I am considering re-granting some money from our nonprofit to another 501(c)(3) to accomplish a piece of our work that we don't have the capacity to fulfill. If I re-grant the money for a project, do I give up control of the project? The other organization would have to hire staff in order to complete the project. As the re-grantor could I then play a supervisory role over the staff that would be hired to take over the project or would this be illegal?
The amount of control probably depends on how you structure the arrangement. If you actually grant funds to the other organization, you can set the terms and conditions under which they have to spend the funds and receive regular reports on progress, but it is unlikely that they will let you control their employees who actually do the work.
On the other hand, if you contract with the other organization to perform professional services for your organization, with employees who must perform to your satisfaction and accomplish the work to your satisfaction, you can have significant direct control over the end product. The other organization may be less willing to accept a contractual relationship than a grantee relationship, but between the two poles, there may be a mutually acceptable compromise that allows both of you to accomplish your goals.
This is obviously an opportunity for collaboration or affiliation — the kind of thing that foundations say they love to fund — so it would make sense to consider this opportunity in a broader context of long term relationships and capacities, not simply as a means to carry out a specific project.
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If the organization is re-granting federal funds, then the organization remains responsible for them in terms of how the funds are used as well as the results achieved. In most cases, the re-granting organization would also need to obtain approval to re-grant funds with the funding agency. As a matter of fact, if the organization is not going to fulfill all of the grant requirements themselves, and it is a foundation grant, it is also a good idea to inform the funder. In the case of federal funds, the re-granting organization is also responsible for ensuring that they obtain an audit and that funds are used for allowable expenditures.
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