Hi Lori, Thank you for the clarification! This is very helpful. One of mi PIs with a NSF award has asked me this question; may I forward this explanation to her? Or would it make her even more worried? In my original reply to her, I did not directly address how funds are managed and where they are "located"; I just told her that for now her award is not going to stop, that we are monitoring developments, and have a link for new updates and info. And as I was writing this email to you all she replied to me as below... I am sure so may other PIs are asking themselves the same question. [cid:image001.png@01DB7245.17049DD0] Sincerely, Francesca Bronder, M.A. Research Administrator II - College Research Administration College of Sciences The University of Texas at San Antonio One UTSA Circle San Antonio, TX 78249-1644 BSE 1.628 Email: francesca.bronder@utsa.edu<mailto:francesca.bronder@utsa.edu> http://research.utsa.edu<http://research.utsa.edu/> From: Lori Schultz <lori.schultz(a)utsa.edu&gt; Sent: Wednesday, January 29, 2025 11:49 AM To: rowdy.research(a)lists.it.utsa.edu Subject: [Rowdy.research] Drawing down federal funds - quick definitions Hi, all, I've fielded a few questions about drawing down federal funds for grants and thought I'd send a quick explainer about what it means. When we receive a grant from a federal agency, the award document represents authority to spend the obligated award amount. Depending on the language in the grant, that obligated award amount might be for the whole project period, or for a year of funding until continuation years are granted and the obligated award amount increases. We don't receive actual money from the sponsor until we start spending on the grant. Letter of Credit (LOC) draws are a way for grantees to electronically request reimbursement for expenses incurred on federal grants instead of sending paper/email invoices. The funds are transferred to the grantee by EFT/wire transfer. GCFS handles LOC draws based on expenditure activity on the grant. We are only allowed to be reimbursed for what we spent on a grant during a given period, and only up to the obligated award amount. GCFS pulls expenditures for federal sponsors with LOC capability, and only expenditures. We cannot draw funds for encumbrances. This applies only to federal grants and some cooperative agreements but not contracts or awards from non-federal sponsors (including subfederal awards where UTSA is the subrecipient). If you have questions, please email through this list. Thanks, Lori