Grants are essential sources of revenue for most nonprofits. They’re critical for your mission, but carry with them a high burden of monitoring and accountability. Proper allocation, tracking, and reporting are essential to ensure your organization receives ongoing funding.
A lot of you out there are probably trying to manage this via spreadsheets, and maybe you’re able to do it if you just have a few grants – but trying to keep track as you grow and add new grants just isn’t sustainable. You will eventually get caught in complex rules or stringent compliance requirements, and may put your future funding at risk. No one wants to lose funding or find themselves in the position to have to return money! So, what’s the best way to prevent this? Here are a few key things to keep top of mind:
For audits and compliance you need to make sure:
- Every dollar of grant expenditure is fully traceable in the event of an audit
- You maintain ongoing internal monitoring to ensure no surprises later
- You’re optimizing the funds allocated to each program with budget-to-actual reporting
Multi-year grants rules mean you need to:
- Use specific general ledger codes for each grant, including layers of codes to track nuances of the requirements
- Create segments to allocate grant dollars across multiple fiscal years, reflecting the way money is actually being spent
- Report on funding according to your unique general ledger structure, avoiding risky manual processes outside your accounting system
Government grants and their unique challenges mean:
- Audits are virtually guaranteed on government grants, especially large grants that automatically trigger separate audits
- Government grants carry additional risk, because they’re typically reimbursed rather than paid in advance; if any compliance issue is found after the fact, the expenditure is not repaid
- 100 percent compliance with the terms of the grant and 100 percent accuracy in reporting are critical to safeguarding your funds
Compounded with this, you need a segmented account structure to track every grant down to the penny, and customize your reports to meet the requirements of each grantor.
Don’t worry if this sounds like a lot! We’ve put together a short paper that can help you determine if your organization is up to managing grants effectively. “Saying Yes to Grant Funding” covers the issues many nonprofits face while juggling grants. Still like to learn more and ask our experts? Register for our live webinar, “Saying Yes to Grants: Managing the Challenges,” presented next Tuesday, March 27 at 1 p.m. CT.