Short answer
Equipment bought with federal funds needs property records, physical inventory at least every two years, safeguards against loss, and disposition records. Tags are the practical link between the item and the grant file.
Federal grant equipment tagging and inventory guide
Equipment rules protect federal property interests after the purchase is made. The procurement file shows how the item was bought. The equipment record shows where it is, who uses it, what condition it is in, and what happened when the grant ended.
Use this guide with the procurement file checklist and the federal award closeout guide.
Decide what counts as equipment
2 CFR 200.1 defines equipment by useful life and acquisition cost. Your nonprofit should also have its own capitalization policy. Use the lower or more specific rule when award terms require it.
Some items may be below the equipment threshold but still worth tracking. Laptops, tablets, cameras, and tools are easy to move and lose. Many nonprofits treat them as sensitive assets and tag them even when they are not capitalized.
Check prior approval before purchase
Equipment often needs prior approval if it was not in the approved budget. 2 CFR 200.439 covers equipment and other capital expenditures. Award terms may be stricter.
Before buying, confirm the item is in the budget or get written approval. Store approval with the procurement file and the equipment record. The prior approval guide explains how to keep that trail clean.
Tag the item when received
Tagging should happen at receipt, not at year end. Use a durable asset tag with a unique number. The tag should link to the property record. Do not rely only on the serial number because serial numbers can be hard to read or duplicated across asset systems.
For items where a tag will not stick, use another ID method and document it. Photos can help prove the asset exists and show condition.
Build the property record
2 CFR 200.313 lists required property record details. Keep:
- Description
- Serial number, VIN, or other ID
- Source of funding
- Federal award identification
- Title holder
- Acquisition date
- Acquisition cost
- Federal share of cost
- Location
- Use and condition
- Disposition date and sale price, if any
Keep the record in a system that finance and grants staff can access. A spreadsheet can work if it is controlled, backed up, and reviewed.
Safeguard the equipment
The organization must have controls to prevent loss, damage, or theft. For portable equipment, assign custody to a person or site. For shared equipment, name the responsible manager.
If an item is lost or stolen, document what happened, who was notified, police report if applicable, insurance claim if any, and agency notice if required. Do not wait for the next inventory to report missing property.
Run physical inventory
2 CFR 200.313 requires physical inventory at least once every two years. Many nonprofits do annual counts because staff and locations change.
During inventory, verify the item, tag, location, condition, and user. Reconcile the count to property records. Investigate missing items. Update locations and condition notes. Keep the signed inventory report.
Use rules after the project
Federally funded equipment should be used for the authorized program as long as needed. After the project ends, use and disposition depend on whether the equipment is still needed for federal programs, fair market value, and agency instructions.
Do not sell, donate, or throw away federally funded equipment without checking disposition rules. Keep agency approval if required.
Track shared use
Some equipment supports more than one program. Shared use can be allowed, but the record should show how the item benefits the federal award and whether any cost allocation is needed. If another program uses the equipment, make sure that use does not interfere with the federal program that paid for it.
Keep a use log for high-value or mobile equipment. The log can be simple: date, user, location, project, and condition note. This is useful for vehicles, cameras, tools, and shared technology.
Reconcile equipment to the ledger
At least once a year, compare the equipment list to the general ledger. The ledger should show the purchase cost, funding source, and asset category. The inventory should show the same item, cost, location, and grant.
Differences need follow-up. A cost coded to equipment but missing from the inventory may mean the item was not tagged. An inventory item with no ledger support may mean the source record is missing or the item was bought with another funding source.
Closeout review
At closeout, compare the equipment record to the grant ledger and procurement files. Confirm all equipment bought with the award is tagged, inventoried, and addressed in closeout. Keep the final equipment list with the award file.
How GrantPipe can help
GrantPipe can connect equipment records to the grant, budget line, purchase support, and closeout tasks. That helps teams answer a simple audit question quickly: where is the asset bought with this award?
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Looking for something else?
- Equipment
- Tangible personal property with a useful life of more than one year and an acquisition cost that meets the applicable capitalization threshold.
DEFINITION
- Disposition
- The approved sale, transfer, disposal, or continued use decision for equipment when it is no longer needed for the original federal program.
DEFINITION
Q&A
Do laptops need tags?
If laptops meet your equipment or sensitive asset policy, tag them. Even below capitalization, many nonprofits tag portable items because loss risk is higher.
Q&A
What should equipment records include?
Records should include description, serial number or ID, funding source, title holder, acquisition date, cost, federal share, location, condition, and disposition data.
Frequently asked