NSGP reimbursement: records, timing and returned claims

How NSGP reimbursement works

FEMA awards Nonprofit Security Grant Program (NSGP) funds to the SAA, which makes subawards to selected nonprofits (Preparedness Grants Manual, July 2026, section 9.3).

1. Clear the award conditions.Subrecipients "cannot claim pre-award costs" (FY2026 NOFO, p. 19). Work that needs environmental and historic preservation review also waits for written clearance (p. 49; see NSGP EHP review).
2. Procure, receive, and pay.The nonprofit follows its procurement procedures, receives the approved goods or services within the period of performance, and pays the vendor.
3. Submit the SAA's claim.The nonprofit uses the state's forms and system and includes the required records. State deadlines and procedures differ.
4. Wait for federal and state review.FEMA reviews every non-disaster reimbursement request before the SAA draws federal funds. The SAA then pays the nonprofit under the subaward's terms.

The subaward controls the payment method. Under 2 CFR 200.305(b), an SAA must use advance payment when a subrecipient has procedures that minimize the time between receiving and spending funds and has financial systems that meet federal standards. Reimbursement applies when those conditions aren't met, when the SAA imposes it as a specific condition, or when the subrecipient requests it.

An SAA's federal drawdown request includes the amount and activity being reimbursed, along with information about each subrecipient. The SAA may therefore ask for more than invoices (FY2026 NOFO, pp. 47–48).

What makes a cost reimbursable

A claim must satisfy the federal cost principles and the subaward. 2 CFR 200.403 requires a cost to be necessary, reasonable, allocable to the award, consistent with the nonprofit's treatment of similar costs, and adequately documented. The cost must be incurred and the goods or services delivered within the budget period (FY2026 NOFO, pp. 17 and 19). Subrecipients also need written procedures for determining allowability (2 CFR 200.302(b)(7)).

A reasonable cost is no more than a prudent person would incur under the circumstances (2 CFR 200.404). An allocable cost belongs to this award in proportion to the benefit and may not be shifted to another federal award (2 CFR 200.405). Claim only the net amount: discounts, rebates, refunds, credits, and corrected overcharges must reduce the award cost (2 CFR 200.406).

Leave late fees and finance charges out of the claim. The regulation specifically makes fines and penalties caused by noncompliance unallowable (2 CFR 200.441); it doesn't classify every late fee that way. A vendor charge caused by late payment is still difficult to justify as a reasonable grant cost.

Records each claim needs

The FY2026 NOFO requires documentation showing that each expense is allowable, allocable, reasonable, and necessary. It also lists specifications, solicitations, quotes, selection records, purchase orders, contracts, invoices, and cancelled checks among the records for federally funded purchases (pp. 48, 53–54). The SAA sets the claim-specific list. Missouri's FY2024 NSGP compliance workshop, for example, required the invoice, proof of payment, proof of delivery, and any purchase order for equipment claims.

Salary charges must rest on records that "accurately reflect the work performed"; a budget estimate alone doesn't support the charge (2 CFR 200.430(g)). The FY2026 NOFO caps M&A at 5% of each subaward and requires a nonprofit with more than one subaward to account for each separately (p. 19). Guard hours require time and attendance support; see security guard grants for the contract rules.

Why claims get returned

The SAA will return a claim when its amount doesn't match the supporting invoices and payments. One payment may cover several invoices, an invoice may be paid in installments, or a vendor may revise an invoice after payment. The nonprofit must show which cost each payment satisfies. Discounts, credits, rebates, and refunds must also reduce the amount claimed under 2 CFR 200.406.

Incomplete proof causes the same result. A bank record doesn't show what was bought, and an invoice alone doesn't prove payment cleared. Cash and payments from a personal account may be impossible to trace to the nonprofit. Use the organization's account and retain the evidence the SAA accepts.

Guard invoices without time and attendance records can be returned or reduced. M&A claims need records for the correct award and must stay within that award's 5% cap. Costs incurred, or goods and services delivered, outside the period of performance cannot be claimed. A date outside the claim's stated reporting period usually requires correction or explanation.

Timing and cash flow

Plan to carry the cost until the SAA pays. When reimbursement is used, 2 CFR 200.305(b)(3) requires payment within 30 calendar days after a payment request unless the SAA reasonably believes the request is improper. A return for correction adds time. Before committing to a large purchase, ask whether the SAA permits an advance or a request based on an unpaid invoice.

State claim deadlines may be earlier than federal closeout deadlines. By default, a subrecipient must submit its closeout reports and liquidate all financial obligations within 90 calendar days after the subaward period of performance ends, or by an earlier date agreed upon by the SAA and subrecipient; the SAA may approve an extension when justified (2 CFR 200.344(b)–(c)). The subaward and SAA instructions set the final-claim deadline. See NSGP reporting and closeout.

When a claim comes back

A returned claim is a request for correction or more information, not necessarily a disallowance. Answer the stated issue and ask the SAA in writing if the request is unclear. FEMA encourages recipients to answer its requests for information within three business days; without an adequate response, FEMA may deny the drawdown and restart the 30-day clock on a new request (FY2026 NOFO, p. 47). The SAA may therefore need the nonprofit's answer quickly.

Correct the underlying record as well as the claim. If an invoice doesn't match the payment, ask the vendor for a corrected invoice and preserve the transaction history. A repeated mismatch points to a bookkeeping problem that can affect later claims.

If the SAA disallows a cost, ask for the reason and governing rule in writing. The nonprofit may be able to provide missing support; otherwise it must pay the cost from its own funds. Any hearing or appeal right comes from the subaward and governing law (2 CFR 200.342). These records may also be requested during a state monitoring review.