Assets for Independence Resource Center
Managing Your AFI Grant > Returning Unused Federal AFI Grant Funds

Returning Unused Federal AFI Grant Funds

Returning unused funds is one of the most important steps in the AFI grant close out process.

All AFI grantees must return any Federal funds (plus interest earned on Federal funds) left unused in their Project Reserve Fund, by the end of the 90-day closeout period. Use the final Financial Status Report to determine the amount of funds to return to the HHS Division of Payment Management (DPM).

Returning unused Federal funds involves two steps: calculating the amount to return, if any; and preparing and sending the appropriate forms, checks, and letters to the Division of Payment Management, the Office of Grants Management, and the AFI program office.

STEP 1: Calculate amount(s) to return

  • Complete final financial report: Follow AFI's instructions when preparing the last Financial Status Report. Note instructions for final reports.
  • Calculate Federal funds to return: Determine the amount of Federal funds you have deposited into the Project Reserve Fund that remain unspent. This figure will be the difference between line(s) 10a and 10e on the final 425. There is no space on the form to enter this amount.
  • Calculate interest on Federal funds to be returned: The grantee may use interest earned on Federal funds for specific participants or projects operations, per AFI guideline. However, the grantee should return undisbursed interested on Federal funds. This amount will be half of the value listed in line "o" on the final financial report because half the interest is earned on nonfederal funds.

Note: Grantees may retain up to $250 a year (total of $1,250) in interest earned on Federal dollars in the Project Reserve Fund.

STEP 2: Prepare Correspondences

  • Write a cover letter: Prepare a letter to accompany any checks; include the following information about the grant:
    1. Amount of funds returned in the enclosed checks, itemizing Federal funds and interest, if any
    2. Grantee name
    3. Award number
    4. Fiscal year of the grant award
    5. Federal Employer Identification Number (as it appears in Box 22 of the NoA document)

Download a template cover letter for retuning fund.

Division of Payment Management

Sending checks for Federal funds or interest returned:

  1. Write a check to the Department of Health and Human Services for the unused Federal amount drawn down. On the check, note the grant number and your EIN.
  2. If you have interest to return, it is best to make that a separate check, also made out to HHS. Include the grant number and your EIN.
  3. Mail the check(s) to the Division of Payment Management.
  4. Include the cover letter.

Office of Grants Management

Submit your final financial report and information on return of funds drawn down and any interest returned.

  1. Attach a copy of the check(s) to your final financial report.
  2. In the "Remarks" section of the report, note the check number(s), the amount(s), and that the check(s) is for undisbursed Federal funds drawn down and, if applicable, interest returned.
  3. Include a copy of the cover letter sent to DPM.
  4. Include the final narrative report.

AFI Program Office, Office of Community Services

  1. Send copes of all correspondences to the AFI Program Office.
  2. Include the final financial report, final narrative report, the cover letter and copes of any checks.


  • Send original checks and cover letter to DPM: Send the signed checks, both for the unused Federal funds and for interest on Federal funds returned, to DPM, with the cover letter. Do not send the financial report to DPM.
  • Send cover letter, original final financial and narrative reports, and copies of checks to OGM: Send OMG copies of both checks that went to DPM, along with the original copy of the final Financial Status Report (with completed remarks) and your cover letter. Include your final narrative report in the same package. Do not send original checks to OGM.
  • Send copies of all documents of OCS: Send OCS copies of the final financial report and narrative report, the check(s), and your cover letter.

Use the checklist below when preparing to return Federal funds.

Download a Word version of this checklist.


Step / Milestone


Date Completed

Complete final financial report


Calculate funds drawn down but not expended for match or administrative costs (maximum 15%)


Calculate undistributed interest on Federal funds


Prepare check(s) to HHS for any Federal funds drawn down or any interest to be returned; include grant number and EIN


Write cover letter


Make copies of all documents


Send to DPM:

  • Cover letter
  • Original check for unused Federal funds
  • Original check for unused interest on Federal funds


Send to OGM:

  • Cover letter
  • Final financial report
  • Final narrative report
  • Copies of both checks sent to OGM


Send OCS a copy of each document sent to OGM



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