Federal grant terminated: what to do in the first thirty days
By Wesley Stevens, Founder of Quillify.
Our federal grant was terminated. What do we do now?
Read the termination notice for its stated reasons and effective date, then find the agency’s deadline to object. Stop new spending on the effective date. Record the costs you have already committed, because some remain allowable. Start closeout, which runs on a fixed clock. Then begin replacing the money.
Last reviewed November 2, 2026.
What a termination notice has to tell you
Under 2 CFR 200.341, the agency or pass-through entity must give you written notice of a termination. The notice should state the reasons, the effective date, and the portion of the award being ended if the termination is partial.
When the termination is for a material failure to comply with the award, the notice must also tell you how SAM.gov will carry it. The decision is reported there and stays available for five years before it is archived. An agency considering a new award to you in those five years must weigh it when the federal share is expected to exceed the simplified acquisition threshold. You may add comments to that record in SAM.gov, and agencies should consider them.
If the notice leaves out the reason or the effective date, ask the program officer and the grants officer for each missing item in writing. Keep their reply with the notice.
The grounds an agency can use
2 CFR 200.340 allows a full or partial termination on four grounds.
- Noncompliance
- The recipient failed to comply with the terms and conditions of the award (200.340(a)(1)).
- Mutual consent
- Both sides agree to end the award and set the conditions together, including the effective date and any portion ended (200.340(a)(2)).
- Your own request
- The recipient asks in writing. If the agency decides the remaining portion would not accomplish the award’s purposes, it may end the whole award (200.340(a)(3)).
- The terms of the award
- The agency acts under the termination provisions written into the award. To the extent the law allows, that includes an award that no longer effectuates the program goals or agency priorities (200.340(a)(4)).
Section 200.340(b) requires the agency to specify every termination provision clearly and unambiguously in the award’s terms and conditions. Read the termination clause in your award document next to the notice, because the award is what the agency has to act under.
How to object or appeal
2 CFR 200.342 requires every agency to keep written procedures for objections, hearings, and appeals. When an agency starts a remedy for noncompliance, including a termination, it must give you the opportunity to object and to provide information challenging the action. The agency must also honor any hearing or appeal a statute or regulation gives you.
Part 200 sets no single day count for an objection. The agency’s own procedures and the notice set it, so find that date first and put it on the calendar.
If the termination is for noncompliance, tell the agency within thirty calendar days that you intend to appeal. The agency may not report the termination in SAM.gov until you have used up your opportunities to object, or until those thirty days pass without word from you (2 CFR 200.340(c)).
Build the objection around the award itself: its termination clause, the ground the notice names, and the records that answer it.
Which costs you can still charge
Under 2 CFR 200.343, obligations you take on after the effective date are not allowable unless the agency authorizes them in the notice or later. Costs from obligations you properly incurred before the effective date remain allowable when you did not incur them in anticipation of the termination. They also have to be costs that would have been allowable had the award run to its normal end.
2 CFR 200.472 covers the costs a termination itself creates. Costs you cannot stop right away despite reasonable efforts are generally allowable. Costs that continue because of a negligent or willful failure to stop them are not. Rent on an unexpired lease that the award reasonably needed can be allowable when you make reasonable efforts to end or reduce the lease.
Settlement expenses are generally allowable too. They include the accounting, legal, and clerical work to prepare a settlement claim, except when the termination is for cause. So are the costs of settling subawards and of storing or disposing of property bought for the award.
Closeout administration is allowable: staff time on final reports, disposition of equipment and property, and related indirect costs. These costs may be incurred until the final reports are due and must be paid before that date.
Closeout on a clock
A terminated award still closes out under 2 CFR 200.344 and 200.345, as 2 CFR 200.340(d) requires. Under 2 CFR 200.344, a recipient must submit all final financial, performance, and other required reports no later than 120 calendar days after the period of performance ends. Every financial obligation under the award must be liquidated within the same 120 days.
A subrecipient owes its final reports and liquidation to the pass-through entity within ninety calendar days, or by an earlier date the two agree on. The agency or pass-through entity may approve an extension when it is justified.
Refund any unobligated money you were paid and are not authorized to keep. Account for equipment and other property bought with federal funds under 2 CFR 200.310 through 200.316 and 200.330. The agency must make every effort to finish its own closeout actions within one year after the period of performance ends.
Ask the agency to confirm in writing the end date it will use to start the 120 days. A recipient that misses its final reports is reported in SAM.gov as a material failure to comply (2 CFR 200.344(i)). The full closeout process, step by step.
Your first week, step by step
Read the notice closely
Find the reason, the effective date, and the portion of the award being ended (2 CFR 200.341). Then read the termination clause in your award terms beside it (2 CFR 200.340(b)). Ask the program officer in writing about anything the notice leaves open.
Put the objection date on the calendar first
The agency’s written procedures set how and by when you can object (2 CFR 200.342). For a termination based on noncompliance, tell the agency within thirty calendar days that you intend to appeal (2 CFR 200.340(c)).
Stop new obligations on the effective date
Anything you commit to after that date is unallowable unless the agency authorizes it (2 CFR 200.343). Tell staff, vendors, and subrecipients the same day.
List what you already committed
Record every obligation made before the effective date, with its date and documents. Note the costs you cannot stop at once, such as a lease, and what you are doing to end them (2 CFR 200.472).
Confirm the closeout dates
Ask the agency which end date starts the 120 days for final reports and liquidation (2 CFR 200.344). A subrecipient asks the pass-through entity, whose window is ninety days or less.
Tell your board and funders
Let them hear it from you, with a plan attached. A funder who learns early can help, and some will move a payment forward or extend a deadline.
Start the replacement search the same week
Name a few organizations doing work like yours. The foundations that already fund them are your strongest prospects, and their tax filings show who they are.
Replacing the money
Other federal programs, state pass-through programs, private foundations, and government contracts all fund work like yours under different names. Quillify searches 129,000+ foundations, 5,000+ open grants, and 11,000+ open contracts in one place, then shows the foundations already funding your peers. Where to look to replace lost federal funding.
Who asks this most
The answer above is the same whoever you are. What Quillify does about it is not.
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