Maximizing Subrecipient Monitoring: Best Practices and Uniform Guidance

Subrecipient management is vital to effectively managing grants and contracts. As governments, local organizations, and institutions increasingly rely on subawards to achieve their missions, proper oversight of subrecipients is paramount. If your organization receives state or federal funds, you are probably aware of specific subrecipient monitoring requirements. 

What Is Subrecipient Monitoring? 

Subrecipient monitoring refers to the process and procedures implemented by grantors and prime awardees to oversee the activities and compliance of subrecipients who receive funds to carry out specific project objectives. Proper monitoring mitigates risks, enhances accountability, and safeguards the integrity of the funding process. Subrecipient monitoring is also a requirement outlined in the federal regulations, specifically in Uniform Guidance 2 CFR 200. This guidance requires grantees to monitor Federally funded activities for compliance with all applicable requirements regardless of who carries out the activity.  

Why Is Subrecipient Monitoring Important?  

Subrecipient monitoring is federally required as codified in 2 CFR Part 200, establishing the framework for federal grant management, including subrecipient monitoring requirements. Key provisions of the Uniform Guidance (and proposed revisions to Uniform Guidance as of October. 2023) related to subrecipient monitoring include:  

• Subrecipient determination: Clearly define subrecipient, beneficiary, and contractor relationships and maintain proper classification for monitoring purposes.  
• Flow-down requirements: Communicate applicable terms and conditions to subrecipients and confirm that they understand their obligations.  
• Subrecipient monitoring: Establish procedures for risk assessment, subrecipient selection, and monitoring consistent with the requirements of Uniform Guidance.  
• Reporting and documentation: Maintain accurate records of subrecipient monitoring activities and comply with Uniform Guidance reporting requirements.  
• Using plain language principles: Consistently use “recipient” or “subrecipient” in place of “non-federal entity” or “subgrantee.”  

Updates To the Uniform Guidance and Implications 

The approved 2024 revisions to the Uniform Guidance introduced key changes that impact how organizations approach subrecipient monitoring. Four notable changes include: 

1. Enhanced Risk Management Requirements 

• Grantees must conduct risk assessments with updated criteria, focusing on financial stability, performance history, and capacity. 
• Grantees must document corrective actions when deficiencies are identified, supporting accountability and improvement. 

2. Expanded Monitoring Obligations 

• Monitoring activities must now include virtual options alongside traditional site visits and desk reviews for greater flexibility. 
• Additional documentation standards emphasize detailed corrective action plans and timely follow-up on identified issues. 

3. Equity and Accessibility Focus 

• Organizations are encouraged to incorporate equity considerations in subrecipient selection and fund distribution, prioritizing underserved communities. 
• Accessibility requirements emphasize compliance with disability inclusion and language access policies. 

4. Technology and Data Emphasis  

• The revisions emphasize leveraging monitoring technology, such as grant management platforms to streamline reporting and risk assessments. 
• Strengthened data privacy and cybersecurity measures to protect sensitive information shared during monitoring. 

These updates require organizations to adapt their policies, procedures, and tools to remain compliant while optimizing their subrecipient management processes. 

Subrecipient Monitoring Checklist & Best Practices 

To maximize the effectiveness of subrecipient monitoring and align with the updated regulations, consider implementing these best practices: 

• Subrecipient Selection and Due Diligence: Assess organizational capacity, financial stability, and past performance during selection. 
• Risk Assessments: Conduct risk assessments to identify potential non-compliance or financial risks. Use the assessments to prioritize monitoring efforts, focusing on high-risk subrecipients. 
• Detailed Subaward Agreements: Clearly outline the scope of work, performance expectations, reporting requirements, and terms and conditions in all subaward agreements. 
• Ongoing Monitoring and Reporting: Perform regular monitoring activities, including site visits, desk reviews, and financial reconciliations. Document all activities and implement corrective actions promptly. 
• Training and Capacity Building: Offer tailored training and technical assistance to subrecipients to build their capacity for compliance and effective grant management. 

Technological Tools for Subrecipient Monitoring 

Organizations should implement technology solutions that streamline subrecipient monitoring. Tools like grant management software can automate risk assessments, tracking, and reporting, providing real-time reports to facilitate efficiency, accuracy, and compliance. 

Subrecipient monitoring is a multifaceted process that requires diligence, collaboration, and a commitment to accountability. The recent updates to the Uniform Guidance underscore the importance of robust monitoring practices. By implementing these best practices and staying informed of regulatory changes, organizations can mitigate risks, promote transparency, and better align with the desired outcomes of the grant-funded programs.  

Our grants management professionals have decades of experience navigating complex federal guidance and assisting clients with program management activities. Contact us below to discuss subrecipient monitoring requirements and how to leverage these practices to strengthen your program.