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4 Strategies for Successful Nonprofit Grant Management

May 14, 2024 by Dennis Fischman Leave a Comment

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:

The nonprofit grant management cycle, which is detailed in the text below

  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.

 

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Nonprofit Financial Management: 3 Frequently Asked Questions

January 22, 2024 by Dennis Fischman Leave a Comment

A guest post by Jon Osterburg at Jitasa 

If your nonprofit is like most, you focus most of your time and effort on two priorities: fundraising, and furthering your mission. After all, your organization was founded to make a difference in the community, and fundraising provides the revenue you need to achieve that goal.

However, there is an essential step that comes in between fundraising and mission-related work: financial management. A solid nonprofit financial management strategy allows you to carefully track the revenue you bring in through fundraising and allocate it to fund mission-critical programs and projects.

As your nonprofit gets started with financial management, you’ll likely have some questions. In this guide, we’ll answer three frequently asked questions about nonprofit finances, including:

  1. Why is financial management important for nonprofits?
  2. What are the core aspects of nonprofit financial management?
  3. How can my nonprofit get started with financial management?

1. Why is financial management important for nonprofits?

Financial management is essential for all nonprofits, whether your organization is just getting started or is well-established. Some of the advantages you can gain by developing and implementing a financial management strategy include:

  • More efficient operations. Keeping track of your finances allows your organization to fundraise more sustainably, make more informed decisions, and plan upcoming projects and campaigns with less stress.
  • Long-term strategic planning. In addition to mapping out your short-term strategy, effective financial management helps you make projections about your organization’s future and determine how quickly it can grow.
  • Legal compliance. Because of your nonprofit’s tax-exempt status, it’s subject to some financial rules and regulations that for-profit organizations aren’t. So, you’ll need to put time and effort into financial management to follow those guidelines.
  • Transparency. Donors want to know that your organization is using their contributions to make a difference. By showing them that you’re managing your finances properly, you’ll build trust and deepen your relationships with them.

Financial management and fundraising depend on each other to succeed. If you correctly handle the contributions your nonprofit brings in, you’ll attract even more donations that can be used to further your mission and fund future fundraising campaigns.

2. What are the core aspects of nonprofit financial management?

Similar to a fundraising plan, nonprofit financial management involves three major elements: strategy, execution, and evaluation.

  • Strategy = budgeting. Your nonprofit’s budget is a financial planning document that outlines all of your expected revenue and expenses for a given year. According to Jitasa, most nonprofits categorize their revenue by source (individual donations, corporate giving, grants, etc.) in their budgets. Expenses are budgeted based on whether the money is spent on mission-related activities (program costs) or operating needs (overhead costs) so you know how your funding is being used to make a difference.
  • Execution = financial policies. Creating a standard set of procedures ensures everyone at your nonprofit is on the same page about how to handle the organization’s finances as they go about their daily activities. Your financial policy handbook should include guidelines for gift acceptance, staff compensation, expense reimbursement, investing, and more.
  • Evaluation = reporting. Financial reporting provides the previously mentioned benefits of transparency and compliance, plus analyzing your organization’s collected data helps with internal decision-making. The most important report you’ll complete each year is the IRS Form 990, which allows your nonprofit to stay tax-exempt. Most organizations also include some financial information in their annual reports for their donors’ benefit.

Once your nonprofit’s budget is finalized, following your financial policies will help you bring in the revenue you outlined and cover all of your predicted expenses. Then, you can use that information to create thorough, accurate reports that you can reference as you develop your budget for next year.

3. How can my nonprofit get started with financial management?

If you run a small shop, it is possible to start managing your nonprofit’s finances on your own. There are a variety of resources available online, from budget templates to the IRS guidelines for filing Form 990, that you can use to understand your organization’s financial needs. Additionally, it’s important to set your nonprofit up with specialized accounting software that you can use to collect, store, and pull reports of your financial data.

However, the best long-term financial management strategy is to work with experts. There are two main types of nonprofit financial professionals, bookkeepers and accountants. Here are a few of the key differences between these roles:

This graphic outlines the differences between nonprofit bookkeepers and accountants, which are discussed in more detail below

  • Bookkeepers are responsible for your nonprofit’s day-to-day financial needs. According to NXUnite, some of their tasks include recording transactions, writing and depositing checks, and processing payroll. Because your bookkeeper doesn’t need to be a Certified Public Accountant (CPA), you can give this role to any staff member with financial knowledge or even a trained volunteer.
  • Accountants focus on financial analysis, reporting, and decision-making. Their duties include guiding the budgeting process, filing your Form 990, and reviewing your financial policies to ensure compliance. Your nonprofit’s accountant needs to have their CPA certification, and most of these professionals also have at least a bachelor’s degree in accounting or a related field.

Because hiring an in-house accountant can be expensive, many small and mid-sized nonprofits choose to outsource their accounting services. You can also look for an outsourced bookkeeper if your organization’s needs become too complex for your staff and volunteers to manage on their own. No matter which financial roles you choose to outsource, make sure the external professional you partner with specializes in working with nonprofits for best results.


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.

 

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Lead Your Organization by Telling a Story

March 13, 2015 by Dennis Fischman Leave a Comment

tug of war

Get your people pulling in the same direction

Here’s a problem leaders face every day. You want to get something done. It will take everyone in your organization to do it.

How will you get them pulling in the same direction?

You could go around and have a heart-to-heart with each person in the organization. You could explain in detail the role each person should play and how they are supposed to do it.

That might work…if you have three people in your organization. In a larger group, you’d be spending a huge amount of time and you still wouldn’t know whether or not your people “get it” until you saw them in action.

You’d also be accused of “micro-management”—and your accusers would be right. Why tell other people how to do their jobs, which is something they might already know better than you do?

You don’t need to tell them how to do it. You need to make sure they know what needs to be done. And the best way to do that just might be through telling a story.

Find out how:

http://www.trippbraden.com/2015/03/13/who-is-the-hero-of-the-story/

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