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Introduction
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.
Uniform 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.” (grants.gov)
Digital 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.” (datacoalition.org)
Treasury “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.” (fiscal.treasury.gov)
Grant 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.” (datacoalition.org)
Challenges and Solutions to Local Grant Management
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.

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.
Solution
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 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.
Solution
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.
Solution
Grant management software can simplify the process by helping you:
1
Capture all elements as data throughout the entire grant ecosystem
2
Automate financial and programmatic reporting
3
Receive real-time snapshots of program effectiveness and internal status reports
4
Manage and account for all activity down to the sub-recipient level
5
Easily integrate with enterprise resource planning (ERP), financial and accounting, and HR/ payroll systems
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.
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.
Solution
1
Create a shared log of responsible parties and tasks, so that all involved are aware of expectations and roles
2
Document project scope, expectations and intended outcomes in detail. This is especially important for multi-year projects
3
Record task and reporting timelines in an easily accessible, centralized location
4
Regularly generate reports to track sub-recipient activity and performance
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.
Solution
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
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, your precinct will be better equipped to comply with legislation and ensure maximum drawdown of your grant funds.
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? Take our readiness survey today.
Check out our grant management software for State Government
For Grant Makers
Manage your entire grant award process.
For Grant Seekers
Track grant opportunities and share progress with your funders.
For Full Grant Lifecycle
Robust enterprise grant management for both grantors and grantees.