When it comes to getting—and managing—grants, common pitfalls can be avoided with the proper tools and policies in place. With all the budgeting, tracking, and reporting that can go into the process, managing grants can seem like a full-time job. But it doesn’t have to be.
Use these 6 time saving tips to help you manage your grants and avoid common pitfalls:
1. Put your mission first
Grant management should begin long before the writing begins. The first question to ask is whether or not your organization should pursue a grant. If you do, make sure the grant – and associated program – fit within your organization’s mission. This should be a pretty easy question to answer. If it’s not, bring in your senior leadership and board members to take a look and make sure your mission and the grant are a good fit.
Then ask if the grant and program fit within your organization’s long-term strategic plan. If both answers are yes, proceed!
2. Connect the grant writer with the finance pro
Often times the group who goes out and gets the grant is different from the group who manages the money once it comes in. Most grant proposals require a budget. But the last minute frenzy to include the finance department is all too familiar.
The problem is simple: grants are complex and take time to manage appropriately.
When your organization is budgeting for grants, you’re essentially creating many “what if” scenarios. (What if we get the grant? What happens to our budget? Based on reporting requirements, can we successfully manage and monitor it accurately over time?) Sophisticated accounting software can help create different budget views to help you understand how your organization’s bottom line will be impacted if it receives the grant.
“It’s important for the grant writer to engage the finance department in the proposal from the very beginning. This will give you a much better idea if the grant you are going after is something your organization can effectively manage in a sustainable way,” says Michael Blanton, senior product manager for Financial Edge NXT™.
Reimbursable grants (where your organization spends its own money before grant money is distributed) create their own complexities. This is an actual spend that has to be included in your organization’s budget. Accounting software can help determine if your organization can cover the grant’s short-term costs until they are distributed—which can often be several months or more. If the grant is awarded, accounting software can also help manage the process of converting the applicable expenses into actual receivables.
3. Have a fundraising strategy waiting in the wings
It’s important to understand how long funding will be available. If your organization is interested in a one-year grant, what is the likelihood that it will be renewed on a schedule for at least several years to come?
If it’s not likely to renew, is your organization’s development team ready to obtain donor support for continual funding of a program without a grant?
Because the national average duration of a grant is only 2.1 years, if this is a program your organization wants to continue over the long haul, there needs to be a long-term funding strategy in place.
4. Understand indirect costs
Grants come with indirect costs. Understand whether operating funds for administrative burdens will be covered or if you need to dig up additional funding. Ask your team if your organization is prepared to reallocate its administrative budget to cover the cost and if so for how long. Cost allocation will allow your organization to share overhead expenses across different programs. After all, a program cannot exist without overhead support, so it’s important to account for indirect program costs.
Examples of Indirect Costs
- Staff Training
- Liability Insurance
- Administrative Staff
- Miscellaneous Supplies
5. Plan to track, then track some more
Most government grants require significant documentation of all expenditures related to grants (foundation grants tend to be a little less exacting, but foundations still want to know how their grant money was spent). Be sure that you have a good financial tracking system in place. Grant giving organizations require recipients to submit detailed supporting documents before grant payments are made. A system that has the capacity to automatically generate grant reimbursement based on grant activity not only saves time but improves the accuracy when generating invoices.
6. Be ready to report back
Nonprofit boards and other stakeholders may ask you for information about how many grants your organization has applied for this year versus last year or how many have been awarded to your organization for each program supported by grants. Most nonprofits use a combination of software to track grant information. With that combination of tools, tracking down the answer to even a relatively simple question can take a lot of time.
With online grants management software, you can filter your list of grants or proposals to see what was submitted or awarded making it easy to answer stakeholder questions. Moreover, the ability to customize reports for grantor and internal management is invaluable. Some systems only offer canned reports and creating customized reports can be very time consuming—sometimes downright impossible.
The right accounting software can create customized reports that drill down to the penny.