Nutrition Services Incentive Program FAQ

1. What is the Nutrition Services Incentive Program (NSIP)? 

The NSIP is authorized by Section 311 of the Older Americans Act (OAA). NSIP provides 

grants to states, territories, and eligible tribal organizations (hereinafter, “state(s)”) to 

support the OAA congregate and home-delivered nutrition programs by providing 

an incentive to serve more meals. Grantees can choose to receive their grant as 

cash, commodities (food) from the United States Department of Agriculture (USDA), 

or a combination of cash and commodities. 

USDA leads a process that allows states to choose cash or commodities prior to the 

beginning of the next fiscal year. This choice may not be changed during the year. If 

a state chooses to use commodities, USDA assesses an administrative fee that is 

taken from the grant.

In 2006, USDA administered the program, and it was commonly known as “cash-inlieu of commodities” or the “Nutrition Program for the Elderly.” The name was 

changed in the 2006 amendments to the OAA when the authorization and funding 

was transferred from USDA to the Administration for Community Living (ACL). 

2. What are the requirements of NSIP? 

The requirements for NSIP are stated in Section 311 of the OAA. There are no other 

requirements by any other federal agency. NSIP allocations are available to states 

that provide nutrition services in adherence to the requirements of the OAA which 

include: 

• Serving meals to an individual who is eligible to receive services under the 

OAA.

• Serving meals to an individual who has not been means-tested to receive 

services.
• Serving meals that meet the requirements of the OAA, including meals that 

meet the Dietary Guidelines for Americans (DGAs) and Dietary Reference 

Intakes (DRIs) as indicated in OAA Section 339.

• Serving meals to individuals who have been provided the opportunity to 

contribute to the cost of service.

• Are served by an eligible agency, i.e., an agency that has a grant or contract 

with a State Unit on Aging (SUA) or Area Agency on Aging (AAA).

NSIP meal requirements do not have service delivery type restrictions. NSIP meals 

may include congregate, home-delivered, grab and go, restaurant, food truck, and 

other innovative delivery models.

NSIP criteria are listed in the State Performance Report (SPR) Appendix A: Data 

Element Definitions (Table 3. Additional Definitions) under NSIP qualified mealCongregate and NSIP qualified meal-Home-Delivered.

3. Does ACL have the authority to waive these requirements? 

ACL does not have the legal authority to waive these requirements. The OAA 

requirements that may be waived are listed in OAA Section 316. Section 316 does not 

list the NSIP requirements in Section 311 or the nutrition requirements in Section 339. 

4. How is NSIP funded? 

NSIP is funded by a Congressional appropriation to ACL. SUAs receive OAA allocations 

for nutrition services for Title III C1 (congregate), Title III C2 (home-delivered) and 

NSIP. Of these allocations, NSIP is about 16% of total OAA nutrition services funding 

before transfers among Titles III B and C occur. 

Types of funding sources that may qualify a meal for NSIP funding, if the 

requirements for NSIP as stated in section 311 of the OAA are met:

• OAA Title III-C1, Title III-C2, Title VI, and/or

• OAA state match, and/or

• other sources of funding, such as public funds (e.g., state, city, county) and 

private funds (e.g., contributions, fundraising, foundation grants).

The NSIP statute requires states to distribute funds promptly and equitably. All 

nutrition services providers (congregate and home-delivered) should be considered 

in the equitable distribution of funding. Additionally, the state should ensure that the 

distribution of the funding is justifiable to the current needs and, if available, use 

more recent data on meal counts. 
5. How may NSIP allocations be used? 

NSIP allocations may only be used to purchase domestically produced food, such as 

milk, fruit, vegetables, protein products, etc., that are used in a meal. 

• The allocations may be used to pay for specific food items that make up a 

portion of each meal, like milk or a protein product. 

• Many programs allocate a percentage of funds from NSIP to pay for a portion 

of the cost of a meal. 

• Another way to spend NSIP funds would be to supplement a shelf-stable meal 

to ensure that it meets OAA nutrition requirements. For example, if a shelfstable meal does not meet the nutrition requirements of the OAA because it 

lacks a dairy component or contains insufficient vegetables or fruit, the NSIP 

funding might be used to supplement the shelf-stable meal with a carton of 

milk, a packet of non-fat dry milk, or a piece of fresh fruit. Then the meal might 

meet the OAA requirements and be reported as an NSIP meal. 

• A holiday meal that meets the NSIP requirements (which includes meeting 

one-third of the DRIs/DGAs) may be reported as an NSIP meal, in accordance 

with the OAA and the state’s policies and procedures. 

o Special or holiday meals that do not meet OAA nutritional requirements 

may be provided with non-OAA funding, and those meals would not 

count as an NSIP meal. 

In all cases, programs must ensure documentation verifies the food purchases 

made with NSIP allocations meet NSIP requirements (i.e., domestically produced food 

such as milk, fruit, vegetables, or protein products that are used in a meal).

6. Can emergency meals such as shelf-stable meals meet 

the nutrition requirements for NSIP? 

Maybe. If the shelf-stable meal meets the nutrition requirements of the OAA, the 

meal meets the requirements of NSIP. If the SUA uses an eating pattern similar to the 

pattern found in Dietary Guidelines for Americans 2020-2025 as its method for 

determining adherence to the requirements and the shelf-stable meal or other 

emergency meal meets this menu pattern, the meal probably meets the nutrition 

requirements. Shelf-stable meals vary in nutrient content such as calories, fat, 

protein, fiber, vitamins and minerals. Many shelf-stable meals are higher in sodium 

than recommended in the DGAs or DRIs. 
7. When should NSIP funds not be used?

NSIP allocations may not be used to pay for administration, indirect costs, or other 

nutrition services such as education, counseling, oral nutrition supplements, 

groceries, specialized utensils, etc. NSIP allocations may not be used to buy groceries 

(food boxes, etc.) for program participants, as these do not constitute a meal. 

The OAA neither explicitly includes nor prohibits assisted living facility (ALF) residents 

from receiving any services. However, SUAs must ensure in accordance with 

45CFR1321 that OAA funds supplement, not supplant, any federal, state, or local funds. 

This means if the resident’s cost of placement within the ALF is publicly-funded and if 

the ALF provides meals as part of their package, then OAA funds (including NSIP)

cannot be used for those meals.

8. How are NSIP meals reported?

NSIP meals are reported on the regular State Performance Report (SPR) for the states. 

SUAs determine how the number of meals are reported at the substate level. All 

meals that meet NSIP requirements — for example meals that meet one-third of the 

DRIs/DGAs — should be reported under NSIP. Reporting NSIP meals benefits 

states/territories by ensuring proper NSIP allocation. 

OAAPS Title III Data Elements and Definitions NSIP

State Performance Report (SPR) Appendix A: Data Element Definitions

9. How does a state receive its allocation?

The SUA receives a notice of grant award after the number of meals is reported 

through the SPR. The SUA determines how to distribute the funding at a substate 

level. The funding formula for NSIP is based on the total number of eligible meals 

served by a state or territory in proportion to the total number of eligible meals 

served by all states and territories in the prior federal fiscal year. If a state or territory 

serves proportionally more meals than other states or territories, that state or 

territory receives a higher allocation, which is in keeping with the incentive purpose 

of NSIP. 

10. How do states allocate NSIP?

States are required to list a funding formula in their state plans for how they 

distribute NSIP funds. As an informational piece under Attachment C of the state 

plan, states must show that they allocate the NSIP in an equitable manner. This 

implementation should not be burdensome. It could be achieved by stating the 
allocated NSIP funds to each AAA is in the same proportion as the proportionate 

number of meals they served (or could develop other mechanisms that are based

on other criteria). SUAs are not required to use the same method. Some states have 

choosen other methods to equally allocate NSIP funding.

NSIP provides additional funding to states, territories, and eligible tribal organizations 

that is used exclusively to purchase food and cannot be used to pay for other 

nutrition-related services or for administrative costs. Funds are awarded to states 

and tribes based on the number of meals served in the prior federal fiscal year.

View historic NSIP funding levels for Title III organizations

11. Can NSIP allocations be transferred? 

No, NSIP allocations may not be transferred because they are not a part of Title III B, III 

C, III D, or III E. 

12. Does USDA provide reimbursement for NSIP commodities 

lost during a disaster?

No. However, USDA provides supplemental nutrition assistance in response to 

numerous types of emergencies and disasters, including, but not limited to,

hurricanes, tornadoes, severe storms, and flooding. To qualify, these emergencies 

must be under a Presidential Disaster Declaration. 

Resources

ACL Older Americans Act Performance System:

• Title III Services Resources

• Frequently Asked Questions

• Domestically Produced Food