Non-Governmental Organizations (NGOs) receiving funding from the U.S. Government (USG) must comply with stringent regulations to ensure accountability, transparency, and proper utilization of funds. Failure to adhere to these requirements can lead to audits, penalties, or even suspension of funding. Below are the top ten compliance issues that NGOs must focus on when managing USG-funded projects.
1. Financial Management and Allowable Costs
NGOs must comply with 2 CFR 200 (Uniform Guidance) regarding financial management, cost allocation, and allowable expenses. Any costs charged to USG grants must be necessary, reasonable, and allocable to the project. Misuse of funds or inadequate financial documentation can lead to disallowances.
2. Procurement and Competitive Bidding
USG-funded NGOs must follow strict procurement guidelines, ensuring fair competition and cost-effectiveness. All purchases must comply with Federal Acquisition Regulations (FAR) and be well-documented. Non-compliance, such as sole sourcing without justification, can result in financial penalties.
3. Subrecipient Monitoring and Due Diligence
Prime recipients of USG funds must conduct thorough subrecipient monitoring to ensure compliance with grant terms and regulations. This includes financial audits, performance tracking, and adherence to reporting requirements.
4. Time and Effort Reporting
Personnel costs charged to USG grants must be backed by accurate time and effort reporting. Employees working on multiple projects must allocate their time properly and maintain detailed records to avoid payroll disallowances during audits.
5. Compliance with Anti-Terrorism Laws
NGOs must ensure that USG funds do not support individuals or groups engaged in terrorism. Under Executive Order 13224 and the Patriot Act, organizations must conduct rigorous vetting of beneficiaries, vendors, and partners.
6. Environmental and Social Compliance
Projects funded by USG must comply with 22 CFR 216 (Environmental Procedures), ensuring that activities do not harm the environment or communities. Failure to conduct environmental assessments or social impact evaluations can lead to project suspension.
7. Human Rights and Safeguarding Policies
NGOs must adhere to USG human rights policies, including prohibitions against human trafficking (Trafficking Victims Protection Act - TVPA) and safeguarding policies to prevent exploitation, abuse, and misconduct within funded programs.
8. Reporting and Performance Metrics
USG funding agreements require strict adherence to reporting schedules, including financial reports (SF-425), programmatic performance reports, and MEL (Monitoring, Evaluation, and Learning) documentation. Failure to submit timely and accurate reports can lead to funding delays or termination.
9. Branding and Marking Compliance
NGOs must comply with USG branding and marking requirements (ADS 320 for USAID-funded projects), ensuring proper visibility of USG contributions. Incorrect branding, such as using unauthorized logos or failing to acknowledge funding sources, can result in compliance violations.
10. Internal Controls and Fraud Prevention
Strong internal controls are essential to prevent fraud, waste, and abuse. NGOs must implement policies on financial oversight, whistleblower protections, and conflict of interest disclosures to mitigate risks associated with grant mismanagement.
