When it comes to receiving funds from the Community Development Block Grant (CDBG) program, there are two terms that are often used interchangeably but have distinct differences: subrecipient and contractor.
A subrecipient is an organization that receives CDBG funds from a grantee (such as a state or local government), and is responsible for carrying out a specific project or program. The subrecipient is required to comply with all of the same rules and regulations that apply to the grantee, including reporting requirements and compliance with civil rights laws.
On the other hand, a contractor is hired by a grantee to provide specific services related to a CDBG-funded project. A contractor is not responsible for complying with all of the same regulations and requirements as a subrecipient, but they are still subject to certain requirements, such as prevailing wage regulations.
So, why does it matter whether an organization is classified as a subrecipient or a contractor? The main reason is that subrecipients are held to a higher standard of accountability. Because they are receiving funds directly from the grantee, they are seen as an extension of the grantee’s responsibilities. This means that subrecipients are subject to more thorough monitoring and oversight, and must be able to demonstrate that they are using CDBG funds in an appropriate and effective manner.
In contrast, contractors may have more flexibility in how they carry out their work, but they are not directly accountable to the grantee for the use of CDBG funds. This means that the grantee must rely on the contractor to operate in good faith and comply with all applicable regulations.
Ultimately, whether an organization is classified as a subrecipient or a contractor depends on the specific nature of their work and their relationship with the grantee. However, it is important for organizations and grantee agencies alike to understand the difference between these two terms and the implications that they can have. By ensuring that all CDBG funds are used in a responsible and effective manner, we can help to create stronger and more vibrant communities across the country.