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Helping charities understand the complex rules around USAID

Sayer Vincent

The United States Agency for International Development (USAID) is a very generous funder; however, when UK charities are applying for USAID funding, there are complex rules and regulations, and specific terminology and acronyms that it is essential to them to understand.

Sayer Vincent is one of only eight firms in the UK that are included on USAID’s list of acceptable audit firms, meaning we are pre-approved to complete USAID audits. We provide USAID audit and advisory services to a growing portfolio of international NGOs.

Examples of some of the projects our clients work on include combatting modern slavery in Mauritania; sanitary projects in India; reproductive rights in Nepal and tuberculosis prevention in sub-Saharan Africa.

To help charities we’ve recently updated our USAID Made Simple guide which covers some of the vital information charities need to be aware of, as well as signposting to additional resources. Below are some of the key points from the guide:

Key people

As with any donor relationship it is important to know who the key individuals managing the Cooperative Agreement are. Specific individuals are responsible for managing different aspects of the award, and any approvals or amendments obtained from the wrong person will not be considered valid. The key people are:

  • Agreement officer (AO) – who deals with many administrative issues and changes with agreement
  • Agreement officer representative (AOR) – who has varying responsibilities depending on the delegated authority

Types of recipients

The rules will depend on the type of recipient an organisation is and it is essential to establish this at the start. For example a charity could be a prime recipient, a sub recipient of another non-US prime recipient, or a sub recipient of a US prime recipient. They may also have a different relationship under different awards so they may be a prime recipient under one award while being a sub recipient under another.

Key documents

USAID can make awards under a contract, a grant, or a cooperative agreement. Most funds awarded to non-US NGOs will be under a cooperative agreement. Under a cooperative agreement, USAID has more substantial involvement than under a contract or grant; for example, they will approve implementation plans and key personnel.

There are three key documents that form part of every funding award. Recipients should be familiar with all three documents and ensure they have the most up to date versions as rules can change. These are:

  • The cooperative agreement itself,
  • The Code of Federal Regulations 2 CFR 200.400 (‘cost principles’)
  • The Standard Provisions (SPs)

Common problem areas

There are some areas which can cause issues for charities not aware about them from the start. These include:

  • Claiming staff costs – for costs to be accepted they must be allowable, reasonable, allocable and supported with documentation. Salary costs are one of the most common problem areas where recipients run into difficulties. Charities must ensure their system for allocating staff costs to projects is consistent with USAID’s expectations.
  • Procurement – charities can use their own procurement rules, as long as these are consistent with USAID’s requirements and established in writing.
  • Compliance with the Fly America Act – This means if there are any international flights to be done under the award, a US air carrier should be used for all flights, unless one of a specific set of exemptions applies.

Finally, charities must be aware that if they spend more than $750,000 in USAID funds over their financial year, they will need to receive an audit of these funds. There are specific rules around this too and only firms in the USAID list of acceptable firms can be used. As stated above, in the UK Sayer Vincent is one of these firms.

USAID funding can be complicated, so its important charities take time to really get to grips with the rules. More information can be found in our USAID Made Simple guide.

The purpose of our guide is to help charities gain a basic understanding of the framework and terminology, which will help them comply with USAID rules. The guide also signposts charities to more resources, which will help deepen their understanding of the rules, including directing them key pages on the USAID website.

We also recently ran a free webinar on this topic, which you can contact us to request a recording of.