Legal Aid Group Revises Grant Spending Guidelines
Published Date: 4/30/2026
Proposed Rule
Summary
The Legal Services Corporation is updating its rules on how grant money can be spent and how property should be managed. These changes make the rules clearer, cut down on paperwork, and boost accountability for organizations receiving federal funds. If you’re involved with LSC grants, get ready to follow these new guidelines and send your feedback by June 29, 2026!
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Analyzed Economic Effects
7 provisions identified: 5 benefits, 1 costs, 1 mixed.
Prior-Approval Threshold Raised to $50,000
If you receive Legal Services Corporation (LSC) grant funds, the dollar threshold that triggers prior written approval rises from $25,000 to $50,000. That means many purchases or contracts under $50,000 will no longer need individualized prior approval under 45 CFR parts 1630 and 1631.
Fundraising Proceeds Must Reimburse LSC
LSC proposes that fundraising proceeds are not 'derivative income' and that a recipient that charged fundraising costs to the LSC grant must reimburse its LSC account from the fundraising proceeds in an amount equal to the amount charged to the LSC grant. This repayment must be done in proportion to LSC funds used.
Exigent Circumstances Allow Emergency Spending
The proposed rule states a recipient may use more than $50,000 of LSC funds to purchase personal property or award a contract for services without seeking LSC prior approval if the purchase or contract is necessary under exigent circumstances. This provides an exception for urgent needs.
Prior Approval Required Before Legal Obligation
LSC clarifies that recipients must obtain prior written approval before they incur a legal obligation to expend LSC funds in excess of the applicable threshold. The rule explicitly says approval is required before you commit to spending above the threshold amount.
Accounting Deadline Tied to Audit Filing
Instead of a fixed April 30 deadline, recipients must provide the annual accounting to LSC by the date they are required to submit their annual audited financial statements to LSC's Office of Inspector General. The accounting must be cumulative and show LSC funds used for acquisition, financing, and capital improvements.
LSC Can Extend Prior-Approval Review Timelines
LSC proposes authority to extend review timelines for complex or atypical prior approval requests. The rule also states LSC will inform recipients within 20 days whether more information is needed and will make decisions within 30 days for personal property requests or 60 days for real estate once materials are sufficient.
Clarified Procurement File Documentation
LSC clarifies that the procurement documentation required with a prior-approval request means the documents you maintain in your procurement files to show you followed your own procurement policies. This aims to reduce follow-up requests for additional materials.
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