Pre-Award Risk Assessment: Assessing Risk in Uncertain Times

The Uniform Grant Guidance (UGG) requires Federal awarding agencies to conduct a pre-award risk assessment before being awarded with funding (2 CFR 200.206(b)). Pre-award risk assessments are intended to assess the ability of the applicant to manage an award. Their previous award management practices, reporting history, and the processes and systems they have in place to manage funding are evaluated, and a risk level is assigned. Essentially, these assessments can be used as a way for funders to make an even more-informed decision about awarding. Pre-award risk assessments can also be used to place specific conditions (previously called “special conditions” in the guidance) on a higher risk applicant who is still spearheading a project or initiative that the funder finds value in. Overall, mitigating risk is part of the Federal effort to avoid fraud, waste, or abuse of funds, and it is an essential practice for grant makers.

While this assessment requirement is in place, the guidelines for how an awarding agency should go about performing this assessment are nebulous.  The UGG states that the awarding agency may evaluate using a risk-based approach, and that “they may consider using any items” such as the following: 

• Financial stability  
• Management systems and standards  
• History of performance  
• Audit reports and findings  
• Ability to effectively implement requirements 

So, an awarding agency must perform a risk-based assessment of applicants when awarding federal funding, but the content of that risk assessment is up to the discretion of the funder. This can be confusing for grant makers at smaller agencies, or for funders who are suddenly encountering an influx of federal funding for the first time in the past few years (i.e., recipients of ARPA/SLFRF and IIJA funding who typically manage a smaller amount of funds).  

AmpliFund wanted to make sure you have a place to get started when you are performing risk assessments this upcoming fiscal year. We have included a template for a Pre-Award Risk Assessment Tool designed specifically with grant makers and municipalities in mind. This risk assessment tool is intended to be a starting point for you to evaluate what your organization values programmatically, and to assess your own resources and capacity to monitor any subrecipients that may need specific conditions to be put in place for awarding.  

This tool consists of 10 narrative-based questions intended to get you thinking about the kind of data you will need to ask for from applicants to perform a thorough review.  Essentially, by beginning your application process with the pre-award risk assessment in mind, you can ensure you are creating an application that will capture the information you need. Grant Makers who use a grant management system to standardize their application process and data capture should be able to track pre-award risk assessment reviewer responses directly in the system to ensure an equitable and fair process for all applicants as well. 

Please feel free to modify this tool as needed to suit the needs of your program. If you are looking for more information on the single audit, we have information from industry expert Carol Kraus for you, as well as resources to help you prepare for an audit. We have also created a checklist   for you to evaluate how responsive your program is right now, before you begin awarding this year.  

If you have any questions while you’re getting started, or are looking for more resources,  don’t hesitate to reach out. We’re here to help.