Grant Agreement
Drafts enforceable U.S. grant agreements transferring funds with conditions, protecting grantor oversight while giving grantees clear operational parameters.
Prerequisites
Gather before drafting:
- Grantor — legal name, state of formation, EIN, entity type (private foundation / corporate / public charity / government), signatory + authority source
- Grantee — legal name, DBA, jurisdiction, EIN, tax classification (501(c)(3) / governmental / fiscal sponsor / foreign org), signatory
- Grant terms — amount, currency, disbursement type (lump sum / installment / milestone), grant period dates
- Project scope — purpose, objectives, deliverables, timeline, geographic scope, itemized budget
- Special flags — private foundation (triggers IRC § 4945); foreign grantee (equivalency determination or expenditure responsibility); government pass-through funds (2 CFR Part 200)
Quick Start
- Collect prerequisites and identify special flags
- Draft sections 1–10 below, scaling reporting/audit to grant size
- If grantor is a private foundation → include expenditure responsibility agreement (Exhibit D)
- If foreign grantee → add equivalency determination or expenditure responsibility election + OFAC screening
- Attach exhibits and circulate for review
Output Structure
1. Parties & Recitals
Grantor block: Legal name, formation state, address, EIN, entity type, authorized representative + title + authority source.
Grantee block: Legal name, DBA, jurisdiction, EIN, tax status (cite determination letter date), address. Fiscal sponsor → identify all three parties with explicit obligations. Foreign org → note equivalency or expenditure responsibility election.
Recitals: Establish: (a) grantor's exempt purpose or CSR rationale; (b) grantee qualifications; (c) selection process; (d) relationship is a grant — not loan, contract, JV, or service exchange; (e) legal authority (board approval, payout compliance).
2. Grant Amount & Payment
| Element |
Terms |
| Total amount |
Numerals and words; specify currency |
| Disbursement |
Lump sum / installments / milestone tranches |
| Conditions per payment |
Reports approved, deliverables met, compliance confirmed, matching funds evidenced |
| Budget modification |
≤10% line-item variance: grantee discretion; >10% or category change: prior written approval |
| Unexpended funds |
Return within [30] days of term end or carry-forward with written approval |
3. Permitted & Prohibited Uses
Permitted:
- Direct costs: salaries (grant-allocated FTE %), equipment, supplies, travel, consultants
- Indirect/overhead: [specify % or fixed cap]
- Subgrants: prior written approval required; key terms must flow down
Prohibited:
- Political campaign activity (IRC § 501(c)(3) absolute bar)
- Lobbying beyond permissible limits (track against § 501(h) election)
- Private benefit or inurement to insiders
- Capital campaigns or endowment (unless expressly authorized)
- Activities jeopardizing either party's exempt status
4. Conditions & Ongoing Obligations
Pre-disbursement checklist:
- Current IRS determination letter or equivalent
- Certificate of good standing
- Itemized budget with narrative justification
- Work plan with milestones
- Insurance evidence (GL + D&O with minimum limits)
- Executed conflict-of-interest policy
- Board resolution authorizing grant acceptance
- Expenditure responsibility agreement (private foundation grantors — IRC § 4945(d)(4))
Ongoing covenants:
- Segregated accounting for grant funds
- GAAP-compliant records; retain [3–7] years post-term
- Maintain licenses, permits, accreditations for funded activities
- Comply with all applicable law
- Maintain insurance; name grantor as additional insured where appropriate
- Acknowledge grantor per recognition guidelines (acknowledgment ≠ endorsement)
- Prior written approval for: key personnel changes, scope modifications, subgranting, budget reallocations above threshold
5. Reporting & Monitoring
| Report |
Frequency |
Due |
Content |
| Financial |
Quarterly/semi-annual |
[X] days post-period |
Expenditures by category, cumulative totals, variance narrative (>10%), compliance certification |
| Programmatic |
Same |
Same |
Activities, progress vs. objectives, challenges, outcomes, plan modifications |
| Final |
Once |
[30–90] days post-term |
Full reconciliation, outcomes vs. objectives, lessons learned, sustainability plan, IP inventory |
| Audit |
Annual (if required) |
[120–180] days post-FY |
CPA audit per GAAS; triggered if grant > [$50k–$100k] or org revenue > [$750k] |
Monitoring rights: Site visits ([X] days' notice; no notice if fraud suspected), on-demand book/record inspection, payment suspension for reporting delinquency.
6. Intellectual Property & Confidentiality
- IP ownership: grantee-owned / grantor-owned / joint / public domain — specify
- If grantee retains: grantor gets royalty-free license for specified purposes
- Mutual confidentiality; survives termination
7. Termination
For cause ([15–30]-day cure unless incurable):
| Incurable (immediate) |
Curable (with cure period) |
| Fraud or intentional fund misuse |
Reporting delinquency |
| Criminal conviction of key personnel |
Insurance lapse |
| Loss of 501(c)(3) or required status |
Budget overrun without approval |
| Bankruptcy or dissolution |
Key personnel departure without notice |
| OFAC/sanctions violation |
Minor scope deviation |
Automatic triggers: Bankruptcy, dissolution, loss of exempt status, prohibited change of control.
For convenience: [30]-day written notice; grantee retains properly expended funds.
Post-termination: Return unexpended funds within [30] days + final accounting. For-cause → grantor may demand return of all funds. Surviving provisions: record retention, audit cooperation, confidentiality, IP, indemnification.
Grant-funded assets: Specify disposition — return to grantor / transfer to designated nonprofit / grantee retains for charitable use.
8. Standard Provisions
| Provision |
Terms |
| Governing law |
[Grantor's state]; no conflict-of-laws |
| Venue |
[County/District], [State] — exclusive |
| Disputes |
Negotiation [30 days] → Mediation (shared cost) → Litigation or AAA Arbitration |
| Indemnification |
Grantee indemnifies grantor for third-party claims from grantee's acts/omissions |
| Assignment |
Grantee: prohibited without consent. Grantor: may assign to successor |
| Relationship |
Independent parties; no partnership, JV, agency, or employment |
| Amendment |
Written, signed by both parties |
| Integration |
Entire agreement; supersedes prior negotiations |
| Severability / Waiver |
Standard; waiver must be written |
| Counterparts / Notices |
E-signatures valid; certified mail / courier / confirmed email |
9. Exhibits
- A — Project Description, Objectives & Deliverables
- B — Approved Budget by Category
- C — Reporting Templates
- D — Expenditure Responsibility Agreement (private foundations only)
- E — Insurance Requirements
10. Signature Blocks
Each party: entity name, signatory name, title, execution date, authority reference.
Pitfalls & Checks
- IRC § 4945 (private foundations): Expenditure responsibility mandatory if grantee is not a U.S. public charity — requires pre-grant inquiry, written agreement, and IRS reporting
- Foreign grantees: Must elect expenditure responsibility or obtain equivalency determination; screen against OFAC/sanctions lists
- Government pass-through: 2 CFR Part 200 Uniform Guidance applies; include required award terms [VERIFY with agency]
- Lobbying: Cannot fund lobbying without tracking; § 501(h) election sets permissible limits
- Single Audit threshold: $750,000 federal expenditures annually [VERIFY — subject to regulatory update]
- Proportionality: Scale reporting/audit to grant size; full audit on small grants deters qualified grantees
- State registration: Some states require charitable solicitation registration for grant-funded activities; advise grantee to confirm
1---2name: grant-agreement3description: Drafts U.S. grant agreements for philanthropic fund transfers between grantors and nonprofit grantees. Enforces IRC § 4945 expenditure responsibility, 501(c)(3) compliance, permitted-use restrictions, milestone disbursements, reporting obligations, and clawback rights. Use when drafting grant award letters, corporate giving agreements, nonprofit funding agreements, or foundation grant contracts.4---5
6# Grant Agreement
7
8Drafts enforceable U.S. grant agreements transferring funds with conditions, protecting grantor oversight while giving grantees clear operational parameters.
9
10## Prerequisites
11
12Gather before drafting:
13
141. **Grantor** — legal name, state of formation, EIN, entity type (private foundation / corporate / public charity / government), signatory + authority source
152. **Grantee** — legal name, DBA, jurisdiction, EIN, tax classification (501(c)(3) / governmental / fiscal sponsor / foreign org), signatory
163. **Grant terms** — amount, currency, disbursement type (lump sum / installment / milestone), grant period dates
174. **Project scope** — purpose, objectives, deliverables, timeline, geographic scope, itemized budget
185. **Special flags** — private foundation (triggers IRC § 4945); foreign grantee (equivalency determination or expenditure responsibility); government pass-through funds (2 CFR Part 200)
19
20## Quick Start
21
221. Collect prerequisites and identify special flags
232. Draft sections 1–10 below, scaling reporting/audit to grant size
243. If grantor is a private foundation → include expenditure responsibility agreement (Exhibit D)
254. If foreign grantee → add equivalency determination or expenditure responsibility election + OFAC screening
265. Attach exhibits and circulate for review
27
28## Output Structure
29
30### 1. Parties & Recitals
31
32**Grantor block:** Legal name, formation state, address, EIN, entity type, authorized representative + title + authority source.
33
34**Grantee block:** Legal name, DBA, jurisdiction, EIN, tax status (cite determination letter date), address. Fiscal sponsor → identify all three parties with explicit obligations. Foreign org → note equivalency or expenditure responsibility election.
35
36**Recitals:** Establish: (a) grantor's exempt purpose or CSR rationale; (b) grantee qualifications; (c) selection process; (d) relationship is a grant — not loan, contract, JV, or service exchange; (e) legal authority (board approval, payout compliance).
37
38### 2. Grant Amount & Payment
39
40| Element | Terms |
41|---|---|
42| Total amount | Numerals and words; specify currency |
43| Disbursement | Lump sum / installments / milestone tranches |
44| Conditions per payment | Reports approved, deliverables met, compliance confirmed, matching funds evidenced |
45| Budget modification | ≤10% line-item variance: grantee discretion; >10% or category change: prior written approval |
46| Unexpended funds | Return within [30] days of term end or carry-forward with written approval |
47
48### 3. Permitted & Prohibited Uses
49
50**Permitted:**
51- Direct costs: salaries (grant-allocated FTE %), equipment, supplies, travel, consultants
52- Indirect/overhead: [specify % or fixed cap]
53- Subgrants: prior written approval required; key terms must flow down
54
55**Prohibited:**
56- Political campaign activity (IRC § 501(c)(3) absolute bar)
57- Lobbying beyond permissible limits (track against § 501(h) election)
58- Private benefit or inurement to insiders
59- Capital campaigns or endowment (unless expressly authorized)
60- Activities jeopardizing either party's exempt status
61
62### 4. Conditions & Ongoing Obligations
63
64**Pre-disbursement checklist:**
65- Current IRS determination letter or equivalent
66- Certificate of good standing
67- Itemized budget with narrative justification
68- Work plan with milestones
69- Insurance evidence (GL + D&O with minimum limits)
70- Executed conflict-of-interest policy
71- Board resolution authorizing grant acceptance
72- Expenditure responsibility agreement (private foundation grantors — IRC § 4945(d)(4))
73
74**Ongoing covenants:**
75- Segregated accounting for grant funds
76- GAAP-compliant records; retain [3–7] years post-term
77- Maintain licenses, permits, accreditations for funded activities
78- Comply with all applicable law
79- Maintain insurance; name grantor as additional insured where appropriate
80- Acknowledge grantor per recognition guidelines (acknowledgment ≠ endorsement)
81- Prior written approval for: key personnel changes, scope modifications, subgranting, budget reallocations above threshold
82
83### 5. Reporting & Monitoring
84
85| Report | Frequency | Due | Content |
86|---|---|---|---|
87| Financial | Quarterly/semi-annual | [X] days post-period | Expenditures by category, cumulative totals, variance narrative (>10%), compliance certification |
88| Programmatic | Same | Same | Activities, progress vs. objectives, challenges, outcomes, plan modifications |
89| Final | Once | [30–90] days post-term | Full reconciliation, outcomes vs. objectives, lessons learned, sustainability plan, IP inventory |
90| Audit | Annual (if required) | [120–180] days post-FY | CPA audit per GAAS; triggered if grant > [$50k–$100k] or org revenue > [$750k] |
91
92**Monitoring rights:** Site visits ([X] days' notice; no notice if fraud suspected), on-demand book/record inspection, payment suspension for reporting delinquency.
93
94### 6. Intellectual Property & Confidentiality
95
96- IP ownership: grantee-owned / grantor-owned / joint / public domain — specify
97- If grantee retains: grantor gets royalty-free license for specified purposes
98- Mutual confidentiality; survives termination
99
100### 7. Termination
101
102**For cause** ([15–30]-day cure unless incurable):
103
104| Incurable (immediate) | Curable (with cure period) |
105|---|---|
106| Fraud or intentional fund misuse | Reporting delinquency |
107| Criminal conviction of key personnel | Insurance lapse |
108| Loss of 501(c)(3) or required status | Budget overrun without approval |
109| Bankruptcy or dissolution | Key personnel departure without notice |
110| OFAC/sanctions violation | Minor scope deviation |
111
112**Automatic triggers:** Bankruptcy, dissolution, loss of exempt status, prohibited change of control.
113
114**For convenience:** [30]-day written notice; grantee retains properly expended funds.
115
116**Post-termination:** Return unexpended funds within [30] days + final accounting. For-cause → grantor may demand return of all funds. Surviving provisions: record retention, audit cooperation, confidentiality, IP, indemnification.
117
118**Grant-funded assets:** Specify disposition — return to grantor / transfer to designated nonprofit / grantee retains for charitable use.
119
120### 8. Standard Provisions
121
122| Provision | Terms |
123|---|---|
124| Governing law | [Grantor's state]; no conflict-of-laws |
125| Venue | [County/District], [State] — exclusive |
126| Disputes | Negotiation [30 days] → Mediation (shared cost) → Litigation or AAA Arbitration |
127| Indemnification | Grantee indemnifies grantor for third-party claims from grantee's acts/omissions |
128| Assignment | Grantee: prohibited without consent. Grantor: may assign to successor |
129| Relationship | Independent parties; no partnership, JV, agency, or employment |
130| Amendment | Written, signed by both parties |
131| Integration | Entire agreement; supersedes prior negotiations |
132| Severability / Waiver | Standard; waiver must be written |
133| Counterparts / Notices | E-signatures valid; certified mail / courier / confirmed email |
134
135### 9. Exhibits
136
137- **A** — Project Description, Objectives & Deliverables
138- **B** — Approved Budget by Category
139- **C** — Reporting Templates
140- **D** — Expenditure Responsibility Agreement (private foundations only)
141- **E** — Insurance Requirements
142
143### 10. Signature Blocks
144
145Each party: entity name, signatory name, title, execution date, authority reference.
146
147## Pitfalls & Checks
148
149- **IRC § 4945 (private foundations):** Expenditure responsibility mandatory if grantee is not a U.S. public charity — requires pre-grant inquiry, written agreement, and IRS reporting
150- **Foreign grantees:** Must elect expenditure responsibility or obtain equivalency determination; screen against OFAC/sanctions lists
151- **Government pass-through:** 2 CFR Part 200 Uniform Guidance applies; include required award terms [VERIFY with agency]
152- **Lobbying:** Cannot fund lobbying without tracking; § 501(h) election sets permissible limits
153- **Single Audit threshold:** $750,000 federal expenditures annually [VERIFY — subject to regulatory update]
154- **Proportionality:** Scale reporting/audit to grant size; full audit on small grants deters qualified grantees
155- **State registration:** Some states require charitable solicitation registration for grant-funded activities; advise grantee to confirm
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