4 Strategies for Successful Nonprofit Grant Management

A guest post by Jon Osterburg of Jitasa

Grants are a significant source of funding for nonprofits, comprising nearly a quarter of total nonprofit revenue. They fuel vital programs and services, which is why you need an organized approach to grant management.

By properly allocating grant funds, your nonprofit will make the most of this funding. This provides additional flexibility to use your other funds where needed, like for donor communications or delivering services in the community. Let’s explore four strategies you can use for effective grant management.

1. Standardize grant management processes.

Many nonprofits earn multiple grants throughout each year. Therefore, these organizations have many grants to manage at once, each of which has its own purpose.

Simplify the process by developing guidelines for grant management tasks and expectations. Your guidelines should include each step of the process from beginning to end.

To help, Jitasa explains grant management as a cycle that follows these steps:

1. Identify grant opportunities
2. Apply for grants
3. Track your grant’s progress
4. Record grant funding
5. Report back to the grantmaker

Using this grant lifecycle as a guide, your instructions will outline each step necessary to apply for, accept, and use grants. This way, every team member can streamline the process and increase efficiency.

2. Comply with grant rules.

When using a grant, you must follow financial management requirements, such as reporting the funding on your nonprofit’s Form 990. But you must also comply with the grantmaker’s rules.

Review the unique terms, conditions, and reporting requirements for each grant before using any of the funding. These requirements may include:

• Budget restrictions: Most grantors restrict funding to specific uses. For example, one grant could be for a specific program while another has to be used for your current capital campaign.

• Project timelines: Many grants require nonprofits to meet a deadline for fulfilling the funding’s purpose. For example, your grant terms may set an end-of-year deadline for launching a new program. In this case, your nonprofit might have to send monthly progress reports to the grantor.

• Monitoring: Grantors may want to oversee your project and assess your usage of their funding. This may include monitoring your progress through site visits or recurring meetings.

These requirements are also important for reporting purposes, such as creating financial statements. Nonprofits must differentiate between unconditional, contingent, and reimbursable grants in these reports. You’ll need to be familiar with the nature of the grant before creating statements.

Another common requirement is acknowledging the grant’s source in your marketing materials. This may include showcasing grant-funded programs on your nonprofit’s website or in your email newsletter. You must be transparent about grant usage with both the grantor and your stakeholders.

3. Track grant usage.

Your nonprofit likely already tracks its financial performance for budgeting purposes. In the same way, you should track grant usage to make informed decisions about fund allocation. This empowers your team to keep grant-funded programs on track to achieve their goals.

Choose relevant metrics to track, such as:

• Cost-per-outcome: Gauge the grant’s effectiveness by calculating the cost of achieving an outcome, such as getting someone to sign up for the designated program. To measure this, divide grant expenditures by the number of outcomes achieved.

• Grant utilization rate: Compare the percentage of the grant used to the total amount awarded. This will show how far you were able to stretch the funding.

• Programmatic output: Track the results of grant-funded programs. This may include the number of individuals served, services provided, or activities completed.

According to NPOInfo’s data collection guide, these metrics will also help you improve a project’s return on investment (ROI). With an overview of your grant usage in comparison to your goals, you can adjust your strategy to make a bigger impact. Then, you can measure your progress and demonstrate your impact to stakeholders.

4. Work with a financial professional.

Grants are just one of your many, diversified revenue streams. You probably also raise funds from individual donations, corporate philanthropy, earned income, and investments. Then, you must apply this revenue to various expenses in a way that powers your nonprofit’s activities.

Working with a financial professional can ensure you make the most of not just grants, but all of your nonprofit’s resources. To start working with a nonprofit accountant who can manage your grants and other financial needs, follow these steps:

1. Determine your financial goals and needs.
2. Establish an outsourcing budget.
3. Research top nonprofit accountants.
4. Schedule consultations to meet with your top choices.
5. Narrow down your list and select an accountant.

A professional accountant can also help you develop future financial goals. As a result, your nonprofit can restart the grant cycle by knowing which grants to apply for and how you’ll use them.

Jon Osterburg has spent the last nine years helping more than 100 nonprofits around the world with their finances as a leader at Jitasa, an accounting firm that offers bookkeeping and accounting services to not for profit organizations.