A sponsored award issued in a foreign currency carries risk due to the conversion rate fluctations, as the actual amount of the award in US dollars may not be determined until all payments in the foreign currency have been received and converted to USD.
OSP will ask departments to provide an estimate of the US dollar equivalent when the eGC1 is created. This amount is only an estimate and can be months old when the payment is received. See OSP’s webpage on Proposals to Foreign Sponsors for information on how to convert a foreign currency to US dollars.
When the dollar is strong and goes up in value, the value of the foreign currency will decrease accordingly because it will take more of the foreign currency to equal $1.00. That means that we will receive fewer US dollars, which will cause awards issued in foreign currency to be worth less than originally estimated.
For example, one Euro on 1/2/2014 was worth $1.34. On 3/6/2015 that same Euro was worth $1.09. If you had an award for 10,000 Euros issued on 1/2/2014, the award would have been set up based on an estimated value of $13,400.00 dollars. If the payment for the Euros came in on 3/6/2015, you would receive $10,900.00 US dollars, a significant decrease in value.
When the dollar is weak and goes down in value, the value of the foreign currency will increase accordingly because the stronger foreign currency will be able to ‘buy’ more US dollars. That means that we will receive more funding than the original estimate.
For awards issued in a foreign currency, or if a sponsor asks to change an award from US dollars to a foreign currency, please be aware that the amount of the award is only an estimate and spending should be based on current exchange rates, not the initial exchange rate used to calculate the award amount. If the sponsor makes multiple payments, e.g. for a cost reimbursable award or one where payments are issued based on completion of milestone deliverables, the award and revenue amounts will be adjusted after all payments have been received. Any discrepancies between payments received and expenses could result in a deficit for the PI/department.
Use the Receipt amount in Grant Tracker to monitor the US dollar value of payments received. GCA recommends asking for payment in full at the start of the award. This will provide PIs and departments with a more accurate amount available to spend.