A guide to helping nonprofits standardize grant management processes for compliance and maximum drawdown.
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Nearly 30 percent of the funding for nonprofits comes from grants on average, according to DonationXchange. Grants are not only essential in helping nonprofits further their causes, but they also aid them in building and maintaining organizational infrastructure.
Since grants are so critical to the missions and existence of nonprofits, efficient management of this funding is of the utmost importance. Unfortunately, due to the variety of grant types and the number of partners nonprofits work with on grants, it can be difficult for these organizations to ensure nothing falls through the cracks when it comes to grant management.
To ensure your nonprofit is maximizing your grant dollars, check out some best practices AmpliFund has identified.
Nonprofits receive a multitude of grant types, including federal grants.
Familiarity with the following grants-related federal legislation can help you prepare your nonprofit for compliance.
“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)
“The nation’s first open data law. It requires the U.S. federal government to transform its spending information into open data.” (datacoalition.org)
“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)
“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)
Grants are one of the backbones of nonprofits. Not only does this funding go directly towards programs and projects that directly impact the nonprofit’s mission, it also helps growing nonprofits increase their capacity and build their infrastructure. Unfortunately, the complexity of a nonprofit’s grant portfolio brings about a host of challenges when it comes to maximizing funding.
Understanding challenges as well as potential solutions to these setbacks is the first step to standardizing a nonprofit’s grant management. Some of the most common challenges when it comes to nonprofit grant management are listed below.
Missing critical grant deadlines can result in a loss of funding for any organization. Considering some nonprofits are primarily reliant on grant funding, missing deadlines is a big concern for these organizations. Successfully meeting all grant deadlines can be difficult for nonprofits due to the shear amount and breadth of grants they are managing to keep their organization and mission afloat. When nonprofits continue to either overlook deadlines or have an inability to meet them due to workload, their organizations may lose funding and suffer immensely.
Your nonprofit’s best defense against missing grant deadlines is a robust notification system throughout your grant’s lifecycle.
By setting up automatic notifications through software, employees will receive alerts on approaching deadlines and reviews. Some software will even provide notifications on spending thresholds.
Nonprofits receive grant funding of all types – federal, state, private, capacity-building. And with each grant type comes a different set of requirements that a nonprofit must adhere to in order to pass audits and maintain compliance to ultimately retain funding.
Both being aware of and complying with all the varying requirements is a struggle for any nonprofit, especially if they are still operating via legacy systems.
Monitor spend and performance regularly, so your nonprofit is prepared when it comes time for audits. 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.
There are also a number of solutions for recipient nonprofits to ensure they maintain compliance. Nonprofits should always:
Capture all elements as data throughout the entire grant ecosystem
Automate financial and programmatic reporting
Receive real-time snapshots of program effectiveness and internal status reports
Manage and account for all activity down to the sub-recipient level
When nonprofits do not establish proper communication channels, parts of the grants process may fall to the wayside. If there is not a system or structure noting who handles what task and when, it’s more likely that your nonprofit will forget or ignore important grant dollars.
To ensure proper communication, your nonprofit must have clearly defined user roles and set goals for each of these roles. Setting these distinctions right away will streamline your grant management and improve communication.
Specifically, there are four primary user role types you should consider assigning: a team lead, impacted employees (employees who are actively involved in the grants process), a middleman between your organization and outside vendors, and an executive-level employee who can assist with internal roadblocks.
And if you are employing a workflow tool, be sure to assign user roles in the system upfront.
Community partners are often crucial to nonprofits’ grant programs; however, the more people and organizations involved, the harder the process becomes to manage. Nonprofits must educate their community partners on reporting guidelines as well as the requirements of the different grants they receive. They must then collaborate to meet timelines, deliverables, and performance requirements.
Create a shared log of responsible parties and tasks, so that all involved are aware of expectations and roles
Document project scope, expectations and intended outcomes in detail. This is especially important for multi-year projects
Record task and reporting timelines in an easily accessible, centralized location
Regularly generate reports to track sub-recipient activity and performance
While the size of a nonprofit can range from small, community-based organizations to worldwide organizations, ensuring a grants team is following the same practices is important for nonprofits of all sizes. No matter the breadth of a nonprofit, if the grants team is using various processes and tools to manage grants, things are likely to fall through the cracks and the inability to drawdown funds increases.
Utilize a centralized hub for your grants. Your organization should have one organized location for all grant and community partner information. Instead of using disparate systems, consolidate your information in one system to keep everyone, from your team to your partners, on the same page.
To lay the groundwork for future awarded funds and maximize funding for current initiatives, nonprofits should begin to implement some key steps in their grant management process. This will lay the groundwork for a standardized grant management process centered on consistent data elements. See below for specific strategies to win awards, maximize fund drawdown, ensure compliance and simplify reporting.
Track expenses in real time.
Maintain reports on both time and effort.
Improve spending transparency..
Adopt grant management software.
Set reminders for drawdown deadlines.
Foster shared data and open communications; eliminate silos.
Track against goals.
Once nonprofits begin recognizing missteps and, in turn, start developing better grant management habits, they are likely to see more positive results from their grants. This includes reduced audit findings, increased drawdown, improved compliance, and more consistency.
While improving your nonprofit’s grant management processes may not happen overnight, there are three steps you can take now to start seeing improvements in compliance and drawdown.
The best way to do this is to evaluate your historical data and reviewing information such as your past deliverables, spend, and outcomes. Internally auditing your grant history will help you figure out how to set and achieve your organization’s grant goals for the future.
This is achieved most easily by understanding the current grant landscape and how your nonprofit fits into it.
Everything from the number of grants you manage to the tools you are currently utilizing will influence if software is right for your nonprofit.
Ensure the funds you distribute are drawn down properly while staying compliant by easily managing your recipients and subrecipients.
Maximize your grant dollars and keep your funders happy by simplifying administrative tasks and increasing collaboration.
Maintain compliance at every stage by centralizing all of your grant management tasks.