Certified Government Financial Manager (CGFM) Practice Exam 2026 – Your All-in-One Guide to Exam Success!

A provisional rate in the context of grant management is defined as a temporary rate that is established pending final determination. This rate allows organizations to begin charging costs to a grant before a final contract rate is negotiated and set. It serves as a placeholder that enables grant recipients to access funds and start project work while the exact rate is still being finalized.

The provisional rate is crucial because it provides a basis for funding during the early stages of a grant, ensuring that program activities can commence without undue delay. Once the actual costs are determined and appropriate adjustments are made through subsequent negotiations, the provisional rate can be adjusted. This process safeguards both the grantor and the recipient, ensuring that the funding is aligned with actual financial needs and project expenditures.

Understanding the essence of provisional rates is essential for effective financial management in grants, as it reflects both flexibility and the necessity of accuracy in funding allocations.