The CFO'S Perspective

Grant Management Best Practices


Grant management is one of the fundamental elements of effective financial management for a non-profit organization. There are many components of grant management, and while the degree of sophistication may vary from organization to organization, the fundamentals remain largely consistent.

So, why is grant management important?

The entire answer to this question depends on the organization, but here are the core reasons:

  • Accurate financial reporting & planning – Tracking pending, active, and recently completed grants are fundamental to the financial performance of many non-profits. Understanding how much funding is available, the amount spent, and what is left is critical. This is why non-profits often track revenues and expenses on a grant-by-grant basis and then aggregate this information into annual budgets and financial statements.

  • Compliance Requirements – Maintaining compliance with grants is essential to avoid audit findings. It is also avoids the risk in having to return funds, as well as in helping to secure funds in subsequent years. Compliance takes on many forms, including meeting programmatic requirements, deadlines, charging applicable costs (allowable and per budget), and interim and final reporting requirements.

  • Financial implications – Effective grant management results in profitability analysis on a grant-by-grant basis. Results are reported to the non-profit’s management team and Board of Directors to inform them whether the organization is making or losing money, as well as whether all costs are being recovered on each particular grant.

Collaboration & Communication

Effective grant management is complex because of the required collaboration across the organization. Development may take the lead in the grant writing and proposal stage. Programs implements the grant. They are responsible for spending funds, allocating time, and usually writing programmatic reports. Accounting is responsible for record-keeping, revenue recognition, document storage, budgets, and all financial reports.

This means that all departments must maintain frequent communication and good records. Effective grant management will be facilitated by:

  • Assigning responsibility: Designate a point person for all grants or parse out grants on a case-by-case basis. This person should ensure all other parties complete the required elements – proposal development, monitoring progress (programmatic and financial), and reporting. The point person is typically part of Development for smaller organizations and part of Programs for larger organizations. Sometimes this lead function is performed by someone in Finance.

  • Regular meetings: A routine meeting with representation from Development, Finance, and the Program teams should be scheduled to:
    • Discuss potential grant opportunities
    • Associated needs and deadlines for each
    • Collaboration options on grant budgets for applications
    • Review grant reporting deadlines
    • Discuss any grant over/under spending
    • Any other relevant topics to enable the team to work more effectively together
  • Good records: Implement tools to track all grant information with software or Excel spreadsheets. A grant calendar is also an excellent idea for tracking the many deadlines.

Contract Routing Form

Time and time again, finance teams admit that they often don’t see grant agreements until several months into operation. My best recommendation and a tried-and-true solution is a contract routing form. The form is routed to each key department and should contain several components, ensuring all relevant parties are ‘in the know’.

At a minimum, this form should ensure the following:

  • Review of all budget components (if not already locked)
  • All parties receive copies of the agreement, and they are centrally stored
  • Accounting sets up fund/account coding for expenses and payroll
  • Accounting establishes revenue recognition (more on this later)
  • Confirm insurance requirements are met (purchased or amended)
  • Additional compliance requirements are planned and documented
  • Evaluation of the potential cashflow impact

Revenue Recognition

One of the most complicated elements of non-profit accounting is determining the proper accounting for recognizing grant revenue. Rather than face this difficult question from scratch for every new grant or contract, develop a formal policy, a revenue recognition diagram with customized examples, and practical guidelines to use as a quick reference guide. The creation will take effort, but it can then be referenced repeatedly and is sure to impress your auditors! For starters, check out the decision tree in ASU 2018-08, then customize it for your specific types of funding and the situations you encounter.

Financial reporting & analysis

Lastly, effective grant management is not complete without creating the tools to measure your financial successes or challenges adequately. In most situations, your organization should be able to measure profitability on a grant-by-grant basis. This analysis should incorporate all costs – including administration. Does the result of this analysis (profit or loss) make sense for your organization?

Consider other tools like a spend-down (burn-rate) calculation of grants to forecast staffing allocations and cashflow impact.

Grant management practices can look significantly different from one organization to the next. As the organization grows in size and complexity, the policies, procedures, and tools to support grant management should evolve to match.

Do you have questions about handling accounting and reporting for non-profits? CFO Selections has worked extensively with non-profits throughout the Pacific Northwest. 

Contact us to learn more about our services

About the Author

todd-kimball-1Todd Kimball is a Partner with CFO Selections and leads the non-profit practice in Oregon and SW Washington. 

Todd is a senior accounting professional with over 15 years of expertise in the non-profit and government sectors. He has a proven track record at tackling the most challenging not-for-profit accounting issues and finding solutions that work and move organizations forward.  He excels at creating process efficiencies, motivating and utilizing staff to their full potential, implementing internal controls and providing sound technical expertise.  Learn more about Todd here.

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Topics: Non Profit Organizations, Grants

Topics: Non Profit Organizations Grants