Grant management 101: Everything you need to know

Introduction:

Navigating the world of grant management is rewarding, yet it comes with frustrations. For grantseekers and grantmakers, streamlining the grant management lifecycle lets you focus on what matters. In this guide, we’ll break down the essentials of grant management and explore best practices, whether you’re seeking funding or providing it. 

What is grant management?

Grant management consists of two major players: the grantmaker – foundations that provide funding – and the grantseeker – organizations that need support. At its most basic, the grant management process is (1) how grantmakers distribute the funding they have available for granting to grantseekers or other fund recipients and (2) how grantseekers steward those funds and report back on their programs to the grantmaker. 

Identifying your organization's mission or goals is a good starting place for both. Grantseekers generally succeed more when they seek funding from an organization whose goals align with their mission. 

For grantseekers, it’s all about anticipating your organization's needs, considering the requirements for applying, and appropriately managing funds that can be accurately accounted for and reported on. 

Grantmakers should consider the right grant application guidelines and decide on the appropriate distribution of funds. This process is known as the pre-award, award, and post-award phases and can be overwhelming without the right resources. 

Why is grant management important? 

Outside of charitable donations and volunteerism, grants are often a key source of support that nonprofits rely on to fund and achieve their mission. However, a nonprofit’s responsibility to maintain compliance with the conditions of the grantor can be taxing. Thus, proper grant management is an essential stabilizing factor within the tango between forms, deadlines, and communications with all stakeholders, which ultimately upholds fiduciary obligations to communities.  

Similarly, grant providers should stay abreast of how grant funds are either available or spent. In addition, streamlined grant management maximizes administrative efficiency by reducing time spent reviewing dozens or even hundreds of active, pending, or completed grants. 

For nonprofits, it’s important to consider transparency and communication with your grantor(s). Proper stewardship of the funds received boils down to ensuring funds are allocated where intended and reported accurately and timely. Potential negative outcomes from mismanaged grants range from financial audits and lawsuits to damaged reputation or funding termination.

Who is involved in grant management?

Effective grant management involves multiple relationships between individuals, partners, and community stakeholders. Here are the most common roles within grant management:

• Grantmakers (funders) are organizations that are structured for and have the financial means to provide money in support of other organizations or individuals to support programs, projects, or operational costs. The grantmaker oversees the grant process from start to finish, managing applications, tracking goal-driven objectives, and assessing the progress and impact of their grant. Common examples of grantmakers are government agencies, community foundations, private or family foundations, and corporate foundations. 
• Grant recipients (grantees/grantseekers/awardees) are the applicant and (hopeful) recipient of the grant generally operating under a 501(c)(3) or other IRS-defined nonprofit status. The grant recipient applies for, plans, and implements their proposed goals for the grant funds. Organizations seeking this funding include community advocacy, environmental issues, community health and wellness, social justice, youth support, and more. 
• Grant managers/administrators play essential roles within the grant process on both sides of the equation. This individual (usually) or team oversees the entire grant workflow: they must create the application or grant proposal, maintain consistent communication between all stakeholders in the grant process, provide financial reporting, present reports to stakeholders, report the impact of the grant, and ensure compliance. 
• Community or beneficiaries are the community or geographic area that, based on need, directly benefits from the allocation of grant money. The beneficiaries will typically benefit from the grant project and will be part of the “communities served” as defined by the grant proposal’s expected outcomes. 
• Advisory boards or review committees provide necessary oversight for their organization and participate in the process during the application review stage. They hold the organization accountable for the public good, maintain transparency and inclusivity, set policies, and ultimately serve the mission. 

Grantseeking organizations | Grantmaking organizations - how are they different?

Despite their differences, grantseekers and grantmakers coexist, relying on one another to serve the public good. However, throughout the grant lifecycle, their roles are distinct:

Grantseeking organizations are operated and managed by a board of one to several individuals – while typically falling under the category of NPO (non-profit organization). Grantseekers vary widely in size, from small nonprofits run completely by volunteers to the American Red Cross with more than 230 chapters. Typically, grantseekers have highly diversified revenue streams and juggle multiple grants concurrently.

Grantmaking organizations can also vary widely in size and structure. A variety of types classify them depending on how they were set up initially (family, private), where they are based (community foundation), or their focus areas (health conversion foundation, arts and humanities council, or education foundation). These organizations receive applications requesting funding. They provide and oversee multiple grant programs, accept and assess applications, and award funds to ideal candidates.  

Pre-award phase 

The pre-award phase includes creating and promoting the funding opportunity (funders) and researching or inquiring about grants (grantseekers). Here are the steps each goes through before issuing funding:

Grantmakers

• • Generate grant guidelines and craft applications that outline the grant's requirements.

  • Promoting the grant will look different for each organization depending on their structure and goals. Some will promote it across their website, social media, and newsletters; others will first ask for an LOI (letter of inquiry) from interested grantseekers; and others will only invite those organizations they have already worked with or vetted.

  • The grantmaker will then collect submissions to their grant application within a given time frame. 

  • Once the submission opportunity is closed, and applications have been gathered, they will thoroughly review each grant application to sustain due diligence between the grantee and grantor before awarding the grant and notifying the recipient. 

Grantseekers

• • The research phase starts with identifying potential funding sources that can fulfill the grantseeker’s predetermined goal and match their respective missions well.

  • Once a grant match is identified, the grant manager will ensure all due dates are mapped out relative to other grants in progress and all requirements are accounted for and tracked effectively.

  • Once it’s determined that this grant fits within their priorities, the grantseeker begins writing the grant proposal, which details the budget, spending plan, and proper qualifications

  • Once the application/proposal has been thoroughly reviewed and all requirements are accounted for, it’s time to submit the grant application.

Award Phase

The Award Phase of the grant lifecycle consists predominantly of notifying the awardee, discussing terms and conditions, and defining key deadlines and programmatic targets:

Grantmakers

• • Communicate with applicants who best meet the grant requirements according to mutual program or organization goals or missions. 

  • Some organizations call this the “notice of award” or NOA, while others simply call it the “award letter” or “grant agreement.” Either way, it is an official legal document stipulating the terms and conditions of the grant.

  • The funds are awarded after discussing the expectations, policies, and timeline.

Grantseekers

• • Before funds can be granted, the grantseeker (or “awardee”) must negotiate terms and conditions such as policies, allocation of funds, and relevant timelines. 

  • The grantseeker will sign the agreement.

  • After establishing compliance requirements, the grantseeker will be responsible for meeting the agreed-upon financial, reporting, and administrative requirements. 

Post-award phase

Next, we enter the post-award phase:

Grantmakers

• • Throughout the grant lifecycle, the grantmaker will actively monitor the progress of the grant project using various methods, such as site visits, check-in calls, online reports, and more, depending on the grantmaker’s policies and procedures.

  • The awarding agency will perform regular evaluations of the program’s performance.

  • To effectively close the award, the grant recipient will submit required regulatory documentation, such as timetables, appropriate financials, and performance data.

Grantseekers

• • The work begins: the awarded organization implements the project.

  • The grant manager(s) will manage financials and oversee their project deliverables throughout their project. 

  • Reports are submitted based on the grant requirements.

Grant Compliance Best Practices

Oversight throughout the grant management lifecycle is a must. Without the proper guardrails, either the grantmaker or the grant recipient may be liable to lose future funding sources or sever productive relationships. Grant compliance is the best way to ensure this doesn’t happen. The relationship between grantor and grantee is based on trust, communication, transparency, and accountability. This is also where a grant management system will greatly benefit your organization. Below are some best practices for both grantmakers and grantseekers.

Federal and state regulations

To avoid complications with future funding, fraud, or misuse of funds, common regulations are put in place at both the state and federal levels:

States: Although it may differ from state to state, standard policies governing the grant process are: 

• • establish recognition as a nonprofit entity.

  • maintain compliance with state labor and non-discrimination laws, environmental regulations, or basic ethical regulations.

Federal: To guard against any potential misuse of funds, federally awarded grant recipients will submit all financial and performance information within 90 days of the grant's close.  

Many resources are available for you to learn about and stay up to date on the most current regulations and requirements. Often, it’s about just getting started with your research somewhere:

• • Grantmaking Basics: Creating Grant Guidelines from Exponent Philanthropy

  • Grant Policies on Grants.Gov

  • Guidance for Grants and Agreements from the Federal Register

  • Grants Policies & Regulations from U.S. Dept. of Health and Human Services

  • The basic rules for governing a family foundation from the National Center for Family Philanthropy (NCFP)

  • Foundation Basics from Council on Foundations

Institutional policies and procedures

Established policies for grantmaking organizations are critical to the long-term success of funding programs. Establishing agreed-upon “rules,” templates, steps, and documentation that guide your grantmaking and keep it aligned with your mission allows for greater efficiency and supports your due diligence.

The National Center for Family Philanthropy maintains a comprehensive list of resources and examples to help inform policy best practices for grantmaking and impact strategy. Examining what others have done and the differences between types of organizations will help you find the right balance as you build your library of policies, procedures, and templates. 

For grantseeking organizations, having your own internal policies and procedures is just as important. In addition, you also carry the added burden of compliance with your grant funders’ policies and ensuring no conflict of interest. When working with a new funding organization, ask up front if there are policies you must comply with. Some of these could be a heavier lift than others, so you’ll want to ensure you account for those added resources in your planning.

The National Council of Nonprofits provides a governance and policies resource for nonprofits with best practice recommendations and additional resources.

Risk management and mitigation

As a grantmaker, working with nonprofits that provide services to struggling communities and populations is a tremendous ethical responsibility. It’s important to have the right tools and systems to uphold it. Namely, it’s considered best practice to conduct regular site visits, create risk matrices that evaluate the potential severity or likelihood of misuse, set up clear policies and procedures in the pre-award phase, and examine audited financials to ensure the organization's financial health. 

For grantees, transparency is the way. Clarifying your grantor about your organization's goals and financially detailed project plans can provide peace of mind. Ensure your organization maintains well-documented methods for managing grant funds and has plans for potential revenue shortfalls. Finally, clear hierarchical structures should be established to approve grant expenditures and keep multiple sets of eyes on the project. 

Grant Financial Management Best Practices

With the constant inflow and outflow of monies from both the grantseeker’s and grantmakers’ perspective, comprehensive and regularly maintained financials should be documented. Below are some of the recommended best practices for grant financial management: 

Set up financial systems

Your choice of a financial system will optimize your record keeping and keep compliance with future reporting assignments while holding your organization accountable to its expenditures and goals. 

For grantmakers, the right grant management system or software platform can greatly reduce the time spent searching for documentation related to ongoing grants in various stages of the grant lifecycle. Find out what kind of integrations or built-in tools your vendor has available that can help with your financial management and reporting.

For grantees, you may have received funds from multiple revenue streams, all with different requirements, timelines, and tasks. It’s important to implement an organizational system to keep records easily accessible to all team members. Consider a prioritization schedule, location for various grant policies, and for budgetary decision-making. 

Financial status reports

Nonprofits are beholden to the expectations of the grantmaker, and financial status reports can make or break a productive relationship. Financial status reports communicate clear information about an organization's use of grant funds, including goals and objectives for grant expenditures. 

For grantmakers, you may include language within your grant application that specifies preferred status report timelines and expectations. 

Internal and external audits

While auditing requirements may vary based on a grantor’s federal or non-federal status, internal and external audits are a regular practice. Internal auditing best practices include:

• • Reconciliation of accounts

  • Proper authorization protocols for administrative actions 

  • Maintaining detailed transaction records

  • Proper and regular staff training in financial systems 

  • Appropriate use and safeguards for using technology 

For external auditing:

• • Preparedness for reviews to address potential issues

  • Select auditors with familiarity and experience in your sector

  • Maintain communication with auditors

  • Respond promptly to findings or recommendations provided by the auditor

  • Conduct post-audit reviews

Cost sharing and matching funds

Some grants may not cover the full expenditure of your project, which is where cost sharing comes in. Cost sharing will place the financial responsibility of a portion of the project cost not covered by a grant on the grantee. This demonstrates a grantee’s commitment to their project and may leverage additional resources. 

Similarly, matching funds act as a form of cost sharing in which the grantee matches the grantor's contribution (dollar-for-dollar or some other ratio). This process ensures that both the grantor and grantee have a mutually vested interest in the project’s success. 

The following are audit best practices for both grantmakers and grantseekers:

For Grantmakers:

• • Provide guidelines on allowable expenses and documentation.

  • Outline the audit process and expectations for grantees.

  • Conduct regular financial reviews and monitoring visits.

  • Identify and focus on high-risk grants using risk assessment tools.

  • Offer training and assistance to grantees on financial management.

  • Provide resources and tools to maintain accurate records.

  • Maintain open communication with grantees to address issues promptly.

  • Encourage early reporting of potential problems.

  • Use independent auditors with experience in grant compliance.

For Grantees:

• • Responding to Findings: Maintain detailed and accurate financial records, including receipts, invoices, and timesheets.

  • Use accounting software to track expenses and generate reports.

  • Thoroughly understand the grantor’s guidelines, allowable expenses, and reporting requirements.

  • Attend any training sessions or webinars offered by the grantor.

  • Implement strong internal controls to prevent and detect errors or fraud.

  • Segregate duties to ensure that no single individual controls all aspects of financial transactions.

  • Address audit findings promptly and take corrective actions as needed.

  • Implement recommendations from auditors to improve financial management practices.

Grant Monitoring and Performance Measurement Best Practices

As a grantmaker, oversight over your funds means grant-funded projects stay purpose-driven toward intended outcomes. As the grantee, monitoring progress means measurable outcomes and staying mission-focused. The steps below can be the difference between subpar results and successful projects: 

Set goals

• • Consider setting a SMART Goal (Specific, Measurable, Achievable, Relevant, and Time-bound), considered a best practice in many organizations. 

  • Be sure your goals align with your organization’s and your grant provider’s overall mission.

Track progress and milestones

• • Collect baseline data before you begin your project 

  • Identify your Key Performance Indicators (KPIs) – what will you measure to reflect whether you’ve achieved this goal? 

Collect and analyze data

• • Meet with the appropriate personnel (such as your board) to review the data. Use visualization tools to tell a story of your project from start to finish, including areas for improvement and reflections on success. 

Adjust strategies based on performance

A clear start and end point for your grant (whether providing the grant or receiving it), outlining clear goals and performance targets, etc., is an excellent plan, but projects will not always go as planned. This is an opportunity for both grantmakers and grantseekers to maneuver their grant policies, establish appropriate oversight committees, or take the temperature of the communities you serve. Adapt and overcome!

Grant Reporting and Documentation Best Practices

Reporting and documenting are the backbone of any organization. This practice helps keep everyone accountable and ensures all boxes have been checked, requirements are upheld, and clear lines of communication are open. This practice builds trust and credibility, supporting a culture where partnerships are foundational. Here are some reporting best practices:

Types of reports required

• • Financial Reports are essential: detailed line-item budgets, expenditures (planned and unplanned), and projected costs reflect transparency. 

  • Impact Assessments show qualitative and quantitative data about the impact on the target population. 

  • Consider Public Reports that outline project successes and what that means for community stakeholders. 

  • Outcomes Assessments reflect alignment with organizational or institutional goals. 

Best practices for report writing

• • The best advice here is to create document templates. With all the various reports you may need to write, templates will save you loads of time. 

  • It’s particularly important for grantmakers to communicate their expectations for the reports they request from their grant recipients. 

Documentation retention policies

Retention policies outline the length of time that documents should be kept. These policies safeguard institutions against violating any IRS (or other regulatory body) policies. A few best practices here include:

• • Create retention-specific policies

  • Train staff on where and how to keep appropriate records

  • Secure disposal of confidential documentation

  • Utilize a password-protected electronic documents management system 

Transparency, proper policy-making, accuracy, and appropriate use of funds keep both parties happy regarding reports and documentation. Retention policies, such as internal and external auditing, regular staff training about retention, and period reviews of these policies, can alleviate stress. 

Setting clear guidelines and policies as the grantmaker, ensuring compliance, leveraging the right technology, and engaging all stakeholders as the grant recipient is a recipe for success. 

Grant Closing and Future Planning Best Practices

Award closeout

Submitting the final reports at the time of the grant closeout will potentially require the following documentation:

• • Financial report 

  • Programmatic report 

  • Compliance documentation (i.e., audits, receipts, or contracts)

  • Evaluative reports (impact or outcomes assessments) 

Depending on the grant agreement, you may be required to return any unspent grant monies upon closing the grant. You may also need to close any active accounts associated with the grant project. Finally, the best advice nearing grant closeout is to prepare by starting early.

Project and program evaluation

Evaluating and presenting project outcomes will reflect its effectiveness. The best starting point is your objectives (established in the goal-setting phase). 

The grantmaker evaluates through: 

• • First, establishing metrics for and defining the success criteria  

  • Soliciting feedback from stakeholders in the project

  • Requesting grantee feedback

  • Preparing an annual or quarterly impact report summarizing challenges, achievements, or lessons learned.

Evaluation as the grantee might consist of:

• • Use of a logic model to assess activities, inputs/outputs, outcomes, and impacts

  • Soliciting feedback from stakeholders to gain a more diverse perspective

  • Creating feedback loops for continuous learning 

  • Preparing a final report that details findings, lessons learned, and actual vs. intended reach of the project. 

Future planning

Evaluating, reflecting, and sharing the news is often recommended upon grant closeout.

For Grantmakers:

• • Evaluation and Reflection – measure both qualitative and quantitative results of your grant 

  • Engage with stakeholders – listen to the feedback received from affected parties or target benefactors. 

For Grant Recipients:

• • Diversify funding sources to avoid reliance on one grantor

  • Applying what you’ve learned 

  • Demonstrate your impact to attract future investors

  • Communicate with your communities – they want to know how you’ve helped and how a grant got you there

Learn how Foundant can Streamline Your Grant Management. 

Grant management can either be a hassle or streamlined and efficient. Want to learn how? See how Foundant provides the tools to maximize the philanthropic community through its grant management software! 

Congratulations! You’re an expert in grant management! We hope our advice is meaningful to both grantmakers and grantseekers. Now that you grasp the full grant lifecycle, you can see how Foundant is committed to educating our audiences and providing tools to maximize the philanthropic community.