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3 Tips for Financially Sound Nonprofit Grant Management

Grants are critical revenue sources for many nonprofits. Whether they come from government agencies, foundations, or corporations, grants can provide significant funding for your organization’s most important mission-related projects and programs.

It’s well known that finding and applying for grants requires a lot of time and effort. However, your organization’s work doesn’t end when you secure funding—you also have to manage grants properly to make the most of these opportunities.

In this guide, we’ll walk through three grant management tips that will help your organization navigate this process effectively. Let’s get started!

Track Your Grant’s Progress Holistically

Funders see grants as investments in nonprofits that are making a positive impact on the world. Recording and monitoring your organization’s use of grant funding proves to them that you’re using their investment responsibly to support the initiative you outlined in your proposal.

To cover all of your bases when tracking grant funding, make sure to:

Refer back to your grant proposal budget. Most grant applications will ask for a budget that shows how you’d use the grant funding if you received it, as well as a breakdown of any other revenue you plan to put toward that initiative. Once you secure the grant, adjust your proposal budget as needed and use it to guide your spending and recordkeeping.

Leverage the right tools. If your organization is managing its first-ever grant, a well-organized spreadsheet will work for recordkeeping. However, once you start tracking multiple grants simultaneously, you’ll need to invest in grant management software or a nonprofit accounting platform that includes grant management capabilities.

Record the details of every expenditure related to your initiative. Include its date, amount, purpose, and whether the funding came from that grant or a different source to assist in creating detailed funder reports.

In addition to financial recordkeeping, track the progress of the initiative the grant is supporting, since funders will also take performance into account when evaluating their investment. For instance, if you’re using it to launch a new community program, document the number of program attendees, the outcomes it produces, and participant satisfaction rates.

Record Grant Funding at the Right Time

Thorough, accurate grant data is essential for several key internal tasks, like properly assessing your nonprofit’s financial situation and filing your annual tax return correctly. Besides keeping detailed records of grant-related expenditures, recording the funding correctly when you receive it allows for more accurate accounting. 

According to Jitasa’s grant management guide, there are three basic types of grants that should be recorded differently:

Unconditional grants are provided all at once with no restrictions, so you should record them as soon as you receive the award letter (even if the funding won’t arrive for a few weeks).

Grants with contingencies are paid out in installments as your nonprofit demonstrates that you’ve fulfilled the funder’s conditions. Record the first installment when you receive the award letter and subsequent installments when the funding arrives.

Reimbursable grants are paid out after your organization has already spent the money for an initiative. You may not know how much you’ll receive until the funding comes, so wait until all of the money is in your nonprofit’s bank account to record it.

During the grantseeking process, note what types of grants you’re planning to apply for so you know how to record the funding if and when you secure them.

Report Back to the Grantmaker As Required

As previously mentioned, funder reports demonstrate that your nonprofit is using grant funding as promised to further your mission. Plus, if a grant is reimbursable or has contingencies, these reports can determine if your organization receives the full funding amount.

In your funder reports, pay special attention to:

Content. Some grantmakers want to see both financial data and updates on the target initiative in all reports, while others only require one or the other in each individual report.

Formatting. Include any charts, tables, or graphs the funder asks for, adhere to word and page counts, and make sure not to write full paragraphs in a section if they request bullet points or vice versa.

Due dates. Create a calendar of all grant reporting deadlines that your team can easily reference throughout the management cycle.

Letting the funder know about the progress you’re making as they’ve requested—and properly managing your grant in general—can open doors for additional grant opportunities down the line.