8 min read
July 26th, 2024
Nonprofit organizations have multiple funding channels to manage. In addition to tracking donations and events, nonprofits must also keep track of the funds received as a result of grant awards.
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Key Takeaways
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Plus, each grant awarded comes with its own set of rules and requirements regarding how and when the funds can be used in addition to how grant-related transactions are recorded and reported.
As a result, it is necessary for nonprofit organizations to operate with a high standard of best practices for grant tracking.
Grant tracking is a part of grant management (i.e. managing every aspect of the grant research, application, awarding, tracking, and closing processes). The grant tracking process occurs after a grant is applied for and awarded.
When a foundation, government entity, or other source awards a grant to a nonprofit, the nonprofit must enact a system of grant tracking. Grant tracking includes processes, policies, tools, and teams designed to monitor, record, and manage the grants. This includes managing and maintaining compliance with grant requirements, tracking progress against goals and expectations, managing fund use and restricted funds, keeping records, and generating reports.
Read More: How Much Do Bookkeeping & Accounting Services for Nonprofits Cost?
Grant management, specifically in the tracking stage, is vital to your nonprofit's success for several reasons:
Depending on your organization's structure, you might appoint a single team to track all grants or distribute the grant-tracking responsibility among several teams. However, you designate the responsibility, it is essential that you do designate a team. These individuals need to have clear expectations of what they are responsible for in terms of grant tracking. This should include tasks such as tracking the grant's financials, meeting compliance requirements, ensuring proper spending, and handling the necessary reporting obligations. Additionally, you must provide your grant-tracking team with the tools and resources necessary for meeting their responsibilities and implementing the following best practices.
You should also provide your team with a detailed post-award plan. This should include requirements, expectations, and scheduling regarding communications and reporting in addition to strategies for discussing and overcoming challenges. The plan should also include a schedule of grant-related milestones, necessary tasks, timelines, and individual responsibilities.
Grant requirements are often complex, lengthy, and buried deep within your grant terms. Be sure to read through the grant thoroughly and carefully. While reading, create a checklist of all compliance requirements and reporting deadlines included in the grant. Make sure your whole team can access this checklist, but appoint a specific individual on the grant-tracking team to take responsibility for managing these requirements. Be sure to conduct audits throughout the grant period to ensure adequate records are being kept.
Depending on the type of grants you are awarded, you might also need to keep track of potential changes to rules and regulations relevant to federal, state, or other local grants.
As part of your post-award plan, you should be working to develop a schedule for meetings, updates, timelines, and reporting deadlines. Put all of this information into a shared calendar that all grant-tracking team members can access in addition to relevant leadership and board members.
Nonprofits operate with several different budgets. You should have an overarching budget for your whole nonprofit in addition to event budgets, program budgets, and individual budgets for grant awards. You'll need to keep close track of the expenses you're charging against a grant and monitor your spending by comparing your budget to actuals. Additionally, be sure you are monitoring the way you use grant funds to ensure you are making the most of any restricted money.
No budget or plan is perfect. So, you will likely need to make changes and adjustments to your plan and budget as you go. Keep a close watch on budget variances and be ready to slow your spending in the event of a deficit or leverage extra funds in the event of a surplus.
Grants tend to require a lot of documentation. You want to be sure you have a record of everything related to a grant in the event of an audit. So, you should maintain complete and thorough records of all grant-related activities, communications, and expenses.
Good financial management and grant tracking processes and policies will ensure you have the data needed for reporting outcomes, success stories, and impact related to grant funds. You can use this data to highlight your nonprofit's successes and accomplishments while supporting these claims with sound financial metrics.
Thorough grant reporting ensures the grant term closes on a positive note while strengthening your nonprofit's relationship with the grant-awarding entity.
Read More: The Key To Reporting on Multi-Year Grant For Your Nonprofit
Effective grant tracking is best facilitated with the use of accounting software and fully integrated tools designed specifically for grant management and tracking. Without these tools, grant tracking processes must be performed manually. Manual processes waste time and resources while delivering less accurate data. Implementing software specifically designed for nonprofit grant tracking will help you automate manual processes, save time and money, and maintain more accurate records.
After the close of a grant period, you should review and evaluate the organization's performance throughout the grant-tracking process and performance regarding use of the grant itself. Identify the most and least successful aspects of the grant. Consider the challenges your team faced throughout the process. Evaluate how well you stuck to your budget. Think about whether the grant helped you achieve the impact you anticipated.
Use these insights and experiences to improve your grant-tracking processes to help you continuously improve future outcomes.
Sage Intacct provides a comprehensive, high-customizable accounting software solution designed specifically for nonprofit organizations. The software meets the unique needs of nonprofits with a module-based accounting software system an extensive marketplace of third-party applications designed to transform accounting software into an enterprise resource planning tool.
Plus, Sage Intacct offers its own high-powered grant-tracking and billing tools designed to automate cumbersome, complicated grant-tracking processes such as expense capture and categorization, reporting, budgeting, timeline management, billing, and utilization. With Sage Intacct, nonprofits can simplify the process of tracking grants, measuring impact, and reporting.
To learn more about establishing best practices for grant tracking and other aspects of grant management, we recommend that nonprofit leaders consider outsourcing their back-office functions to experienced nonprofit client accounting service providers. Outsourcing can help your organization optimize every aspect of its financial operations while using the back office to support data-driven decision-making, increase efficiency, and maximize impact.