Grants are financial assistance paid or services furnished by a state agency via a third party to an eligible recipient instead of acquiring by professional or technical contract, purchase, lease, or barter property or services for the direct benefit or use of the granting agency. Grants always involve three parties:
the state agency with authority to make the grant,
the outside entity that will administer the grant or deliver the service, and
A grant agreement is a class of contract which provides the transfer of cash or something of value to a recipient to support a public purpose authorized by law. Grant agreements are different from other contracts in many key ways.
State agencies do not have general or automatic grant making authority. The authority for grants must be specifically stated in the statutes and is generally directly related to the appropriations that fund them. Some agencies, such as The Department of Employment and Economic Development, have long-term programs that authorize grants and loans. Most other situations are appropriation specific.
The Department of Administration’s Office of Grants Management (OGM) is charged by Minnesota Statutes 16B.97 to standardize, streamline, and improve state grant-making practices. A tool used to accomplish this mission are 13 comprehensive grants management policies that apply to all Executive Branch agencies, boards, commissions, councils, authorities, and task forces.
As a general principle, grants distributed by an agency should be done in a fair and equitable manner, which is usually done through some form of public notice. Each state agency may differ in how it notifies the public and solicits requests for proposals (RFP), but the agency should have a defined process that ensures a fair and equitable distribution. Per Grants Management Policy 08-03, competitive grant opportunities shall be publicized as broadly as possible and at a minimum, must be posted on the granting agency’s website. Agencies should pursue additional methods and identify multiple ways to share grant request for proposals or requests for applications to reach potential applicants and parts of the state that have not historically participated in the grant application process. This can include targeting communities and conducting outreach to culturally specific and community based organizations.
Minnesota Statutes 15.994 requires state agencies with Internet sites to provide information on grants available through the agency and are encouraged to provide a link to the grant application under Minnesota Statutes 16E.20. In addition, state agencies are encouraged to develop systems for electronic grant application submission.
Examples of appropriate public notice:
If the legislation does not specify who the grantee is, the process should be open, fair and as competitive as practical in making the awards. This would include such actions as issuing an RFP and placing a notice on the agency’s website. Agencies should pursue additional methods to reach potential applicants that may include: targeting communities and parts of the state that have not historically participated in the grant application process, culturally-specific and community-based organizations, e-mail, agency distribution lists, agency social media accounts and channels, targeted news and diverse media sources, notifying prior applicants and recipients, the State Register and US Mail.
If the legislation specifies specific organizations or groups, such as metropolitan counties, notification should be directly sent to all eligible organizations or groups, such as of the counties in the metro area.
The RFP or grant application should contain the following essential elements:
A clear description of the grant program
The legislative authority for the grant including specific requirements from the state legislation or federal pass-through.
If applicable, eligibility requirements
The objectives, goals, priorities, outcomes, reporting requirements, and work product of the grant.
The grant program’s diversity and inclusion needs including how the grant program serves diverse populations
Information on multi-organization collaboration -i.e. is it encouraged, required, restricted, etc.
Providing notice that a grant applicant’s past performance as a grantee of the particular state agency administering the grant will be considered when evaluating a grant application.
The grant selection/evaluation criteria and the weight assigned to the criteria.
General information about the review process and general overview of the composition of the review committee
Amount of money for distribution and how it will be allocated
If applicable, in-kind or match requirements
A statement about when information in the grant application becomes public data
Deadlines and timelines for each step in the application and award process
Application formatting instructions or an application template
State agency contact information
If you have any questions about public notice, ask your Agency Contract Coordinator, the Office of Grants Management, or Assistant Attorney General.
There are statutory provisions for conflict of interest that apply to processes and the roles of individuals involved in the grant award and grant administration process; including state and nonstate employees. Relevant statutes are Minnesota Statutes 10A.07, 15.054, 15.43, 16B.98 Subd 2-3,16C.04, 43A.38, 471.87
Executive branch agencies, boards, councils, and task forces may have agency additional and unique statutes, rules, and policies related to conflict of interest that are specific to their work and in addition to the broader statutes referenced above. Executive branch agencies should reference HR/LR Policy #1445 Code of Ethical Conduct to understand and implement the requirements for executive branch employees (state employees)
Please reference these key principles with state grant-making and grant administration:
Minnesota state agencies, executive branch boards, committees, authorities, task forces, and councils must work to deliberately avoid actual and potential conflicts of interest related to grant-making and grant administration at both the individual and organizational levels.
When a conflict of interest concerning state grant-making exists, transparency shall be the guiding principle in addressing it.
Minnesota state agencies, executive branch boards, committees, authorities, task forces, and councils must take steps to communicate, address, resolve, and document conflicts of interest as they arise.
Executive branch agencies can consult with their agency’s ethics officer as an appropriate resource/when needed for assistance with decision-making.
Grants Management Policy 08-04 states that Minnesota state agencies must use a written grant contract agreement or grant application with a corresponding grant award notification for all grants made by the agency.
It is essential to write clear duties and expectations of the grantee into the grant contract agreement or grant application with a corresponding grant award notification.
Clear writing and using plain language:
Ensures that the parties to the grant clearly understand the terms of the grant contract agreement or grant application with a corresponding grant award notification.
This includes the minimum requirements and assurances that come with accepting the terms of the grant which include (but are not limited to) duties, quality and time of performance, terms of payment, etc.
Sets up the granting agency, the grant applicants, and the grantees for success.
Helps avoid potential disputes
May result in failure to obtain the services the agency assumed were described in the grant.
Can create difficulty in grantees understanding what duties need to be performed
Can lead to unnecessary amendments
The written grant contract agreement or grant application with a corresponding grant award notification is generally the only thing that counts in a dispute over whether the grantee has fulfilled their legal obligation.
In a legal action, any ambiguity will be interpreted against the party in the more powerful position; in most cases the agency, so a provision that can be interpreted against the agency most likely will be. Dialogue that takes place between the granting agency and the grantee is useful for technical assistance and moving down a path toward shared understanding. However, verbal agreements do not take the place and do not hold the same weight as what is in writing. If it is not written in the grant contract agreement or grant application with a corresponding grant award notification, it is not enforceable.
Before taking the next steps described below for clear drafting, the granting agency must first ensure that it has statutory authority to enter into and externally administer grants.
Suggestions for clear drafting
The granting agency should start with these questions when beginning to draft either a grant contract agreement or grant application with a corresponding grant award notification:
Who, What, When, Where, and How much?
What is the purpose of the grant?
What change(s) will happen as a result of this investment?
Answering these questions with specific information helps establish the broad parameters of the grant.
Thinking through the following list of topics will help granting agencies receive the maximum benefit from the grant by communicating clear expectations:
Project, Reporting, Fiscal and Administrative components:
List outcomes, outputs, work product(s), preferred or required qualifications of the person(s) performing the work, period of performance, reporting, monitoring and financial reconciliation, etc.
Specifically identify how grant payments will be made to the grantee.
Describe how grant performance will be measured, monitored, and evaluated
Describe grantee's duties simply and use plain language
Tip: Ensure what’s proposed in work plan/application clearly aligns and ties directly to the purpose of the grant and the grant appropriation.
Incorporate all attachments to the grant contract agreement properly.
Label attachments in the chronological order referenced in the grant contract agreement; that is, the first attachment mentioned should be Attachment A, the second, Attachment B, etc.
Attachments must actually be attached to each copy of the grant agreement.
Tip: Incorporate attachments by reference within the grant contract agreement. Use plain language to ensure information is clear and accessible to both the grantor and the grantee.
All numerical computations are accurate.
Every blank in the grant contract agreement is filled in.
All instructions are deleted from the grant contract agreement, there is proper pagination, etc.
The grant contract agreement or grant application with a corresponding grant award notification is consistent with the limits and purposes of the appropriation from which payments are to be made.
Sample Grant Contract Agreements and Grant application with a corresponding Grant Award notification are available on the Policies, Statutes and Forms page under the Forms and FAQs Tab.
The grant contract agreement, sample grant application with assurances and sample grant award notice templates meet the minimum requirements for executive branch granting agencies for broad compliance with Minn. Stat. §16B.97 and Minn. Stat. §16B.98.
Enterprise grant-makers must ensure that all grant contract agreements and grant application with corresponding grant award notification they execute meet the minimum requirements these templates provide.
Understanding that grant programs and specific grant appropriations can contain unique requirements, granting agencies may need to add terms and conditions to grant contract agreements and grant application with corresponding grant award notification which is within their authority per Minn. Stat. §16B.98 Subd. 6.
Agencies are strongly encouraged to reach out to OGM and their Assistant Attorney General if/when considering removing or substantially altering any of the template language.
Grants Management Policy 08-08 requires that state agencies specify the method and schedule of payments for each grant in the grant agreement. Reimbursement is the preferred method for making grant payments. Although they are not preferred, advance payments on grants may be allowed in certain situations. Advance payments on grants shall be negotiated between the state agency and grantee on a case by case basis.
When entering the grants into the State wide Integrated Financial Tools (SWIFT) system agencies should follow Minnesota Management and Budget’s guidance for properly coding grant payments to the correct expenditure object code and the correct accounting period.
Any amendments to the terms of the grant contract agreement or grant award notification must be made according to a fully executed amendment. A memo to the grantee indicating changes is not legally binding and is not sufficient to make the changes. Please see Grants Management Policy 08-12 for additional information on grant amendments.
It’s important that the amendment is in place before the grant contract agreement or grant award notification expires. This will avoid any liability that may occur for not having an agreement in place when the grantee is working.
Grant contract agreements or grant award notifications must be amended when there is a change in the amount of the grant or the time period of the grant.
Grant contract agreements or grant award notifications may be amended only when the purpose of the amendment is similar to the purpose of the grant contract agreement or grant award notification and when the grantee duties are within the scope of the original request for proposal, notice of grant opportunity or grant application.
The amendment should:
Describe the changes and why changes were made.
Correspond to changes to the standard assurances and minimum requirements in the grant contract agreement or grant award notification
Be clearly numbered (if multiple amendments are made) and approved in the same manner as the original grant contract agreement or grant award notification.
Grant contract agreement attachments, exhibits, approved grant application materials with corresponding grant award notices may also be revised as part of a grant amendment.
State granting agencies have discretion on how grant contract agreements are structured with incorporating work plans and budgets as attachments to the grant.
Granting agencies can choose to streamline work plan and budget changes through a revision process without needing to pursue an amendment.
It is the responsibility of the granting authority to monitor its grantees’ performance. Grants Management Policy 08-10 states that agencies must conduct at least one monitoring visit per grant period on all state grants over $50,000 and at least annual monitoring visits on grants over $250,000. In addition, agencies must conduct a financial reconciliation of grantees’ expenditures on grants over $50,000.
Agencies typically utilize a combination of monitoring techniques to effectively monitor their grantees. The following are various examples of how an agency may monitor performance.
Obtain and review third party certifications indicating that the work is satisfactorily completed (by an inspector).
Perform site visits using a fiscal/program management checklist as a tool to ensure the grantee’s contract compliance.
Attend grantee board meetings.
Conduct telephone interviews with grantee program staff and document desk monitoring findings on a checklist or write a report.
Interview or conduct focus groups with grantee service recipients or community members.
Review any independent auditor/public accountant reports of the grantee’s activities.
Obtain and thoroughly examine all payment documentation submitted for reimbursement and the documentation that evidences that the grantee obtained any required match funds.
Documentation from monitoring visits must be kept in the grant file.
Grant Overview: Procedures Checklist: This checklist may serve as a guide as you move through the approval process.
Identify grant-making statutory authority and determine a mechanism for ensuring that a fair and equitable means of spending the grant funds has been identified by the agency and approved by agency head.
Follow Admin's Office of Grants Management and agency grant making guidelines and identify grantees. Public notice of the grant is strongly recommended.
Select grantees based on criteria listed in RFP or review and approve workplan and budget submitted by legislatively-mandated grantees.
Write a grant contract agreement using Admin's Office of Grants Management and agency guidelines and the appropriate grant agreement form and applicable terms and conditions.
Granting agency can also choose to utilize a Sample Grant Application with Assurances and corresponding Grant Award Notification process. The process overview with corresponding documents can be referenced here: Grants Management Policies, Statutes, and Forms / Forms and FAQs tab/Forms Section
Obtain grantee’s and state’s signatures.
Notify grantee they may begin work on the grant and send a copy of grant contract agreement to grantee.
Monitor grantee’s progress and compliance with grant requirements as required by Admin's Office of Grants Management and agency guidelines.
Store information gathered during progress and compliance activities in the grant file.
Complete grantee performance evaluation at end of grant and store in grant file.