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The most recent allocations from the Higher Education Emergency Relief Fund (from CARES Act Section 18004(a)(3)) has provided a “game changer” for a number of schools.


Saltwater Christian College (SCC) is a private college exempt under Internal Revenue Code section 501(c)(3) and 170(b)(1)(A)(ii).  They are required to file Form 990 annually.

SCC’s CFO called us to say that their team is celebrating the news that the Department of Education has included them in a listing of additional funding under the Higher Education Emergency Relief Fund whereby SCC is eligible to receive grants totaling $500,000.

“Our first allocation was about $60,000 and must be split between student grants and institutional uses with at least 50% going to student grants.  That will really help our students – and our school!  But, now that we have this new allocation – of over $400,000 – what expenses can that money be applied to?”

We answer.  “First, congratulations.  Next, the Section 18004(a)(3) amounts can be spent on a broader range of expenditures involving costs related to responding to the COVID-19 pandemic, which may include lost revenue, reimbursement for expenses already incurred, technology costs associated with the transition to distance education, faculty and staff training, and payroll.  In addition, the funds may also be used to give grants to students.  Under these additional (Section 18004(a)(3)) student grants, students may use the money for any component of their cost of attendance, including tuition, course materials, and technology.  There are some restrictions and we are awaiting further guidance from the Department of Education.”

“That is broader than the Section 18004(a)(1) funds.  How soon do we have to spend the 18004(a)(3) funds?” They asked.

Great question, we respond.  “The short answer is one year.  When you apply for the funds on, you must sign a ‘Certification and Agreement.’ That agreement states, ‘Expenses must have been first incurred on or after March 13, 2020, the date of the Proclamation of National Emergency. In addition, the institution agrees to promptly and to the greatest extent practicable use the funds for the institution’s stated Expenses and Student Grants by one year from the date of the certification and agreement.’”

“Great,” said SCC’s CFO.  “And, we understand that we need to account for the funds and how they were spent because – if received – these funds will put us about the “Single Audit” threshold of $750,000.”

“Excellent strategy.  The ED comments on the required accounting and reporting in the Certification and Agreement,” we said.

The ED HEERF allocations alphabetical list for CARES Act Section 18004(a)(3) can be found here.



From the Department of Education Recipient’s Certification and Agreement for Funds under Section 18004(a)(3) of the Higher Education Emergency Relief Fund:

Recipient may use the funds to defray expenses incurred by Recipient, including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll (“Recipient’s Expenses”). Recipient also may use these funds for grants to students for any component of the student’s cost of attendance, as defined under Section 472 of the HEA, including food, housing, course materials, technology, health care, and child care (“Student Grants” or “Student Grant”).



  • The CARES Act has provided important funding to certain colleges and universities under the Higher Education Emergency Relief Fund (HEERF).
  • Many schools were allocated hundreds of thousands – if not millions – of dollars under CARES Act Section 18004(a)(1) – including a “student portion” and an “institutional portion.”
  • A recent allocation of CARES Act Section 18004(a)(3) funds has brought numerous, smaller schools up to a “minimum level” of HEERF funding of $500,000.
  • Section 18004(a)(3) funds may be spent by the institution within one year of certification on a broader range of expenses.


Specific questions? Email Dave Moja

The information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.

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