How to Manage Local Government Grants

A guide to helping municipalities and counties standardize grant management processes for compliance and maximum drawdown.


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Municipalities and counties are doers. Engrained in the day-to-day operations of the communities they serve, they are effectively positioned to identify local problems and gather feedback from constituents on solutions and program impact.

But they also commonly face budgetary challenges. From infrastructure, transportation, technology, police and fire to arts, parks and public welfare initiatives, there is always more to be done—with limited resources to support these programs. The next time your city desires a new walking trail or community center renovation, or your county wants to repave its roads, where do you turn for the added funds?

Outside of revenue from property and sales taxes, federal and state grants are a primary driver of income for many local communities and can be used to fuel these types of neighborhood improvements. Proper preservation of grant funds, however, requires keen management and accurate reporting. Local governments must centrally oversee and manage grants received within their jurisdictions to ensure compliance with federal, state, and local regulations.

To ensure your precinct is equipped to handle these extra levels of complexity, read on for best practices for managing your grant programs. 

According to the U.S. Government Accountability Office, the federal government awarded state and local governments over $674 billion in grant funding in fiscal year 2017, reflecting an increase in funding. This extra funding means more complex grant management processes for municipalities and counties.

Compliance and Grant Dollars

Federal initiatives, such as the Digital Accountability and Transparency Act (DATA Act), OMB’s Uniform Grant Guidance, and the recent Grant Reporting Efficiency and Agreements Transparency (GREAT) Act are continuing the trend of results-based fund distribution. Federal agencies increasingly want to know that they are funding programs that drive results and that money isn’t being wasted or abused. As such, grant applicants that can demonstrate a history of performance results and the ability to accurately track outputs and outcomes will be favored.

iconsai_Select-1Uniform Grant Guidance (UGG)

“Aims to reduce the administrative burden on award recipients and, at the same time, guard against the risk of waste and misuse of Federal funds.” (

iconsai_Select-1Digital Accountability and Transparency (DATA) Act

“The nation’s first open data law. It requires the U.S. federal government to transform its spending information into open data.” (

iconsai_Select-1Treasury “Do Not Pay” Initiative

“The purpose of this order was to reduce improper payments by intensifying efforts to eliminate payment error, waste, fraud, and abuse in the major programs administered by the Federal Government, while continuing to ensure that Federal programs serve and provide access to their intended beneficiaries.” (

iconsai_Select-1Grant Reporting Efficiency and Assistance Transparency (GREAT) Act

“The proposed law will transform federal grant reporting from disconnected documents into open data by directing the executive branch to adopt a standardized data structure for the information grantees must report to agencies.” (


1. Overreliance on One Grant Source

Many local governments fall prey to not diversifying their grant portfolio, thereby, the loss of one grant will severely cripple a program. Municipalities and counties will over-rely on one grant source, failing to balance grants with other income-generators like sales and property taxes, permit fees, and court fines.


When applying for grants, be sure to apply only for grants in which you are eligible and that align with your local government’s goals. When growing your grant portfolio, use a grant research database to efficiently identify applicable federal, state, and foundation opportunities. Also, run an audit on existing income sources to determine your municipality or county’s current mix, sustainability of revenue sources, and existing or future gaps.


2. Lack of Internal Controls

There are a number of people and departments involved in the grant lifecycle, especially for local governments because of the prevalence of sub-recipients. The more people included in the process, the more difficult it is to maintain internal controls, and GAO audits have identified that there are already clear deficiencies in internal controls of grant management. A lack of internal controls negatively impacts grant awarding, eligibility, proper fund allocation, and proper financial statements.


Ensure a separation of duties across key accounting processes—recording transactions, authorizing transactions, and housing program assets. Train staff appropriately on internal control processes and grant standards.

Another solution to improving internal controls is having a centralized hub for your grants. This is especially helpful for local government because sub-recipients are often involved. Instead of using disparate systems, consolidate your information on one system to consolidate information and keep everyone from your team to your sub-recipients on the same page.


3. Lack of Reporting Capabilities and Organizational Tools

Standardization and an increased focus on performance make it harder for local governments to manage grants in traditional spreadsheets and word processing documents. These tools lack the built-in reporting capabilities and organization required to efficiently meet specific and non-negotiable budgeting and reporting requirements from federal agencies.


Grant management software can simplify the process by helping you:

4. Difficulty Managing Complex Consortia Grant Management Processes

Consortia grants, or grants in which two or more entities work together to achieve a goal, are common in cities and counties. The public sector also benefits from working with nonprofits, particularly when executing on social service and public welfare programs. Nonprofits often have existing infrastructure and staff in place to solve specific local needs and are more agile in their operations. 

An increase in participation in grant execution requires more sophisticated and organized management processes. As prime recipients, municipality and county governments must educate their sub-recipients on federal reporting guidelines and requirements, most notably those stemming from the recently enacted GREAT Act and the DATA Act. Local government must then collaborate with sub-recipients to hit timelines, deliverables, and performance requirements. 


5. Issues With Audits and Fund Spend

Improper allocation of grant funds can lead to missed drawdown or even repayment to the funding source. A number of local governments have had to make repayments of hundreds of thousands of dollars to reconcile errors.


Monitor spend and performance regularly. Reconcile balance sheets, review bank and investment accounts, and run financial expenditure reports (e.g. expenditures by project, time/cost versus budget, cost and trend). Flag unusual activity.


Local Government Repayment Stories

City of New York 

The City of New York was asked to reimburse the U.S. Department of Housing and Urban Development (HUD) $35,000 for the misuse of funds, in addition to providing additional documentation for $206,000 in inventory purchases. 

County Sheriffs of Colorado 

Auditors recommended that County Sheriffs of Colorado repay $688,587 in questioned costs related to improper spending on promotional t-shirts, meals for spouses, and more. 

Des Plaines 

The Illinois Department of Transportation cut off funds to Des Plaines after grant-funded overtime pay was found to be inflated. The city was also required to pay $92,000 to IDOT in a settlement case. 


Baltimore paid back nearly $4 million in mishandled federal funds due to ineligible sub-recipients and failure to comply with grant program terms related to Homelessness Prevention and Rapid Re-Housing funds.

If you follow some of these best practices below, your precinct will be better equipped to comply with legislation and ensure maximum drawdown of your grant funds.

iconsai_Select-1Carefully read grant guidelines and acceptable use policies. Understand what types of expenses are allowable.

iconsai_Select-1Limit online access to bank and investment accounts.

iconsai_Select-1Keep accurate expense report and receipts for all purchases. Verify that these expenses are charged to the correct project and grant, that funds were spent within the approved timeframe, and that all supporting paperwork has been submitted. For grant-funded compensation expenses, back Time and Effort reports with accurate timesheets.

iconsai_Select-1Keep all grant-related paperwork centralized, including allocation plan(s), vendor invoices, cancelled checks, travel logs, and timesheets. Use a consistent naming scheme and filing structure so that information can be easily referenced.

iconsai_Select-1Ensure a separation of duties across key accounting processes—recording transactions, authorizing transactions, and housing program assets. Train staff appropriately on internal control processes and grant standards.

iconsai_Select-1Stick to grant deadlines. Don’t lose potential funds because you missed an important action or date. Use a calendaring system and automated reminders to keep milestones in check.

iconsai_Select-1Seek pre-approval from the grantor prior to redistributing funds, particularly if budgets or project scope change from what was presented in the original grant proposal.

Next Steps for Local Government Grant Management Improvement

Grant funding is integral to keeping local programs and projects afloat. So once local governments start developing better grant management habits, they are likely to see more tangible results from their grants. Along with more successful local initiatives, if municipalities and counties are able to streamline their grants management they will see reduced audit findings, increased drawdown, improved compliance, and consistency.

1. Evaluate and understand the current grant landscape

Understand grant requirements when evaluating your grant funding for the next year. For example, some federal grants require your municipality or county to match funds. Ensure that your precinct is equipped to meet these expectations.

2. Pinpoint where your grant management processes are succeeding as well as lacking

Start with current grants. Properly allocate them toward goals and regularly monitor to meet performance expectations. Use this data to set your government up for future grant success.

3. Consider if procuring technology could streamline your grant management processes

Everything from the number of grants you manage to the tools you are currently utilizing will influence if software is right for your local government. Think your city or county might be ready to consider grant management software?