Chapter III - Financial Requirements and Payments
The acceptance of an award from NSF creates a legal duty on the part of the grantee organization to use the funds or property made available in accordance with the terms and conditions of the award. Payments may be made in advance of work performed or as a reimbursement for work performed and/or costs incurred by the grantee. Payments, however, may not be made in advance of an award being signed by an NSF Grants and Agreements Officer for the project period. NSF has a reversionary interest in the unused balance of advance payments, in any funds improperly applied (whether or not received as an advance payment), and in property acquired through the award, to which NSF specifically either retains title or reserves the right to require title transfer.
While the provisions of this Chapter cover all NSF assistance awards (i.e., grants and cooperative agreements), the term grantee is used throughout. Graduate fellowship awards to domestic colleges and universities are included, but fellowships awarded to individuals and contracts are excluded. All categories of grantees (academic, non-academic, profit and non-profit) are covered by this chapter. The procedures in this chapter apply primarily to the comptrollers office or business office.
NSF grantees are required to have financial management systems that meet the requirements of 2 CFR § 200.302.
The following definitions are either not included elsewhere in the Award & Administration Guide or are repeated in this Chapter because of their special applicability.
1. ADVANCE PAYMENT - means a payment that NSF makes by any appropriate payment mechanism, including a predetermined payment schedule, before the grantee disburses the funds for program purposes.
2. BUSINESS OFFICER means the financial official of the grantee organization who has primary responsibility for the accountability for, and reporting on, NSF award funds.
3. CASH ON HAND means a grantee organizations cash position relative to the funds received from NSF minus the costs incurred for the award.
4. DISBURSEMENTS/OUTLAYS/EXPENDITURES means charges made by the grantee to a project or program for which an NSF award was received.
5. FINANCIAL FUNCTIONS means the NSF systems and services used by grantees to transmit financial information to NSF. Grantees must access Financial Functions through Research.gov. The primary Financial Functions used by grantees are:
- Award Cash Management Service (ACM$) means NSFs award payment process under which grantees provide award level detail at the time of the payment request. ACM$ has replaced the reporting of expenditures on the Federal Financial Report (FFR) and the Cash Request Function.
- Federal Financial Report History means the electronic version of the standard "Federal Financial Report". Used by grantees prior to ACM$ implementation to report the financial activity of NSF awards on a quarterly basis.
6. GRANTEE - means the organization or other entity that receives a grant and assumes legal and financial responsibility and accountability both for the awarded funds and for the performance of the grant-supported activity. NSF grants are normally made to organizations rather than to individual Principal Investigator/Project Director(s). Categories of eligible proposers may be found in GPG Chapter I.E.
7. NSF OBLIGATIONS means funds authorized by an NSF Grants and Agreements Officer for a specific NSF award creating a balance payable to a grantee.
8. GRANTEE OBLIGATIONS means orders placed for property and services, contracts and subawards made, and similar transactions during a given period that require payment by the grantee during the same or a future period.
9. PAYMENTS means the funds transferred from NSF to the grantee by electronic funds transfer (Automated Clearing House (ACH)) and on some rare occasions by check or by wire for same day electronic funds transfer or international payments.
10. UNLIQUIDATED OBLIGATIONS for grantee financial reports prepared on a cash basis, means obligations incurred by the grantee that have not been paid (liquidated). For grantee reports prepared on an accrual expenditure basis, means obligations incurred by the grantee for which an expenditure has not been recorded.
11. UNOBLIGATED BALANCE means the amount of funds under an NSF award that the grantee has not obligated. The amount is computed by subtracting the cumulative amount of the grantees unliquidated obligations and expenditures of funds under the NSF award from the cumulative amount of the funds that NSF has authorized the grantee to obligate.
NSF grantees, except for some Special Payment grantees (see AAG Chapter III.C.4), and some foreign grantees, are required to request payments electronically through the Award Cash Management Service (ACM$). Under ACM$, grantees must provide award level detail at the time of the payment request.
Certain Special Payment grantees and foreign grantees without access to a U.S. bank are required to request funds by submitting a "Request for Advance or Reimbursement Form", (SF 270) (see AAG Exhibit III-1), to NSF either through mail, email or by fax.
The purpose of this section is to prescribe the timing of advances and the procedures to be observed to assure that cash payments occur only when essential to meet the needs of a grantee for its actual disbursements.
a. Timing of Payments. Advance payments to grantees must be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the grantee in carrying out the purpose of the approved program or project. The timing and amount of advance payments must be as close as is administratively feasible to the actual disbursements by the grantee for direct program or project costs and the proportionate share of any allowable indirect costs. When making a payment request, grantees must certify that all disbursements have been made, or will be made, within three days of the receipt of the payment in accordance with the terms and conditions of the award.
b. Payments to Subrecipients and Contractors. Payments made by NSF grantees to subrecipients and contractors shall conform to the same standards of timing and amount as apply to payments by NSF to its grantees.
c. Withholding payments. NSF reserves the right, upon written notice, to withhold future payments after a specified date if the recipient:
(i) fails to comply with the terms and conditions of an NSF award, including the reporting requirements; or
(ii) is indebted to the U.S. Government.
Payments will be released to the grantee upon subsequent compliance.
d. Safeguarding Funds. In no case will NSF funds be commingled with the personal funds of, or be used for personal purposes by, any officer, employee, or agent of the grantee; nor will any of these funds be deposited in personal bank accounts for disbursement by personal check.
a. Grantees may submit requests for payments as often as they like and are authorized to receive payments from NSF in advance of costs incurred provided that the following conditions exist:
(i) Funds for the project period have been obligated by a Grants and Agreements Officer in the form of a signed grant;
(ii) The grantee has established written procedures that will minimize the time elapsing between the transfer of funds from the U.S. Treasury and their disbursement by the grantee; and
(iii) The grantees financial management system meets the standards for fund control and accountability prescribed in 2 CFR § 200.302.
b. GRantees shall maintain advances of NSF funds in interest bearing accounts as specified in AAG Chapter III.D.3.
When grantees do not meet the conditions specified in AAG Chapter III.C.3 above, or when otherwise considered appropriate, NSF may restrict their capability to request funds through ACM$ or they may be required to request funds by using a Request for Advance or Reimbursement (SF 270) form. For a copy of the form, see AAG Exhibit III-1. The cognizant NSF Grants and Agreements Officer is responsible for establishing the documentation requirements for special payment grantees. Documentation may be submitted by email, by fax to 703-292-9142, or through the mail to:
National Science Foundation
Division of Grants & Agreements
4201 Wilson Blvd
Arlington, VA 22230
In those cases where the reimbursement method described in AAG Chapter III.C.4 is not feasible, arrangements may be made whereby NSF projects are financed on a working capital advance basis. On this basis, funds may be advanced to the grantee to cover estimated disbursement needs for a given initial period. Thereafter, the grantee would be reimbursed for the amount of its actual cash disbursements. The amount of the initial advance shall be geared to the reimbursement cycle so that after the initial period, the advance approximately equals the average amount of the grantees unreimbursed program disbursements.
The System for Award Management (SAM) is the NSF system of record for organizational financial information. Once a grant is awarded, failure to maintain current and complete financial information within SAM could prevent the grantee from receiving funds.
NSF has a reversionary interest in the unobligated balance of an award upon the end date or completion of the award. Based on final payment amounts submitted through ACM$, the final unobligated balance will be computed by NSF and deobligated from the award amount.
Advances or reimbursements made in error must be refunded to the National Science Foundation. Excess funds should be promptly refunded electronically or by check. Electronic remittances should be submitted through Pay.gov at https://pay.gov/paygov/forms/formInstance.html?agencyFormId=10506005. Checks shall be mailed to NSF, Attn. Cashier, 4201 Wilson Boulevard, Arlington, VA 22230. Contact the NSF Division of Financial Management at (703) 292-8280 for additional information.
The only exception to the requirement for prompt refunding is when the funds involved will be disbursed immediately. This exception for prompt refunding should not be construed as approval by NSF for a grantee to maintain excessive funds on hand.
Grantees shall maintain advances of NSF funds in interest bearing accounts, unless any of the following apply:
a. The grantee receives less than $120,000 in Federal awards per year;
b. The best reasonably available interest bearing account would not be expected to earn interest in excess of $500 per year on Federal cash balances;
c. The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources; or
d. A foreign government or banking system prohibits or precludes interest bearing accounts.
Interest earned on NSF advances deposited in interest bearing accounts shall be remitted annually to the Department of Health and Human Services (DHHS), Payment Management System, P.O. Box 6021, Rockville, MD 20852 (telephone number: (301) 443-9247). Grantees are authorized to retain up to $500 per year for administrative expenses. The requirement to annually remit interest does not apply to grantees subject to the Cash Management Improvement Act (CMIA) and its implementing regulations (i.e., State agencies and instrumentalities). State universities and hospitals shall comply with the CMIA, as it pertains to interest. In accordance with 2 CFR § 200.305, if a grantee subject to CMIA uses its own funds to pay pre-award costs without prior written approval from NSF, it waives its right to recover the interest under CMIA.
The following provisions implement the applicable portions of 2 CFR § 200.307 on program income.
PROGRAM INCOME means gross income earned by the grantee that is directly generated by a supported activity or earned as a result of the grant during the period of performance. Program income includes, but is not limited to, income from fees for services performed, the use of rental or real or personal property acquired under the grant, the sale of commodities or items fabricated under the grant, license fees and royalties on patents and copyrights, and principal and interest on loans made with grant funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in Federal statutes, regulations, or the terms and conditions of the grant, program income does not include rebates, credits, discounts, and interest earned on any of them.
Note: Registration fees collected under NSF-supported conferences are considered program income.
c. NSF Policy
(i) Standard Treatment
Unless otherwise specified in the grant, program income received or accruing to the grantee during the period of the grant is to be retained by the grantee, added to the funds committed to the project by NSF, and thus used to further project objectives. The grantee has no obligation to NSF with respect to program income received beyond the period of the grant. The grantee also shall have no obligation to NSF with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions produced under an award. However, Patent and Trademark Amendments (35 USC 18) shall apply to inventions made under an award.
Efforts should be made to avoid having unexpended program income remaining at award expiration. Program Income earned during the project period should be expended prior to requesting reimbursement against the award. In the event a grantee has unexpended program income remaining at award expiration, it must be remitted to NSF by crediting costs otherwise chargeable against the award. If it is not possible to record the credit via ACM$, the excess program income must be remitted to NSF electronically or by check payable to the National Science Foundation. (See section D.2 above for further information.)
(ii) Special TreatmentIn exceptional circumstances, the NSF Grants and Agreements Officer, in collaboration with Program Officers and other appropriate NSF offices, may approve use of a special grant provision to restrict or eliminate a grantees control of income earned through NSF-supported activities if it determines that this would best serve the purposes of a particular program or grant. The special provisions may require treatment of the program income via use of the deductive method, the Federal share of program income be kept in a separate account, or reported on and/or remitted for such periods as may be reasonable under the circumstances.
If, in accordance with the award terms and conditions program income is designated for deductive treatment, it must be remitted to NSF by crediting costs otherwise chargeable against the award. Program Income in excess of the award will be remitted to NSF electronically or by check payable to the National Science Foundation.
(iii) Program Income Reporting Requirements
On an annual basis, grantee organizations are required to submit a Program Income Reporting Worksheet to NSF in order to report program income earned/expended for any of their awards during the previous twelve months or to validate that they did not earn/expend program income for any of their awards during the applicable period.
(a) The Program Income Reporting Worksheet utilizes the standard, Office of Management and Budget (OMB)-approved government-wide data elements from the Program Income section of the Federal Financial Report (SF 425).
(b) The Program Income Reporting Worksheet will be made to grantees through Research.gov. Grantees are required to report the award number, amount of program income earned, amount of program income expended, and the amount of unexpended program income remaining as of the date. Grantees that have no program income to report will be able to validate that status by an email response. The Program Income Reporting Worksheet is due 45 days after the end of the Federal Fiscal Year.
Failure to report program income or to validate that no program income was earned/expended could result in suspension of future award payments.
Purchase discounts, rebates, allowances, credits resulting from overhead rate adjustments and other credits relating to any allowable cost received by or accruing to the grantee shall be credited against NSF award costs if the award has not been financially closed out. See also AAG Chapter V.A.2.c.
NSF does not require grantees to submit FFRs for each award for purposes of final award accountability. NSF procedures have been designed to extract the final financial data from the entries in ACM$. This is accomplished as follows:
For any award listed on the ACM$ Payments screen, the grantee will enter the final payment amount in the Payment Amount Requested column.
1. If final disbursements change by $1.00 or more from the amount at award financial closeout, the grantee should submit an "Adjustment to a Financially Closed Award" through the ACM$ payment process.
2. Grantees must liquidate all obligations incurred under their awards not later than 90 calendar days after the award end date
3. NSF will financially close awards 90 days after the award end date and the award will be removed from the ACM$ payment screen for active awards.
4. Grantees have the option of using ACM$ to designate awards for financial closeout prior to the scheduled close out date. Grantees can complete that action by selecting the Final Flag on the ACM$ payment screen. That action will financially close the award upon posting of the ACM$ transaction to the NSF financial accounting system.
5. Post Closeout Adjustments and Continuing Responsibilities. NSF will make settlements for any upward or downward adjustments to the Federal share of costs after the award financial closeout within the following time limits:
- Upward adjustments may be submitted through ACM$ for up to 15 months after the financial closeout date of the award.
- Downward adjustments may be submitted through ACM$ until the appropriation funding the award cancels. The time limitation for ACM$ downward adjustments has no effect on the requirement that the grantee return any funds due to NSF as a result of later refunds, corrections, or other transactions including final indirect cost rate adjustments. In cases where the award appropriation has been cancelled, the grantee should return the funds associated with the downward adjustment in accordance with section D. Cash Refunds and Credits to NSF.