grant-agreement

name	grant-agreement
description	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.
tags	["agreement","corporate","drafting","transactional"]

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:

1. Grantor — legal name, state of formation, EIN, entity type (private foundation / corporate / public charity / government), signatory + authority source
2. Grantee — legal name, DBA, jurisdiction, EIN, tax classification (501(c)(3) / governmental / fiscal sponsor / foreign org), signatory
3. Grant terms — amount, currency, disbursement type (lump sum / installment / milestone), grant period dates
4. Project scope — purpose, objectives, deliverables, timeline, geographic scope, itemized budget
5. Special flags — private foundation (triggers IRC § 4945); foreign grantee (equivalency determination or expenditure responsibility); government pass-through funds (2 CFR Part 200)

Quick Start

1. Collect prerequisites and identify special flags
2. Draft sections 1–10 below, scaling reporting/audit to grant size
3. If grantor is a private foundation → include expenditure responsibility agreement (Exhibit D)
4. If foreign grantee → add equivalency determination or expenditure responsibility election + OFAC screening
5. 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