Grant funding is a large and increasingly crucial part of strategic funding plans at many nonprofit organizations. That is partly because grants can be a good way to get a large influx of funds from government institutions and charitable foundations. Of even greater benefit, grants are not like using loans for funding—grants never need to be paid back. Grant funding helps forge a path to nonprofit sustainability and financial resilience.
Grants deliver many benefits to nonprofits; however, they also require careful management. Grant management is a team effort that benefits from specialists. Grantors (the entities making the grants) usually stipulate a number of terms and accountability requirements as part of grantee responsibility. It is important to have the right tools and processes in place to deliver on what you promise, if you want to keep winning new and recurring grants.
In this article, we will explain what is involved in grant management and then look at why grant tracking spreadsheets are not the best tool for this job. Finally, we will examine how cloud nonprofit accounting software with strong grant management capabilities can help you introduce best practices into your organization’s grant management processes.
The grant management lifecycle
There is a lot of paperwork and accountability at every stage of the grant lifecycle. You can break grant management into two phases—pre-award and post-award.
In the pre-award phase, you must first conduct research to find funding opportunities. Then, someone on your team needs to write a great grant proposal, develop a budget, and complete the rest of the proposal documents. After you submit the proposal, if your organization wins the grant, you will need to negotiate the award and the terms with the grantor and then execute a contract which will govern all your responsibilities about how the money will be spent and how you will demonstrate accountability.
Now that you have secured the grant funding, you’ll move into the post-award phase of grant management. In this phase, you need to capture accurate costs, and calculate and monitor performance and impact metrics. Not only do you need to account for every expenditure, but you will also need to manage timelines and milestones. Finally, you will have to ensure compliance with the terms of the grant by sending timely billing and compliance reporting.
What is at stake
Inadequate grant management can lead to negative financial consequences for your organization. The risks of poor grant management include:
- Lost awards
- Poor audit results
- Reputational damage
- Having to return funds from grants you won
- Difficulty securing future grants
5 ways grant tracking spreadsheets fail nonprofit finance leaders
As we have seen, grant management requires a big commitment of time and energy. Many nonprofits start out small and attempt to manage their grant lifecycle using grant tracking spreadsheets. While spreadsheets are a familiar and low-cost tool, most organizations run into a number of problems using them for grant management. Here are five of the most common challenges with using spreadsheets for tracking grants:
- Grant management teams have difficulty sharing the spreadsheets. Finding, winning, managing, and reporting on grants takes a team of people. In fact, it often requires two teams—a pre-award team and a post-award team. These teams will be staffed with people from key functional areas including fundraising, project management, leadership and finance. It is difficult to share grant tracking spreadsheets between so many people. Only one team member at a time can edit the spreadsheet. Too often, one person ends up overwriting the work of another.
- Reporting requirements may create multiple versions. Each grantor may have a slightly different set of specialized reporting requirements. To comply, organizations often create different spreadsheets to produce different types of reports. This quickly leads to problems with version control. When you updated your primary spreadsheet, did you also update the derivative reporting spreadsheets? Who has control of each of the reports?
- Spreadsheets are prone to errors. It cannot be stressed enough how important it is to maintain strict compliance with the terms your grantors set out in the contracts. Transparency and accountability are key, and your organization’s reputation is on the line. Even the most well-meaning and conscientious staff member can make typographical mistakes. Spreadsheets lack features for validating data or flagging transactions that do not make sense. Therefore, errors caused by juxtaposing numbers within spreadsheets often go unnoticed until it is too late.
- Spreadsheets do not scale well. A grant tracking spreadsheet might enable a small nonprofit to manage a few grants a year, provided the awards are small and there will be few expenditures tracked. But major challenges will emerge as your nonprofit succeeds with grants and begins to scale up your funding operation. Large awards and an increasing number of grants will quickly lead to messy and overwhelming complex spreadsheets.
- Spreadsheets lack good security features. The only security you can add to a spreadsheet is a password. But a good grant management system should provide much more accountability, in the form of role-based access levels and audit trails whenever changes are made.
For improved grant management, automate your process
Automation is the solution to the inadequacies of grant tracking spreadsheets. An effective grant management process should be supported by modern technology with a centralized database. A grant management system is an application that assists fund-seeking organizations in administering and automating the grant process. Many nonprofits pursuing grant funding also benefit from integrated fund accounting, time and attendance, project management, and CRM solutions.
Sage Intacct Grant Tracking and Billing centralizes all grant documents and program delivery details for secure, comprehensive views of grant management. It provides the grants team, staff, and auditors with a single, shared source of truth. Download the e-book to learn the 7 Proven Grant Management Best Practices for Growing Nonprofit Funding, including why best practices are easier to implement with a cloud grant management solution.