Nonprofit Grant Management: Learning the Essentials

Grant management is a critically important part of the grant funding process for nonprofits.

Although applying for and securing a grant are naturally major tasks in and of themselves, you can’t afford to neglect the essential management, reporting, and compliance steps that follow. Think of it as the due diligence that comes with receiving grant funding.

Funders want and need to ensure that the grants they award will actually be put to their intended uses, create sustainable changes, and follow their stipulated requirements. Nonprofits need to effectively track how they’ve used the funding in order to report back to the funder and to keep their own financial records in order.

If your organization is just getting started with grant seeking (or wants to improve your existing grant management process), we’ve got you covered. This guide will explore the following topics:

• Grant Management FAQ
• How to Manage Grants: 7 Core Steps
• The Complete Grant Management Lifecycle
• Extra Grant Management Best Practices

Understanding the essentials and following the best practices outlined in this guide will help your organization safeguard your funding (and make it easier to secure new grants in the future). Let’s get started by reviewing the fundamentals of grant management.

Grant Management FAQ

What is nonprofit grant management?

Nonprofit grant management consists of all the steps and processes organizations must follow to satisfy the requirements of grant funding that they’ve been awarded. It typically involves tasks related to documentation, financial tracking, project management, and more.

Why is grant management important?

Effectively managing your grants, satisfying funder requirements, and reporting back on your progress are important for a few reasons:

• It ensures your organization can actually keep and use awarded funds.
• It keeps your own internal tracking and accounting processes running smoothly.
• It helps you develop a proven track record, which helps significantly with future grant seeking.
• It fosters stronger relationships with funders over time.

What are the risks of ineffective grant management?

On the flipside of the benefits of grant management, failing to properly track and report on your awarded funding can have serious risks, including:

• Loss of awarded funding
• Lengthy and complex financial audits
• Being required to return funding or cover previously incurred related expenses without repayment
• Damage to your organization’s reputation among funders and stakeholders
• Increased difficulty securing future grants

What tools do you need for grant management?

To effectively manage grants, your nonprofit will need a variety of tools. Accounting software, project management and/or time tracking tools, and a central database or CRM are recommended, along with well-defined protocols for staying organized and delegating tasks.

While it’s certainly possible to handle grants with minimal tools and instead rely on basic spreadsheets, dedicated software will be your best bet. It simplifies the process of executing and reporting on your grant, and the easy access to past data that it provides lays the groundwork for easier grant seeking and management in the future.

Who should be involved in grant management?

The entire grant management process will involve a number of key players from your nonprofit’s team, including staff from these departments:

• Leadership
• Fundraising
• Programming and project management
• Finance and accounting
• Evaluation and quality improvement
• Human resources

Because grant management can touch so many different parts of your organization, it’s especially important to secure teamwide buy-in and clearly outline responsibilities in advance (more on this below).

How to Manage Grants: 7 Core Steps

To create a grant management process for your nonprofit, follow these 7 core steps:

1. Identify resources and clearly define roles.
   • Start by determining what you’ll need and who will handle which aspects of the grant management process. Answer these questions:
     • Do you need any new tools for tracking expenses or managing the program?
     • Does your team include voices from leadership, fundraising, programming, finance, human resources, or any other departments that need to be involved?
     • Does each representative understand the role that they’ll play in executing, tracking, and reporting on how the grant is being used?
   • Define your needs, various team responsibilities, who they’ll report to, and when they need to take action as specifically as possible. This step can greatly simplify the rest of the grant management process!
2. Create documentation for tracking grants.
   • Create any documentation that your team will need in order to effectively handle their responsibilities in the process. This can include configuring any special projects or views in your project management, accounting, or database software.
3. Review all relevant grant requirements.
   • Take some time to review your grant’s requirements. Ensure that team members can easily access and understand the requirements, as well.
4. Lay out a comprehensive schedule for your grant.
   • Combine your team assignment notes from Step 1 and grant requirements from Step 3 with your broader programming plans to create a thorough grant schedule. This plan should show the complete picture of how and when different parts of your program and grant management steps will be executed and reported.
   • Again, make sure that all team members involved in managing the grant can access and understand this schedule.
5. Understand how to record grant funds.
   • Before moving ahead with using your grant funding or incurring expenses, double-check that your finance team is prepared to properly record and report the funds in accordance with the grant’s requirements.
   • Depending on the type of funding you’ve received, you’ll either record incoming funds as you receive them or track program-related expenses in real-time to be reimbursed later. Grants may have a number of additional reporting protocols or rules, so always take the time to review these expectations.
   • Additional grant accounting tips:
     • Use budget-to-actual reporting to give your team a consistent view of how efficiently you’re utilizing awarded funds.
     • Develop or follow especially strict reporting protocols for multi-year grants.
     • Be prepared for financial audits, particularly when reporting on government grants.
6. Report on your progress internally.
   • Funders may require periodic reports and updates. But even if they don’t, it’s still a good idea for the entire grant management team to regularly report any updates, changes, and progress made towards goals. These benchmark periods should be outlined in your grant schedule in Step 4.
7. Double-check your grant closeout plan.
   • Finally, review any stated requirements around final reporting for your grant. What defines the end of your grant? How will you measure or gauge success? Which reports or documents will you need? Determine these specifics in advance so that this final stretch runs as smoothly as possible.

Although the grant management process technically kicks off when you’re awarded a grant, you should ideally prepare as much as possible in advance. Recruiting a grant programming and management team, outlining their individual responsibilities, and auditing your documentation and technology for readiness are all steps that you can (and should) take early.

The Complete Grant Management Lifecycle

Before getting started with grant management, it’s helpful to review the broader context of how nonprofits seek, secure, and use grant funding. Different types of grants and their requirements that you encounter at earlier stages will impact how you ultimately manage them later.

The Nonprofit Grant Lifecycle

The full nonprofit grant lifecycle or process contains 6 key stages:

1. Identifying grant opportunities.
   • Your nonprofit identifies potential grants to pursue from a variety of sources, like those listed in the next section below.
2. Cultivating relationships with funders.
   • Once you identify a grant to pursue, look for connections that might exist between your team and mission and those of the funder. Reach out to the relevant point of contact to put your organization on their mind and express an interest in applying for funding.
3. Applying for the grant.
   • Research the grant’s guidelines and requirements and draft a complete proposal. Tailor your writing to the unique funder, and hone in on a central, compelling idea of how you’ll use the funds to push your mission forward.
4. Receiving the grant.
   • If all goes well, your nonprofit receives the grant to use for the purposes and programming outlined in your proposal.
5. Managing the grant.
   • Once it’s time to put your awarded funds to use, follow grant management protocols and best practices to track expenses, keep comprehensive records, allocate your team’s time, and complete any other necessary tasks to satisfy the grant’s requirements.
6. Reporting on your progress.
   • Depending on the grant’s requirements, you may need to periodically report on your progress towards your proposal’s stated goals and project-related finances (in addition to any internal reporting your team conducts). Once the program or funding has ended, close out the grant with a final report.

From here, the cycle can begin again. Using lessons learned and relationships built during previous grant lifecycles, your nonprofit can continually streamline the entire process.

Understanding Types of Nonprofit Grants

The various types and classifications of nonprofit grants can impact the management process once you secure them.

Common grant sources include family, independent, community and other foundations, government endowments and councils, public charities, and corporate philanthropy divisions.

Among these various sources, you’ll also encounter three primary types of requirements attached to grants:

• Unconditional. These grants provide upfront funding that can be recorded at the time they’re awarded. Although you’ll have to use the grant for the specific programs outlined in your proposal, there are minimal requirements around financial reporting.
• Contingent. Grants with contingencies typically provide funding in installments as your nonprofit fulfills specific conditions and benchmarks outlined by the funder. Incoming grant funds must be carefully recorded and tracked as installments, not as a lump sum.
• Reimbursable. These grants provide funding after you’ve incurred and reported the costs of the program. Closely track all program expenses, and then notify the funder that you’ve reached the grant’s funding total, at which point you’ll receive and record the funds.

The type and source of your grant will shape the management process that you follow. For instance, government grants are often reimbursable and require audits of your program expenses. Understanding these requirements ahead of time will help your team to better prepare for managing the grant and running the program later.

Extra Grant Management Best Practices

Actively track your complete grant history over time.

The long-term value of developing a thorough grant management process for your nonprofit is that it helps you build a comprehensive, well-organized record of how you’ve applied for, managed, and reported on all past grants.

This way, when preparing to execute on a new grant in the future, you’ll have a complete view of how your team has handled everything in the past. Learn from past mistakes, fill important gaps that were only made apparent in hindsight, and lean into any organizational or internal reporting strategies that worked especially well.

Remove all internal silos that could disrupt grant management.

Communication and collaboration are key when managing grants since their many moving pieces could fall through the cracks as they’re handed off between departments or staff members. Clearly labeled, well-organized, and accessible documentation is a must. Create a comprehensive grant management schedule or roadmap along with an outline of team members and their specific responsibilities.

Invest in the right tools for long-term grant success.

As mentioned throughout this guide, using dedicated software to track details related to your grant will be invaluable. Consider tools such as:

• A database or CRM platform. This should serve as the central repository for all of your nonprofit’s incoming data. If your CRM can integrate with your donation and event software, it will also give you an accurate picture of program-related engagement that you may need to report back to the funder.
• Project management and/or time-tracking software. Depending on the scope of your funded program, you may need to closely plan your team’s work and track time spent on grant-related work. This software makes it easier to manage your staff allocation internally and gives you a clear record of time spent on grant programming.
• Accounting software. Recording grant funding and reporting on grant-related expenses can quickly become quite complex. To stay compliant with grant requirements and drastically simplify the reporting process, consider investing in professional-grade accounting tools or services if your nonprofit hasn’t yet.

These types of tools should cover your bases when it comes to nonprofit grant management. But remember to think about your grant’s specific contingencies. If there are any gaps in your toolkit that need to be filled in order for you to measure and report on any of them, find appropriate tools as early as possible.

With a solid grant management tech foundation in place, the entire process of applying for, managing, and reporting on your grants can be significantly streamlined over time.

Take an organized approach from the start.

Being organized from the start of the grant seeking process can help to simplify the later management steps immensely. Thorough grant research and relationship cultivation with accurate notes and attached requirements make it easy to lay out a grant management roadmap once it’s time to begin putting the funding to work.

Working with grant seeking experts can be an excellent choice to get the ball rolling in an organized way.

Grants Plus is a trusted grants advisor for nonprofit organizations. We’ve helped organizations secure over $200 million in grant funding! With our support, your nonprofit can develop a reliable pipeline of grant opportunities and grow your relationships with funders so that you can approach grant management with confidence.

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To learn more about grant seeking best practices, explore these additional resources from Grants Plus:

• Nonprofit Grant Writing: How to Secure Grants for Your Cause. New to grant seeking? Start with the fundamentals with our crash course on how to write a winning proposal.
• What’s a Donor-Advised Fund? Understanding the Essentials. Donor-advised funds (DAFs) are a relatively new giving vehicle that has become extremely popular in recent years. Learn how to start securing DAF grants with this guide.
• 20+ Top Fundraising Consultants. Looking for professional guidance in any area of your nonprofit’s operations? We’ve rounded up 20+ leading providers in their fields.