Last updated: November 2026
A federal grants management program is the set of written procedures a healthcare nonprofit uses to administer federal awards under 2 CFR Part 200, the Office of Management and Budget's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards. It is for nonprofits that carry out a federal award as a recipient or a subrecipient, including organizations whose awards come from the Department of Health and Human Services (HHS). Integral Healthcare Solutions (IHS) compares your written policies with Part 200 and drafts the missing procedures for your finance staff and counsel to approve.
What does 2 CFR Part 200 require, and which parts apply to a nonprofit?
Part 200 sets uniform administrative requirements, cost principles and audit requirements for federal awards, and which subparts reach an award depends on its type. We read the current text of 2 CFR Part 200 (eCFR Title 2, last amended August 17, 2026; page opened November 5, 2026). A non-Federal entity is a State, local government, Indian Tribe, Institution of Higher Education, or nonprofit organization that carries out a Federal award as a recipient or subrecipient (200.1). Subparts C and D apply only to grants and cooperative agreements, with listed exceptions, while sections 200.303 and 200.331 through 200.333 also apply to all types of Federal financial assistance (200.101(b)(3)). Among other exclusions, subpart E, the cost principles, does not apply to Federal awards to hospitals (200.101(b)(4)(iv); see Appendix IX, Hospital Cost Principles). The sections we relied on:
- Financial management (200.302). Recipient and subrecipient financial management systems, including records documenting compliance with Federal statutes, regulations and award terms, must be sufficient to permit the preparation of the reports the award terms require and the tracking of expenditures to establish that funds were used in accordance with Federal statutes, regulations and award terms. The system must also provide for written procedures to implement the Federal payment requirements of 200.305 and for determining the allowability of costs under subpart E and the award terms.
- Internal control (200.303). The recipient and subrecipient must establish, document and maintain effective internal control over the Federal award that provides reasonable assurance of compliance with Federal statutes, regulations and award terms. These controls should align with the Comptroller General's Standards for Internal Control in the Federal Government or the COSO Internal Control-Integrated Framework.
- Procurement (200.318). The recipient or subrecipient must maintain and use documented procedures for procurement transactions under a Federal award or subaward, including for acquisition of property or services, consistent with State, local and tribal laws and regulations and the standards in 200.317 through 200.327. It must oversee contractor performance against contract or purchase-order terms, conditions and specifications; keep written conflict-of-interest standards governing employees selecting, awarding and administering contracts; and retain each procurement transaction’s history.
- Subrecipient or contractor (200.331). The pass-through entity makes case-by-case determinations whether an entity receiving Federal funds is a subrecipient or a contractor, and the Federal agency may require the pass-through entity to comply with additional guidance to make these determinations, provided the guidance does not conflict with the section. No single factor or combination of factors is necessarily determinative, and the substance of the relationship is more important than the form of the agreement.
- Pass-through entities (200.332). A pass-through entity must verify that the subrecipient is not excluded or disqualified under 180.300; the verification methods include confirming in SAM.gov that a potential subrecipient is not suspended, debarred or otherwise excluded from receiving Federal funds.
- Records (200.334). The recipient and subrecipient must retain all Federal award records for three years from the date of submission of the final financial report, or, for awards renewed quarterly or annually, from submission of the quarterly or annual financial report, respectively. Agencies and pass-through entities may not impose other retention requirements except those the section lists, such as retention until all litigation, claims or audit findings involving the records are resolved and final action is taken, if the litigation, claim or audit started before the three years ended.
- Allowable costs (200.403). Except where otherwise authorized by statute, a cost must be necessary and reasonable for the award and allocable to it, conform to limits or exclusions in the principles or the award, be consistent with policies that apply uniformly to federally financed and other activities, receive consistent treatment and be adequately documented, among other criteria.
- Audit (200.501). A non-Federal entity that expends 1,000,000 dollars or more during its fiscal year in Federal awards must have a single or program-specific audit conducted for that year. A single audit is required unless the entity elects a program-specific audit and meets the conditions in 200.501(c) or (d). An entity expending less than 1,000,000 dollars in Federal awards during its fiscal year is exempt from Federal audit requirements for that year, except under 200.503; its records must remain available for review or audit by appropriate Federal agency, pass-through entity and Government Accountability Office officials.
OMB published the revised guidance (89 FR 30046) on April 22, 2024, effective October 1, 2024. Agencies may apply it to earlier awards but need not; early implementation could not precede June 21, 2024. It raised the single audit threshold from 750,000 to 1,000,000 dollars. HHS adopts Part 200 with additions in 2 CFR Parts 300 and 376 (300.106). Both sources: page opened November 5, 2026.
Who needs a grants management program, and what triggers it?
A nonprofit recipient or subrecipient needs procedures matched to its award type, applicable Part 200 provisions and award terms (200.101). Typical triggers:
- The organization has its first federal award and its policies were written for private funding.
- Spending on federal awards is nearing 1,000,000 dollars in a fiscal year, or has passed it.
- The organization passes federal funds to partners and has no written subrecipient-or-contractor test.
- An audit finding has questioned procurement or the allowability of a cost.
- A health center or other grantee needs administrative policies that match its HHS award terms; see FQHC site visit preparation.
How does IHS help?
IHS works in three practice lines: accreditation consulting, compliance services and program development. This is compliance services. The steps:
- Gap assessment. IHS reviews existing policies, the chart of accounts, timekeeping practice and procurement files against these sections.
- Evidence mapping. An index shows which policy or record answers each requirement.
- Drafting. IHS drafts procurement, cost allocation, subrecipient monitoring, record retention and audit-readiness procedures for finance staff and counsel to approve.
- Mock review and readiness support. IHS prepares a training outline, reviews sample evidence against the procedures and identifies remaining gaps.
The organization supplies its award documents and terms, financial policies, chart of accounts, procurement records, subaward agreements and prior audit reports. The real limit: IHS is not a CPA firm and does not perform the audit. IHS gives no legal advice and does not contact federal agencies. The organization approves and runs the procedures. In IHS's reading as of November 2026, Part 200 calls for documented procedures and effective internal control and does not prescribe a manual format.
What to have ready
IHS preparation checklist; section references use current 2 CFR text, Title 2 last amended August 17, 2026 (page opened November 5, 2026). These are preparation materials, not prescribed document titles.
- Internal-control documentation and owners (2 CFR 200.303).
- Financial records and written payment and allowability procedures (2 CFR 200.302).
- Procurement procedures, conduct standards and transaction histories (2 CFR 200.318).
- Case-by-case subrecipient-or-contractor decisions (2 CFR 200.331).
- Subrecipient eligibility verification (2 CFR 200.332(a)); SAM.gov is one method under 2 CFR 180.300.
- Retention schedule with applicable reporting dates and exceptions (2 CFR 200.334).
- Allowability procedures (2 CFR 200.403), subject to 2 CFR 200.101 applicability.
- Fiscal-year Federal expenditure tracker for the 1,000,000 dollar audit threshold (2 CFR 200.501).
- Award terms and applicable HHS additions (2 CFR 300.106).
If several items are missing, bring the list to the free introductory call.
How does an in-house manual compare with outside help?
Finance staff can draft procedures internally, or IHS can help assess gaps and draft them for client approval. Neither a manual nor outside assistance guarantees compliance. Grants software can hold records; in IHS's reading as of November 2026, software alone does not establish the controls and procurement practices described in 200.303 and 200.318. The audit required by 200.501 is a separate service; IHS does not perform it.
What does it cost?
Part 200, in the sections we read, does not state a fee for adopting these procedures. IHS scopes each engagement after a free introductory call. The scope depends mainly on the number of awards and subrecipients and the state of existing policies.
What this is not
- IHS provides consulting, not legal advice or audits; it is not a law firm or CPA firm.
- IHS does not guarantee a clean audit or funder approval. The client approves procedures, submits materials and handles agency communications.
- This overview does not replace award documents or cover agency-specific terms beyond those discussed; the HHS Grants Policy Statement and individual award terms were not reviewed.
Frequently asked questions
What does 2 CFR Part 200 require a nonprofit to have in writing?
Where applicable under 200.101, Part 200 requires written payment and cost-allowability procedures under subpart E and award terms (200.302(b)), documented procurement procedures (200.318(a)) and effective, documented internal control (200.303(a)). In IHS's reading as of November 2026, it does not prescribe one manual format.
What must documented procurement procedures cover?
Section 200.318 requires documented procedures for procurement transactions under a Federal award or subaward, consistent with State, local and tribal laws and regulations and the standards in 200.317 through 200.327. The recipient must also keep records sufficient to detail the history of each procurement transaction.
How do we tell a subrecipient from a contractor?
Under 200.331 the pass-through entity decides case by case. No single factor or combination of factors is necessarily determinative, and the substance of the relationship is more important than the form of the agreement.
What does a pass-through entity verify about a subrecipient?
Under 200.332(a), a pass-through entity must verify that a subrecipient is not excluded or disqualified in accordance with 180.300. That section permits checking SAM.gov Exclusions, collecting a certification, or adding a clause or condition to the covered transaction.
How long must award records be kept?
Section 200.334 sets three years from the date of submission of the final financial report, or from the quarterly or annual financial report for awards renewed quarterly or annually. The section lists exceptions, so check each award.
When is a single audit required?
Section 200.501 requires a single or program-specific audit when a non-Federal entity expends 1,000,000 dollars or more in Federal awards during its fiscal year. A program-specific audit is available only if the conditions in 200.501(c) or (d) are met. IHS does not perform the audit.
What makes a cost allowable?
Except where statute authorizes otherwise, 200.403 requires costs to be necessary, reasonable and allocable under the principles, and to conform to limits or exclusions in those principles or the award. Consistent treatment and adequate documentation are also required, among other criteria.
Did the 2024 revisions change Part 200, and does HHS add to it?
OMB's revised guidance has a stated effective date of October 1, 2024, and raised the single audit threshold from 750,000 to 1,000,000 dollars. HHS adopts Part 200 with additions in 2 CFR Parts 300 and 376 (300.106); in IHS's reading as of November 2026, Part 200 alone does not show every HHS award requirement.