With spending transparency for grant recipients comes a multitude of benefits.
Trust and goodwill is established with those providing funding, as well as those receiving services and benefits from the grant funds.
Transparency also leads to two key types of accountability. First, fund recipients are held accountable for providing the services and achieving known objectives. Second, when spending is transparent, there is an increased level of oversight that results in lowering the chance of fraud or mismanagement.
Federal Grants: Not Always Transparent
State and local governments traditionally had a high level of transparency for many funding types, resulting in healthy democratic debate on priorities.
For example, school board expenditures and decisions are normally well known and frequently the subject of detailed discussions. State and local financial reports also make it clear how dollars are allocated and used for services, such as police and fire protection, or highway maintenance.
However, the emergence over the past 50 years of federal grant programs to fund projects and services has muddied the water. Today, there is no real transparency with grants, which makes it extremely hard to see where funds are spent.
Centralize to Make Crystal Clear
Numerous federal agencies make money available to grantees with no centralized accounting or reporting system. As a result, there is no way for taxpayers to see where, and for what, money was being spent across the federal government.
At the Recovery Accountability and Transparency Board, where I served as executive director, we worked diligently to make the $840 billion in government stimulus spending transparent. We did this by collecting reports directly from recipients and displaying the information on the website, Recovery.gov. Information was presented in easy-to-understand formats, including spending data at the zip-code level.
This success in transparency was key to achieving high degrees of accountability for overall Recovery spending.
Learning from Recovery.gov
Last year, the Recovery Board ran a very small pilot in to see if broader grant reporting could be accomplished in a similar fashion to the Recovery Act.
The Grant Reporting Information Project (GRIP) was successful as a proof of concept for collecting grant financial data in a standard and consistent format using a centralized system. The data could then be downloaded and analyzed by the funding agencies, or any individual or organization wishing to review it.
Congress recognized the value of this small pilot by including a larger grant-reporting pilot in the Digital Accountability and Transparency Act (DATA Act). This Act has now passed the House and a version is moving through the Senate.
I am optimistic that with the proven success of transparency under the Recovery Act, and positive indications regarding the DATA Act, that grant transparency will be enhanced over the next several years accruing associated accountability.
For more from Mike Wood and other industry thought leaders on increased grant transparency and accountability, download our whitepaper, The Changing Landscape of Grant Reporting.