Consider whether your nonprofit can optimize its grant management processes. Explore these tips and tricks for grant management and learn how nonprofit accounting software can help you implement these strategies effectively.
What is Grant Management?
As a key player in your nonprofit, your role in grant management is crucial. Grant management encompasses all the processes and methods organizations employ to utilize and fulfill the requirements of a grant. Grants are a vital source of revenue for most nonprofits. They’re critical for your mission but carry with them a high burden of monitoring and accountability. If you’re wondering how to manage grants for your nonprofit, remember that proper allocation, grant tracking, and reporting are essential to ensure your organization receives ongoing funding.
How to Manage Grants?
While you can manage your funding via spreadsheets if you have just a few grants, trying to keep track as you grow and add new donations is unsustainable. You will eventually be caught up in complex rules or stringent compliance requirements, which could jeopardize your future funding. No one wants to lose funding or find themselves in a position to have to return money! So what’s the best way to manage grants?
Remember, you’re not alone in this. Here are some tips to keep in mind when managing grants for nonprofits.
For Audits and Compliance:
- Every dollar of grant expenditure must be fully traceable in the event of an audit.
- You must maintain ongoing internal monitoring to ensure that there are no surprises later.
- Ensure that you’re optimizing the funds allocated to each program with budget-to-actual reporting.
For Multi-Year Grant Rules:
- Use specific ledger codes for each grant, including layers of codes to track the nuances of the requirements.
- Create segments to allocate grant dollars across multiple fiscal years, reflecting the actual spending patterns.
- Report on funding according to your unique general ledger structure, eliminating manual processes that introduce risk outside your accounting system.
For Government Grants and Their Unique Challenges:
- Audits are virtually guaranteed for accounting for government grants, especially large grants that automatically trigger separate audits.
- Government grants carry additional risk because they’re typically reimbursed rather than paid in advance; therefore, any compliance issue is discovered after the fact, but the expenditure is not repaid.
- One hundred percent compliance with the grant terms and accuracy in reporting are critical to safeguarding your funds.
Looking to optimize your organization’s operations? Follow these best practices to streamline operations and set your organization up for sustained success.
