided funding”) occurs, municipalities must abide by all the federal funding sources’ statutory and regulatory requirements and governing protocols. Municipalities should maintain documentation demonstrating that no duplication of benefits has occurred.

For example, responses to frequently asked questions regarding the combination of American Rescue Plan Act (“ARPA”) funds and Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), note that:

Funds may be used in conjunction with other funding sources, provided that the costs are eligible costs under each source program and are compliant with all other related statutory and regulatory requirements and policies. The recipient must comply with applicable reporting requirements for all sources of funds.[1]

Likewise, Community Development and Block Grants (“CDBG”) guidance makes clear that such grants can be leveraged with other Federal, state, local or private funds,[2] but municipalities must review the specific CDBG requirements to ensure compliance.[3]

Federal requirements for “braided funding” generally apply to the entirety of municipal projects. For municipalities considering funding sections of a project with different types of federal funding, the applicable federal requirements in each section apply to the entire project. For example, the U.S. Department of the Treasury (“Treasury”) requires that “[C]SLFRF funds may not be used to fund an activity that is not, in its entirety, an eligible use under the [C]SLFRF program.”[4]

As municipalities plan projects that may involve “braiding” funding sources, a critical step is to assess each federal statutory and regulatory requirement applicable to each funding source for the projects and to document compliance with the same. Municipalities should give considerable effort to understanding these requirements to ensure compliance with federal regulations, and to memorialize their efforts to do the same.

Last Updated: February 7, 2023