How to Manage Local Government Grants

Challenges and Solutions to Local Grant Management

Research from the GAO and Data Foundation on state grant programs has identified some of the most common missteps that states make when managing grants.

With this increase of federal regulations, now more than ever, compliance is of the utmost importance for local governments if they want to win and retain grant funding for their programs. The distribution of grant funds in a municipality or county requires passing through greater bureaucracy (and more paperwork) than nonprofit grantee counterparts, so grant management becomes even more nuanced and complicated. Some of the specific challenges municipalities and counties face today when it comes to managing their grants are below.

Understanding what these challenges entail as well as potential solutions to these setbacks is the first step to standardizing your municipality’s grant management.

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.

There are a number 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.

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.

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. 

But increased 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. 

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. 

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.

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.

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.