Grant Ready: Why Federal Award Compliance Is Breaking Organizations That Are Doing Everything Else Right

Q: Allowable vs. Unallowable Costs

Budget development is where allowability decisions are made. We walk through the three-part test of allowable, allocable, and reasonable under 2 CFR Subpart E, and the costs organizations routinely build into budgets that fail that test.

Q: The Middle Layer Problem: When Intermediaries Collect Fees Without Delivering Value

When an intermediary produces no required deliverables and simply extracts a fee from federal dollars passing through it, every party in that chain carries regulatory exposure. We examine how 2 CFR §§ 200.331–200.332 draws the line between a legitimate pass-through relationship and a billing arrangement.

Q: The Grant Is Over, Your Obligations Are Not

Closeout is the phase organizations prepare for least. Final reports, liquidation of obligations, equipment disposition, record retention exemplify how federal requirements extend well beyond the last day of the period of performance.

HiQuity Solutions
2 days ago
5 min read

POST 1 of 10

Series - Grant Ready: A Compliance Readiness Framework for Federal Award Recipients

Introduction

If your organization is writing a federal grant proposal right now, you are focused on the right things: needs statements, logic models, budget narratives, and deadlines. That work matters, as does winning the award.

The organizations that struggle most with federal grants are rarely the ones that wrote weak proposals; instead, they’re the ones that won competitive awards and walked into the post-award environment without the structure to manage what came next.

Federal grant management is a separate discipline, governed by the Uniform Guidance at 2 CFR Part 200, enforced through audits and monitoring visits, and capable of producing repayment demands, award terminations, and lasting reputational damage with federal agencies when organizations are not prepared. The Government Accountability Office has found that more than a third of federal grant pass-through entity audits reveal indicators of incomplete subrecipient monitoring, missing documentation, or failures to vet the eligibility of entities receiving funds, findings against organizations that ran programs, served communities, and simply didn’t know what the regulations required of them structurally.

That gap is what this series is designed to close. Starting now, while proposals are still being written, is the best time to build compliance infrastructure, before the award arrives.

A Critical Alert for HHS Grantees

If your organization receives federal funding from the Substance Abuse and Mental Health Services Administration, the Health Resources and Services Administration, the Administration for Children and Families, or any other HHS operating division, your compliance framework changed significantly in 2024 and again in 2025.

In October 2024, HHS adopted key threshold changes from the revised Uniform Guidance, effective for new awards. In October 2025, HHS fully repealed 45 CFR Part 75, the HHS-specific compliance framework in place since 2014, and adopted 2 CFR Part 200 in full. For HHS grantees, this is the most significant regulatory shift in a decade.

Organizations still running compliance policies, staff training, and subaward templates built around 45 CFR Part 75 are operating on a rescinded regulatory framework. Post 1 of this series covers what changed, what it means operationally, and what your organization should do now.

Introducing Grant Ready — A Compliance Series for Federal Award Recipients

GRANT READY: A Compliance Readiness Framework for Federal Award Recipients is HiQuity Solutions' practitioner-focused INSIGHTS series on federal award compliance. Each post tackles one area where we consistently see nonprofits, local agencies, and community-based providers get tripped up, due not to mismanaging funds, but to misunderstanding the structure of accountability that federal awards create.

Every topic in this series returns to the same organizing question: Who is responsible, for what, and under what authority? In practice, that question cuts through some of the most persistent and costly misconceptions in the field.

What We Will Cover — And Why Now

We have sequenced this series to follow the federal funding cycle as it actually unfolds, starting with the regulatory context every HHS grantee needs right now, and moving through proposal development, continuing through award, implementation, and, finally, closeout.

Post 2 — 45 CFR Part 75 Is Gone: What HHS Grantees Need to Know

The most significant compliance shift for HHS grantees in a decade happened in 2024 and 2025, and most organizations have not fully caught up. This post covers the two-phase transition, what specifically changed, and what your compliance documentation, policies, and staff training need to reflect right now.

Post 3 — Grants Are Not Fundraising

Before a single proposal goes out the door, organizations need to understand that federal grant management requires its own function separate from development, separate from program delivery, and accountable to compliance outcomes rather than fundraising targets. Placing a grant writer inside a development office seems efficient, but the structural problems it creates show up later, in audits and monitoring findings, when they are much harder to fix.

Post 4 — The Real Procurement Process

Most organizations writing proposals right now are also identifying subcontractors and partners they plan to name in the budget. Many of those relationships will not survive federal scrutiny if procurement is not handled correctly from the start. We break down what 2 CFR §§ 200.317–200.327 actually requires: competitive thresholds, documentation standards, SAM.gov verification, and what happens when those steps are skipped.

Post 5 — Allowable vs. Unallowable Costs

Budget development is where allowability decisions are made and where mistakes get locked in before the award even arrives. We walk through the three-part test of allowable, allocable, and reasonable under 2 CFR Subpart E, and the costs organizations routinely build into budgets that fail that test.

Post 6 — The Indirect Cost Rate Trap

The 2024 revisions to the Uniform Guidance raised the de minimis indirect cost rate to up to 15% of Modified Total Direct Costs for eligible awards, a meaningful increase that many organizations are not applying correctly in their budgets. We explain what it means, who qualifies, how the MTDC base is calculated, and where the compliance exposure lives when the math is done wrong.

Post 7 — The Middle Layer Problem: When Intermediaries Collect Fees Without Delivering Value

Awards arrive in September. Some prime recipients channel federal dollars through an intermediary agency that then contracts with independent professionals to deliver grant-funded functions like program evaluation, training, or direct client services. When that intermediary produces no required deliverables and simply extracts a fee from federal dollars passing through it, every party in that chain carries regulatory exposure. We examine how 2 CFR §§ 200.331–200.332 draws the line between a legitimate pass-through relationship and a billing arrangement that federal auditors will not accept.

Post 8 — The Grant Is Over, Your Obligations Are Not

Closeout is the phase organizations prepare for least and regret most. Final reports, liquidation of obligations, equipment disposition, record retention exemplify how federal requirements extend well beyond the last day of the period of performance. The consequences of missing them will follow organizations into their next award cycle.

Post 9 — AI Can Write Your Grant, It Cannot Manage Your Compliance

AI tools are already reshaping how proposals are researched and written. We examine where they add legitimate value in the federal grant process, where they introduce risk, and how to deploy them without compromising the regulatory integrity of your award, from proposal through closeout.

Post 10 — Grant Ready: A Compliance Readiness Framework

This self-assessment framework pulls together every topic in the series into a structured tool your organization can use to identify compliance gaps before your next award arrives, and prioritize the work that matters most given where you are in the funding cycle. Join our mailing list to receive this excel file.

Who This Series Is For

This series was written for organizations that receive federal grants directly or as subrecipients and want to know their internal processes would hold up under a monitoring visit, and for those that have had a finding and are building something better. Grant writers, program directors, finance staff, and executive leadership will all find something here that applies directly to their role in the compliance structure.

HHS-funded organizations, SAMHSA, HRSA, ACF, NIH, AHRQ, Head Start, and every other HHS program, will find that Post 2 speaks directly to their current regulatory situation before the rest of the series builds on that foundation.

A Note on How We Write These

Every post in this series is grounded in the actual regulatory text, primarily the Uniform Guidance at 2 CFR Part 200, as revised in 2024, and for HHS grantees, 2 CFR Part 300 where applicable. We write for practitioners, which means regulatory language gets translated into operational terms without losing the specificity that matters when an auditor is in the room. Inline citations and a reference list at the end of each post connect every assertion to its regulatory or evidentiary source.

Are you having these conversations with your consulting teams? If not, let us know.