BNUMBER: B-270654
DATE: May 6, 1996
TITLE: The Asia Foundation
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Matter of:The Asia Foundation
File: B-270654
Date:May 6, 1996
DIGEST
The Asia Foundation may not use its general support grant funds from
the Department of State to match other federal grants from the Agency
for International Development (AID) and the United States Information
Agency (USIA). Generally, funds derived from other federal grants do
not qualify as matching funds unless statutorily authorized. The Asia
Foundation does not have specific statutory authority to use grant
funds to match other federal grants.
DECISION
This is in response to your request for an opinion concerning whether
the Asia Foundation (Foundation) may use general support grant funds
from the Department of State to satisfy cost-sharing requirements,
that is, to match grants from other federal agencies. As explained
below, the Asia Foundation may not use its general support grant funds
to match other federal grants from the Agency for International
Development (AID) and the United States Information Agency (USIA).
The Asia Foundation is a private nonprofit corporation which promotes
democracy and human rights throughout the East Asian and Pacific
region. The Asia Foundation receives financial support from the
United States government through various means, including an annual
grant from the Secretary of State as specifically authorized by 22
U.S.C. sec. 4402(a)(1992).
"The Secretary of State shall make an annual grant to The Asia
Foundation with the funds made available under section 4403 of
this title. Such grants shall be in general support of the
Foundation's programs and operations. The terms and
conditions of grants pursuant to this section shall be set
forth in a grant agreement between the Secretary of State and
The Asia Foundation."
The Asia Foundation seeks grants from AID and USIA and proposes to use
grant funds provided under section 4402 to satisfy AID and USIA
cost-sharing requirements. 22 C.F.R. Parts 226.23 and 518.23.[1]
These regulations provide that AID and USIA shall accept contributions
as part of the recipient's cost sharing or matching if they meet
certain criteria, one of which is that contributions "[a]re not paid
by the Federal Government under another award, except where authorized
by Federal statute to be used for cost sharing or matching." AID and
USIA have interpreted this provision as preventing the Asia Foundation
from using funds derived from the State Department grant to meet
cost-sharing requirements because the Asia Foundation does not have
specific statutory authority to use grant funds from the Department of
State to match federal grants.
The Foundation does not challenge the validity of the AID and USIA
regulations; rather the Foundation claims that it has the requisite
statutory authority to use grant funds from the Department of State to
match AID and USIA grants. The Foundation claims that the phrase
"general support" as used in 22 U.S.C. sec. 4402 indicates that Congress
did not intend to attach any strings to the grant. Accordingly, the
Foundation maintains that AID and USIA must permit use of those funds
for cost sharing requirements. The Foundation points to the
legislative history of the Asia Foundation Act which noted that it
received funding from other agency grants, such as AID and USIA and
that the State Department grant was for the purpose of general support
of the Foundation's programs and operations. See H.R. No. 130,
reprinted in 1983 U.S.C.C.A.N. 1484, 1565. The Foundation also claims
that the State Department core grant does not restrict, nor could it
restrict, the Foundation from using those funds to meet cost-sharing
requirements.
In determining whether an agency may use federal funds to match other
federal grants, we have looked at the cost-sharing objectives of
matching grants as well as statutory and regulatory provisions
imposing restrictions on matching grants. Generally, cost-sharing
objectives of matching grants are intended to stimulate new grantee
expenditures and/or to limit federal expenditures on the program
activities involved. Consistent with these objectives, the general
rule is that a grantee may not use funds received under one federal
grant as the matching share under a separate grant. 56 Comp. Gen.
645, 648 (1977); 32 Comp. Gen. 561 (1953); 32 Comp. Gen. 141 (1952);
and B-214278, Jan. 25, 1985 (Where a statutory provision specifies
that the federal contribution to a local project will not exceed a
particular percentage of project costs, the remaining project costs
should be funded with nonfederal moneys in the absence of a clear
indication of contrary congressional intent). See also OMB Circular
No. A-110, "Grants and Agreements with Institutions of Higher
Education, Hospitals and Other Non-Profit Organizations", para.
23(a)(5). We apply this rule even where there is no express
prohibition against such use in the relevant program statute because
we have held that a matching requirement contemplates that both
federal and nonfederal funds will be used to support authorized grant
activities. See B-214278, Jan. 25, 1985.
Normally, exceptions to this rule are in the form of express statutory
authority. See 59 Comp. Gen. 668 (1980). Where Congress has
authorized the use of federal grant funds to satisfy local share or
matching requirements, it has very clearly conveyed its intent. See
59 Comp. Gen. 668 (1980) (Housing and Community Development Act of
1974 expressly permits Community Development Block Grantees to use
those funds to provide a local matching share required by another
federal grant program); B-239907, July 10, 1991; and B-214278, Jan.
25, 1985.
We recognize that the statute authorizing the State Department grant
and its legislative history indicate some flexibility in the
Foundation's use of those funds. However this statute also permits
the imposition of restrictions on the grant: "The terms and
conditions of grants pursuant to this section shall be set forth in a
grant agreement between the Secretary of State and The Asia
Foundation." 22 U.S.C. sec. 4402. In any event, neither the statute nor
its legislative history can be read to authorize the use of those
funds to match funds for other federal grants.
The Asia Foundation claims that its State Department grant is similar
to the grant analyzed in 57 Comp. Gen. 710 (1978). In that case a
state proposed to use federal funds distributed under Title II of the
Public Works Employment Act of 1976 as the state's required nonfederal
share under the Medicaid program, but was opposed by the
predecessor of the Department of Health and Human Services (HHS).
HHS's regulations stated the general rule that federal funds may not
be utilized as the nonfederal share for HHS programs unless authorized
by law. 45 C.F.R. sec. 74.52(b)(5) (1976). We determined that Congress
considered the federal funds distributed under Title II as more in the
nature of revenue sharing than traditional grants-in-aid of specific
purposes. We found that under Title II, an agency had no discretion
in deciding whether to make an award and could not impose conditions
on the use of the federal funds distributed under Title II.
Furthermore, the method of distributing funds under Title II is
accomplished by formula distribution defined by statute and not by an
application or approval by a federal grantor agency. Thus, we held
that such funds were not subject to the restrictions applicable to
grants, including the prohibition on the use of grant funds to match
other grants nor were such funds subject to the HHS regulations
regarding contracts or grants.
In this case, section 4402 specifically identifies the funds received
by the Asia Foundation as a grant and states that the grant is
governed by the grant agreement between the Foundation and the State
Department. The grant agreement applies general grant management
principles such as cost allowance, accounting and reporting
requirements. There is no doubt that the Asia Foundation is a federal
grant recipient and nothing in the statute or legislative history
supports the proposition that Congress intended that the grant not be
subject to the general rules regarding grants.[2] We have no basis to
conclude that the Foundation's grant funds are nonfederal and that AID
and USIA regulations should not be applied in this case. Accordingly,
the Asia Foundation may not use funds from its State Department grant
to match grants from AID and USIA.
/s/Robert P. Murphy
for Comptroller General
of the United States
1. Both USIA and AID grant regulations implement the provisions of OMB
Circular No. A-110 issued on November 19, 1993. See 59 Fed. Reg.
39440 (1994) and 60 Fed. Reg. 3743 (1995).
2. We also considered whether the Asia Foundation's grant was similar
to the grants analyzed in 59 Comp. Gen. 668 (1980). We there
concluded that Community Development Block Grants (CDBG) were "local
resources" for purposes of local matching requirements for community
development programs such as the Coastal Zone Management Act and thus
were available to match a grant under that Act. The controlling
distinction between that decision and here is that the Community
Development Act of 1974 specifically authorized the use of CDBG funds
as "non-federal share" for grants in community development programs,
42 U.S.C. sec. 5305 (1974), whereas here the Asia Foundation has no
analogous statutory authority.