Prior approval guide for federal grants

Federal awards do not give recipients unlimited freedom to move money, change work, buy equipment, or extend timelines. Some changes need written approval before the action happens. That is the point of prior approval.

Use this guide when a program asks to change a budget, buy equipment, replace key staff, extend the project, or charge a cost that feels outside the normal plan. It links closely to the equipment inventory guide, procurement file checklist, and closeout guide.

Start with the award document

The notice of award is the first source. It may list prior approval rules, budget flexibility, key personnel terms, reporting steps, and agency contacts. Pass-through agreements can add their own approval process.

Do not rely only on general federal rules. A program office can set stricter terms. A state pass-through entity can require approval even when the federal agency gives more flexibility.

Check 2 CFR 200.407

2 CFR 200.407 lists cost items and actions that may require prior written approval. It points to other sections, such as equipment, participant support costs, fixed amount subawards, and certain budget changes.

Use 200.407 as a trigger list, not the only rule. If a cost appears there, read the linked section and the award terms. If the award terms are stricter, follow the stricter rule.

Common prior approval triggers

Common triggers include:

• Change in project scope or objective
• Change in key person named in the award
• Absence or reduction of key person effort when covered by terms
• Budget revisions that cross allowed thresholds
• Transfer of funds into participant support costs
• Equipment or capital expenditures not already approved
• Subawards not included in the approved application
• No-cost extensions
• Carryforward when agency approval is required

This list is not complete. Treat unusual costs as a reason to check before spending.

Write a clear request

A good request explains what changed, why it matters, what amount is affected, and how the change still supports the award purpose.

Include:

• Award number and project title
• Requested action
• Budget lines affected
• Dollar amount
• Reason for the change
• Program impact
• Revised budget or timeline
• Contact person

Keep the tone plain. The agency needs enough detail to decide. It does not need a long story.

Wait for written approval

Prior approval means approval first. A phone call is not enough. An email from an authorized grants officer or pass-through official may be enough if the award allows that process. Some agencies require approval through a grant system.

Do not charge the cost, sign the subaward, or treat the budget as changed until approval is received. If program work cannot wait, escalate quickly and document the risk decision.

Store approval with the transaction

Approval should live in more than one place. Store it with the award file, budget revision, and any transaction that depends on it.

For example, if the agency approves equipment, keep the approval with the procurement file and equipment record. If the agency approves a no-cost extension, keep it with closeout dates and reporting deadlines.

Update reports and budgets

Once approval is received, update the internal grant budget, reporting calendar, procurement plan, and closeout checklist. A common failure is getting approval but leaving the old budget in the accounting or grant system.

If the SF-425 or performance report will reflect the change, add a note to the report workpaper. That helps the reviewer understand why spending moved.

Build a prior approval log

Keep a log for every request, even if it is denied or withdrawn. Include the request date, action requested, amount, agency contact, status, approval date, and where the written approval is stored. The log helps finance staff know which budget version is current.

Use the log during monthly grant review. If a cost depends on pending approval, hold it out of the federal draw until approval arrives or charge it to non-federal funds.

Review pass-through rules

If your award comes through a state agency, city, county, or another nonprofit, send requests to the pass-through entity unless the agreement says otherwise. The federal agency may not accept a direct request from a subrecipient.

Pass-through approval should identify the federal award and the approved action. If the pass-through entity gives a vague response, ask for clarification before spending.

Watch retroactive fixes

Sometimes staff find out too late that approval was needed. Do not hide it. Contact the agency or pass-through entity, explain the facts, and ask what correction is available.

The agency may approve, deny, or require a different treatment. If denied, the cost may need to be moved to non-federal funds.

How GrantPipe can help

GrantPipe can keep prior approval requests, budget revisions, approval files, and affected costs tied to the same award. That helps finance staff see whether a cost is ready to charge before it becomes a closeout problem.

DEFINITION

Prior approval

Written approval by an authorized federal agency or pass-through official before a recipient takes an action or charges a cost that requires approval.

DEFINITION

Budget revision

A change to the approved award budget. Some revisions are allowed within limits, while others require prior approval.