When awarded grant money, a nonprofit organization is responsible to account for every penny spent. But there are times when the organization granted the money not only is responsible for its own handling of funds but of other organizations as well. These other organizations are known as subrantees.
They form a partnership with the lead organization or grantee when applying for the grant. The grantor is the federal agency that awards the grant. The grantee reports directly to the grantor whereas the subgrantees have little direct contact with the grantor. All of their reporting goes directly to the grantee.
It is invaluable to have a written agreement or contract between the grantee and the subgrantee. The person responsible for the overall management of the grant should sign the agreement. Typically. this is the nonprofit’s executive director. However, just because he signs it doesn’t mean he has to manage the program. He simply is claiming responsibility for it.
Keep copies of the subgrantee’s paperwork. The grantee is ultimately accountable for the subrantee’s spending. The grantee will have to answer to the federal agency and justify both its own expenses as well as that of the subgrantee.