What are the rules on subgrants to community partners?

While the Final Rule does not provide a specific definition of “community partners,” in terms of the transfer of Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) to other entities, the U.S. Department of the Treasury (“Treasury”) is aligning the definition of subrecipient with Uniform Guidance. Specifically, the Final Rule states:

Per 2 CFR 200.101 (b)(2) of the Uniform Guidance, the terms and conditions of federal awards flow down to subawards to subrecipients. Therefore, non-federal entities, as defined in the Uniform Guidance, must comply with the applicable requirements in the Uniform Guidance regardless of whether the non-federal entity is a recipient or subrecipient of a federal award. This includes requirements such as the treatment of eligible uses of funds, procurement, and reporting requirements.

The Uniform Guidance definitions for both subaward and subrecipient specify that payments to individuals or entities that are direct beneficiaries of a federal award are not considered subrecipients. [1]

To determine the relevant rules, recipients should assess the rationale for why they are providing funds to the individual or entity. If the community partner is carrying out a CSFLRF program for the subrecipient, all terms and conditions of CSFLRF would apply to the subaward.

However, if the community partner is receiving funds as a result of experiencing a public health impact or negative impact of the pandemic, then it is a beneficiary and not subject to subrecipient monitoring or reporting requirements.[2] If the community partner is a beneficiary, then the recipient should document the COVID-19 public health or economic impact and how the response is related and reasonably proportional to the harm identified.[3] For example, general economic development or workforce development that is not directly addressing an economic impact of COVID-19 would not be eligible under this funding.[4]

Last Revised: March 22, 2022