What Is a Reimbursement Grant?

A reimbursement grant provides funding to grant recipients after expenses have been incurred. The grantee must follow a certain procedure to obtain the reimbursement for project expenses. Reimbursements are provided on a set payment schedule after the organization has submitted sufficient documents to verify expenses.

After you have received your notification that you are selected to receive a grant award, you can begin your project activities. Since you have been awarded a reimbursement grant, it is expected that you have the capabilities to fund these activities upfront. Whether the grant funds will reimburse hiring of staff or providing services to specific population, the organization should have demonstrated a stable financial history to carrying out these activities. Most grantees are required to have at least three years of experience to qualify for grant funding for these reasons.

To get your reimbursement, most granting agencies require you to document your expenses. Credible documentation includes receipts, invoices or credit card statements. Even if sufficient documentation is provided, not all expenses are eligible for reimbursement. The federal government has provided guidance on allowable expenses that grant funding can reimburse through the Office of Management and Budget's Circulars. If you have received a federal grant, you must adhere to the OMB Circular for your organization type. There is a separate OMB Circular for nonprofit entities, institutions of higher learning, and state or local governments.

Federal agencies require you to set up a bank account to draw down your grant funds. The granting organization provides guidance on how often your funding can be drawn down. Typically, the grant can be drawn down on a monthly or quarterly basis until all the funding has been exhausted. You must submit expenses incurred to draw down the funds for that reporting period. Once the funds are transferred into your account, you can credit the money back to your organization. During each reporting period, the organization must submit the expenditures to obtain the remaining funding.

At the end of the grant period, after all the funding has been expended, the organization is required to keep on file a record of all the expenses charged to the grant for a specified amount of years. For federal grants, the organization will have to comply with the Internal Revenue and Inspector General audits. Expenditures that are not maintained on file may have to be paid back to the granting agency. The organization also has to keep records of the results and outcomes of the grant-funded project.