The Treasury “Do Not Pay” Initiative: What it Means for Grantees

budget managementIn November 2009, President Obama initiated an Executive Order to reduce improper payments and eliminate waste across federal programs. The Treasury “Do Not Pay” Initiative is one effort to help the federal government achieve these objectives.

Here’s how the Treasury “Do Not Pay” Initiative affects your organization’s award activities.

How the Treasury “Do Not Pay” Initiative Works 

Government agencies use the Treasury “Do Not Pay” Initiative to determine grantee eligibility prior to releasing federal funds. This ensures that the federal government is only paying out on grants in which recipients are compliant with award requirements. It also allows the federal government to hit a stop button on payments if ineligible. 

To evaluate eligibility, agencies can search, match and analyze data sets within an online portal—known as the Do Not Pay Business Center. Currently available data sets include:

  • Death Master File (DMF)
  • Treasury Offset Program (TOP) Debt Check
  • List of Excluded Individuals/Entities (LEIE)
  • Credit history, social identity matching, and others from Dun and Bradstreet
  • Office of Foreign Assets Control (OFAC)
  • System for Award Management / Excluded Party List System (SAM/EPLS)
  • SAM Central Contractor Registration (CCR)

Additional data sets are pending.

Agencies can search available data sets by entering a social security number (SSN), employee identification number (EIN), taxpayer identification number (TIN), first and last name, business name or DUN. From there, they can see a history of compliance, identify parties that are excluded from doing business with the government, learn of past performance metrics and more. In essence, Do Not Pay Business Center’s data allows agencies to prevent improper payments by verifying entity eligibility information. 

Note: Not all government agencies currently implement “Do Not Pay” as it is not legally required.

The Effect on Federal Fund Recipients

Thus far, the Treasury “Do Not Pay” Initiative has only affected recipients of large sums of federal dollars—i.e. states and counties. While no nonprofit or educational system has had “Do Not Pay” issued against them yet, smaller organizations may become a target down the road as data becomes more readily available via open data initiatives.

The main risk to nonprofits is projection of cash flow. As traditional drawdown cash flow timelines become more mitigated based on programmatic performance and organizational compliance, drawdowns and paybacks will become less concrete. This forces questions like: How do I manage my expenses? How do I know how much cash flow is at risk, even if it’s drawn down? How much might I have to pay back?

To safeguard your organization from stifled cash flow and lost funds, it is wise to put the proper systems in place to maintain compliance. Implement a technology solution to:

  • Record and consolidate grant-related documents.
  • Make data machine-readable.
  • Track programmatic progress, and create performance reports.
  • Assist in meeting deadlines.

The ability to drawdown the full amount of federal dollars awarded will be contingent upon performance and compliance, and your ability to measure both. The Treasury “Do Not Pay” Initiative is one more stepping stone in the government’s quest for greater spending transparency and accountability.

How does the Treasury “Do Not Pay” Initiative fit into the greater discussion on open data and government transparency? Download our free ebook, The Path to Open Data, to learn more. 

The Path to Open Data

Image Source: OTA Photos via Flickr