Important Information to Know

These two words may look and sound the same, but they are, in fact, completely different. Let’s start with the definitions. Supplanting occurs when a grantee reduces state or local funds for an activity, specifically because federal funds are available to fund the same activity. Supplementing occurs when federal funds enhance existing state or local funds for program activities. Simply put, “Supplement” means to add to; “supplant” means to replace. Therefore, federal regulations strictly prohibit supplanting as federal funds cannot replace state, local, or agency funds. In fact, federal agencies encourage supplementing-adding funds to existing state or local funds.

Understanding the Difference Can Avoid Consequences

As a grant recipient of federal funds, it is imperative to fully understand the difference between supplementing and supplanting. This can ensure that your grant runs smoothly and avoid potential consequences from your federal awarding agency. If supplanting is discovered, grants could be suspended or terminated, and grantees could be barred from receiving current and future federal funding. In addition, grantees may also have to repay the misused funds.

To avoid supplanting from occurring, grantees should do the following:

• Ensure that all staff understands the difference between supplementing and supplanting.
• Separately store files for each grant with individual accounting tracking systems or spreadsheets. Funds should not be lumped into one category labeled “grants.” However, if the funds are allocated for the grant, they should be labeled accordingly.
• Ensure that budget categories (personnel, equipment, supplies, etc.) are set up for each grant award.
• Ensure that all expenses and reimbursements are consistently tracked for accuracy.
• Never use federal funds to pay for existing employees unless the existing position is “back-filled” with a new hire.
• Never use federal funds to pay for items or costs that the grantee is already obligated to pay with state or local funds.
• Always have supporting documentation. This may include budget sheets, meeting minutes, agency memoranda, notices or orders, and other official documents addressing the reduction in non-federal resources.

Don’t Be Afraid to Ask for Help

When in doubt, grantees should check the awarding agency’s program regulations or the Notice of Grant Award (NOA) to check if it states that supplanting is prohibited. In addition, if a grantee is unsure about supplanting, they should contact their assigned grant officer to discuss the scenario and ensure that supplanting doesn’t occur.