Equipment purchased with federal grant funds may belong to your organization, but federal requirements can follow that property long after the award ends. This article explains what qualifies as equipment, what records you need to maintain, and what to do when the equipment is no longer needed.
A vehicle purchased for a grant program may be titled to your organization, insured by you, maintained by your staff, and listed among your assets. It certainly looks like yours.
Under the federal rules, it is yours, but there are strings attached.
Under 2 CFR 200.313(a), title to equipment purchased under a federal award generally vests in the recipient or subrecipient when the equipment is acquired. However, that title remains subject to federal requirements governing how the property is used, managed, documented, and eventually disposed of.
Those responsibilities can continue long after the award itself has closed.
For most recipients and subrecipients, your organization holds title to equipment acquired under the award, subject to the requirements of 2 CFR 200.313. Let’s clarify the following when it comes to procurement rules:
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States follow their own state laws and procedures for equipment acquired under a federal award.
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Tribal nations follow tribal law and procedures, when they exist.
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Subrecipients of states and Tribes generally follow the federal requirements.
The distinction matters because owning the equipment doesn't mean your organization can treat it the same way it treats property purchased entirely with unrestricted funds.
Under 2 CFR 200.1, equipment is tangible personal property, including information technology systems, with a useful life of more than one year and a per unit acquisition cost at or above the lesser of:
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Your organization's capitalization threshold for financial statement purposes OR
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Acquisition value of at least $10,000
That "lesser of" language matters. If your capitalization threshold is $5,000, then $5,000 is the threshold you use for federal grant equipment (you have to change the organizational policies if the federal threshold changes).
Items below the applicable threshold are generally considered supplies. Computing devices also fall under supplies when their acquisition cost is below the lesser of your capitalization threshold or $10,000.
Unused supplies have a separate rule under 2 CFR 200.314. If the aggregate value of unused supplies exceeds $10,000 at the end of the period of performance and they're not needed for another federal award, the federal agency may be entitled to its share of their value or sale proceeds.
Depending on the type and cost of the equipment, you may.
Under 2 CFR 200.439, capital expenditures for general purpose equipment generally require prior written approval from the federal agency or pass through entities to be allowable as direct costs. Special purpose equipment is allowable as a direct cost, but items costing $10,000 or more also require prior written approval.
The timing matters because the approval needs to be obtained before the purchase.
Before making a significant equipment purchase, check the award, approved budget, and applicable terms and conditions to determine whether written approval is required.
Federal requirements don't stop once the invoice is paid.
Under 2 CFR 200.313(c), equipment must be used for the program or project for which it was acquired for as long as it's needed. When it's no longer needed for that purpose, federal rules establish priorities for other uses.
Your property records also need to contain specific information required by 2 CFR 200.313(d), including:
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A description and identification number
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The funding source, including the Federal Award Identification Number
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The title holder
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Acquisition date and cost
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The federal agency's percentage of participation in the original cost
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Location, use, and condition
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Disposition information, when applicable
At least once every two years, you must conduct a physical inventory and reconcile the results with your property records. If something is missing, moved, damaged, or recorded incorrectly, the discrepancy should be investigated and resolved.
You also need controls to protect equipment against loss, damage, and theft, along with procedures for keeping it properly maintained. Under 2 CFR 200.310, federally funded equipment must receive at least the same level of insurance coverage you provide for property your organization owns outright.
Before selling, transferring, or disposing of grant funded equipment, check its current fair market value.
Under 2 CFR 200.313(e), equipment with a current per unit fair market value of $10,000 or less may generally be retained, sold, or otherwise disposed of without further responsibility to the federal agency.
When the current fair market value exceeds $10,000, the federal agency may be entitled to compensation based on its percentage of participation in the original purchase.
The key is current value, not original purchase price. Equipment that cost $40,000 several years ago could be worth less than $10,000 today, so determine its value before deciding how to dispose of it.
Grant funded equipment can remain a compliance responsibility long after the program that purchased it has ended. A complete property record and a regular physical inventory schedule make that responsibility much easier to manage.
Take a look at your equipment records this week and check two things: whether every required data point is there and when your last physical inventory was completed. If either answer takes some digging, you've found a good place to start.
