Interest Earned on Advances of Grant Funds

The Treasury and OMB policies establishes requirements for recipients to account for interest earned on advances of grant funds and provide for use of the reimbursement method if cash management requirements are not met. Except as provided in 45 CFR 74.22(k), any grantee agency who  receives advance payments must maintain those advances in an interest-bearing account. This information will benefit newly formed grantees that are not familiar with this requirement.

 

The following is an excerpt from the HHS Grants Policy Statement.

The Treasury and OMB policies also establish requirements for recipients to account for interest earned on advances of grant funds and provide for use of the reimbursement method if cash management requirements are not met. Except as provided in 45 CFR 74.22(k), any HHS recipient subject to the requirements of 45 CFR part 74 that receives advance payments must maintain those advances in an interest-bearing account.

Interest earned on advances of Federal funds must be handled as follows:

  • Nongovernmental recipients. Any interest earned by nongovernmental recipients on advances of Federal funds under all Federal grant awards and subawards that, in the aggregate, exceeds $250 per year (based on the recipient's or subrecipient's fiscal year) must be remitted annually to PMS (as the government-wide agent for collection). Recipients with electronic funds transfer (EFT) capability should use an electronic medium to remit interest.
  • Governmental recipients other than States. Except as provided in 45 CFR 92.21(i), any interest earned by local governments or Indian tribal governments on advances of Federal funds under all Federal grant awards and subawards that, in the aggregate, exceeds $100 per year (based on the recipient's or subrecipient's fiscal year) must be remitted promptly, and at least quarterly, to PMS.
  • State governments. State governments operating under Treasury-State agreements are subject to the payment and receipt of interest as specified in their agreements. All other State recipients are expected to follow sound financial management practices that minimize the potential for excessive Federal cash on hand and to comply with the cash management requirements of 45 CFR 92.20 and 21.

Interest Earned on Advances of Grant Funds. Grants Policy Statement. DHHS. 2007. English.

Last Reviewed: June 2009

Last Updated: September 10, 2015