What to Do with Leftover Supplies After a Federal Grant Ends
When a federal grant ends, we tend to focus on the big milestones—final reports, financial reconciliation, outcome documentation. But there’s one detail many organizations overlook: what to do with the leftover supplies.
If your organization has a closet (or two) filled with unused items—laptops, training materials, medical kits—you’re not alone. And if you’ve been wondering what the federal rules say about these supplies, this episode was made for you.
What Counts as a Supply Under 2 CFR?
Under 2 CFR guidance, “supplies” are defined as tangible property costing less than $5,000 per unit and used during the project. Think office supplies, educational materials, medical items, or even laptops and tablets—anything that gets used up and needs replacement over time.
If an item costs more than $5,000 and has a useful life of over a year, it’s considered equipment, which follows entirely different rules. (If you missed our episode on that, check out Episode 1.)
Important Update: As of October 1, 2024, the per-unit cost threshold for supplies increases from $5,000 to $10,000—but only for new grants or continuation awards issued on or after that date. If your grant started before then, the $5,000 rule still applies.
What If You Have Supplies Left Over?
Here’s where it gets real: Under 2 CFR §200.314, if your leftover supplies have a total fair market value over $5,000 (or $10,000 for post-October 1 awards), you’re required to either:
Keep the supplies and repay the federal government for its share of the original purchase,
Sell the supplies and return the proceeds (minus allowable costs) to the government.
Example: What You Owe
Say your organization closes out a grant and has $12,000 in leftover supplies. If the federal agency funded 85% of the original purchase, you owe them 85% of the current value—$10,200.
If you decide to sell the supplies and it costs you $1,000 in handling fees, you can deduct that amount before repaying. In this case, you’d remit $9,200 back to the government.
Pro Tips for Staying Compliant
Take inventory at closeout. Know what’s left and what it’s worth now, not what it cost when you bought it.
Check your grant terms. Always verify with your program officer or grants management specialist—some agencies have specific requirements.
Know which threshold applies. Grants issued before October 1, 2024 use the $5,000 limit; those after that date use $10,000.
Track federal participation. Calculate how much of the original cost was covered by the federal funds to determine what you owe.
Even if you’re under the threshold, document your disposal process. Reassigning supplies internally? Reusing them for other federal work? Write it down.
A Word for Subrecipients
One more important note: If you're a subrecipient, you can’t use leftover supplies to provide services at a reduced fee that would undercut a private competitor. For instance, if you received federal funds to buy medical supplies, you can’t use those to offer medical services for $25/hour when private clinics charge $50. This rule helps maintain a level playing field and protects the government’s investment.
Final Thoughts
It’s easy to overlook leftover inventory when closing out a grant—but doing so can put your organization out of compliance. The key is to plan ahead, track thresholds, and follow the federal share rules.
For a deeper dive into this topic, including real-world examples and actionable tips,
Listen to the full episode of the Grants Management Experts podcast here.
