Pre-Award Risk Assessment: What It Means for Your Grant Proposal and Behavioral Health Grant Writing Services

Your grant proposal scores 100 out of 100. Your team is excited. Then comes the invitation to the next step: a pre-award risk assessment.

Now the funder wants to review your organization’s financial health.

This is the part I want more organizations to understand before investing in behavioral health grant writing services. A top-scoring proposal can move you into the next stage without guaranteeing an award. The funder may still need to determine whether your organization is financially and operationally prepared to manage the money.

At Recovery Movement Consulting, we write proposals and help clients administer grants and prepare reports. Across different types of funders, we’re seeing financial reviews become a more visible part of securing funding. We’re also seeing organizations encounter barriers when their finances or supporting records aren’t in order—even after a strong application moves forward.

As a CEO and grant professional, I want these conversations to happen earlier. Organizations put too much time, effort, and hope into applications to discover a financial concern only when an award is within reach.

What Is a Pre-Award Risk Assessment?

A pre-award risk assessment helps a funder determine whether your organization can manage the proposed award and meet its requirements.

Your proposal explains why your program deserves investment. The risk assessment examines the organization responsible for delivering it.

For federal awards, relevant considerations include financial stability, management systems, previous grant performance, audit findings, and the ability to implement award requirements.

The sequence varies. Some funders collect financial information with the application. Others request it after applicants advance through scoring or selection. Foundations may call their review “due diligence.”

Whatever the terminology, a funder may want to see your Form 990, audit, current financial statements, organizational budget, financial policies, and evidence of appropriate oversight.

A Brief History—and Why We May Be Seeing More Scrutiny

These reviews have developed over time. Recent policy changes and public scrutiny help explain the environment organizations are navigating.

• Federal grant requirements became more standardized in 2014. Federal Uniform Guidance established a common applicant risk review framework in 2013, with requirements generally taking effect in December 2014. The current applicant risk provision is at 2 CFR 200.206.

• States have formalized their own processes. Illinois enacted its Grant Accountability and Transparency Act in 2014; its current pre-award requirements include fiscal, administrative, and programmatic risk assessments. Minnesota adopted statutory pre-award risk assessment requirements in 2023 for covered grants of $50,000 or more.

• Fraud prevention has become more explicit in federal guidance. OMB’s 2024 revisions expressly addressed fraud risk in applicant assessments and clarified that pass-through entities must evaluate subrecipient fraud risk alongside the risk of noncompliance.

• High-profile fraud cases have increased pressure for stronger oversight. Minnesota provides a significant example. In July 2026, the Justice Department announced guilty pleas involving approximately $2.2 million stolen from the Medicaid Housing Stabilization Services program through false or inflated claims. Separately, Minnesota’s legislative auditor found in 2024 that inadequate state oversight of Feeding Our Future created opportunities for fraud in federally funded nutrition programs. These involved different funding systems, but both illustrate the consequences of weak verification and oversight.

• Oversight failures can lead to demands for better verification. Following its Feeding Our Future review, Minnesota’s legislative auditor recommended additional verification of high-risk applicants’ information and follow-up on corrective actions. That is a concrete example of scrutiny extending beyond what an applicant states on paper.

Medicaid provider oversight and grant pre-award assessments are separate processes. These cases do not establish why every funder changes its requirements. My perspective is that public fraud cases, oversight findings, and more explicit risk requirements help explain an environment in which funders want stronger evidence before releasing money.

What Financial Red Flags Should Your Organization Understand?

A financial concern does not automatically mean an organization has mismanaged money or cannot receive funding. But leadership should know what its records show and be prepared to explain concerns accurately.

• An operating deficit. If your Form 990 or financial statements show expenses exceeding revenue, a reviewer may ask why. A planned use of reserves or one-time expense is different from a continuing shortfall. Understand the cause, whether it is recurring, and what your current financial position shows.

• Repeated losses or declining reserves. Several difficult years can raise questions about sustainability. Be ready to explain how leadership is addressing the situation and whether the proposed grant would create additional obligations your organization cannot support.

• Limited cash available for operations. Having revenue on paper does not necessarily mean you can cover payroll next month. This becomes especially important with reimbursement-based grants. Review whether you can pay expenses while waiting for reimbursement and whether funds in the bank are restricted to other purposes.

• Significant debt or overdue obligations. Debt alone does not tell the whole story. A funder may be concerned about your ability to meet loan payments, vendor bills, payroll, or tax obligations while delivering the proposed program. Understand your obligations and their effect on cash flow.

• Audit findings or unresolved corrective actions. Material weaknesses, significant deficiencies, and other findings deserve careful review with your accountant or auditor. Know what was identified, what has been corrected, and what remains open. Keep documentation showing that improvements are being implemented.

• Questions about continued operations. If your audit raises substantial doubt about the organization’s ability to continue as a going concern, leadership needs to understand the circumstances and the plan to address them. A funder may question whether you can remain operational throughout the award period.

• Inconsistent or outdated records. Differences between your Form 990, audit, financial statements, and application budget may have reasonable explanations. Unexplained discrepancies or unreconciled accounts make it harder to assess financial health. Review the documents together before submitting them.

• Unclear financial controls. If one person handles every financial step without independent review, or expenses cannot be reliably identified by grant, a reviewer may have concerns about oversight. Be prepared to explain who approves spending, records transactions, reconciles accounts, and reviews reports.

Financial distress and fraud are different issues. An organization can be honest, effective, and deeply needed while facing financial challenges. The purpose of preparing is to understand those challenges and respond with accurate information and appropriate action.

How to Get Ready Before the Next Application

You do not need to overhaul everything at once. Start with the records and responsibilities that will matter most during review.

• Schedule a financial readiness conversation. Bring leadership, your financial team, and your grant professional together. Review your latest Form 990, audit if applicable, current financial statements, and budget. Ask directly: What could concern a funder?

• Prepare explanations supported by records. If an older Form 990 shows a deficit but your finances have improved, have current reports available. Explain what changed and provide evidence. Avoid relying on a general statement that things are better.

• Address unresolved findings. Maintain a corrective action plan with responsible people, deadlines, and completed steps. A written policy is useful; evidence that your team follows it is stronger.

• Confirm that you can operate the proposed award. Review reimbursement timing, matching requirements, uncovered costs, and staffing needs. Make sure your cash flow and budget can support the commitment.

• Strengthen grant tracking and review. Confirm that your accounting system can identify each grant’s revenue and expenses. Assign responsibility for reviewing spending against the approved budget and resolving discrepancies.

• Connect financial and program reporting. Decide how your team will document services, participants, outcomes, and expenses. The commitments in the proposal need workable tracking procedures behind them.

• Read the funder’s review requirements early. Look for financial capacity criteria, required documents, eligibility restrictions, and pre-award questionnaires. Clarify uncertainties before investing substantial time in an application.

• Tell your grant professional about concerns early. We can help assess the opportunity and communicate your position accurately when we have the relevant information. Some issues will also require support from an accountant, auditor, or other financial professional.

Can You Still Receive Funding If Concerns Are Identified?

Sometimes. Depending on the opportunity and the concern, the funder may request additional information, require a mitigation plan, place conditions on the award, or decline to proceed.

Federal award conditions can include reimbursement payments, additional financial reports, closer monitoring, technical assistance, or additional approvals. Minnesota’s guidance also identifies information requests, mitigation plans, and the possibility of not awarding funding.

That is why early preparation matters. It gives your organization time to make improvements and demonstrate progress before a decision is on the line.

What This Means for Behavioral Health Grant Writing Services

When an organization hires us, I want the conversation to include what happens after a proposal scores well.

Who will respond to financial review questions? Are the required records current? Can the organization support the payment schedule? Who will manage the award and prepare reports?

A compelling application depends on information from leadership, finance, and program staff. Preparing for an award requires that same collaboration.

I know what this funding can mean: retaining staff, keeping recovery services available, reaching families, and helping someone access care when they are ready. Financial readiness supports the continuity of that work.

If your proposal scores 100 out of 100 and the funder invites you into a pre-award risk assessment, I want your organization to be ready for that next conversation.

Recovery Movement Consulting provides behavioral health grant writing services, organizational readiness support, grant administration, and reporting. Contact us to discuss your funding goals and how to prepare your organization for the next opportunity.