Community Action Agencies (CAA) in Virginia should be aware of the following guidelines for expenditures of CSBG funds. Section I – Scope of Work, Paragraph E – Expenses of your CSBG contract reads as follows: “Expenditures made pursuant to this Contract shall be for services and related matters as described in the approved Grantee Work Program and are subject to OMB Circulars... A-110 and A-122.” As a result of this contractual language, the requirements of the OMB Circulars apply to all CSBG funding including federal CSBG, state CSBG, and TANF expenditures.
While the VDSS - OCS office is planning a workshop on this topic in the near future, a brief highlight of a few allowable and unallowable cost items may be helpful to avoid any non-compliance issues. Complete explanations of federal cost principles and these unallowable cost items can be found in Attachment B of OMB Circular A-122 and are applicable to all non-profit organizations.
Please ensure that Chief Financial Officers are familiar with OMB Circular A-122. Because of the language contained in the CSBG contract, the OMB Circular A-122 Cost Principles apply to all of CSBG contract funding as well as all other federal funding received. If you have any questions pertaining to allowable versus unallowable costs, please contact the VDSS - OCS office before expending CSBG funds.
Item #12 in Attachment B of OMB Circular A-122 reads as follows: “Contributions or donations, including cash, property, and services, made by the organization, regardless of the recipient, are unallowable.” Unallowable contributions or donations therefore include even those made to other charitable organizations or other community action agencies. Purchasing ads in annual meeting programs or sponsoring annual meetings, tables, and functions of other organizations is also unallowable.
Item #23 in Attachment B of OMB Circular A-122 reads as follows: “Costs incurred for interest on borrowed capital, temporary use of endowment funds, or the use of the non-profit organization’s own funds, however represented, are unallowable.” Many non-profits utilize a line of credit to cover the cash flow needs of meeting the organization’s payroll and other obligations. Use of CSBG contract funds to pay the interest charges on those lines of credit is unallowable. CSBG funds, however, may be used to repay the principal owed on these lines of credit.
Item #25 in Attachment B of OMB Circular A-122 prohibits the use of federal funds for lobbying purposes. Please review this item carefully. As a result, community action agencies are not allowed to use any of their CSBG funds to pay their legislative assessments to VACAP or to support any other lobbyist or legislative advocate. You can use CSBG funds to pay membership dues to VACAP.
Item #1 in Attachment B of OMB Circular A-122 sets strict limits on allowable advertising and public relations costs. Basically, any use of federal funds to maintain the image of the agency or to promote understanding and favorable relations with the community or public at large or any segment of the public is unallowable. The only allowable advertising costs are recruiting of personnel, procurements of goods and services, and disposal of scrap. The only allowable public relations expenditures include communicating with the public and press and the costs of general liaison necessary to keep the public informed on matters of public concern.
*Please note that the above document is not a comprehensive analysis of the OMB Circulars. It is recommended that individuals review each of the OMB Circulars listed at the beginning of this document in its entirety.
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