Top 3 Pitfalls in NonProfit Grant Management

Posted on: March 7th, 2016

We have identified the top 3 pitfalls in grant management. Grant management encompasses the entire process of selecting grants to pursue, fulfilling the grant purpose, and adequately reporting on the grants as per the mandate. According to the Center for Effective Philanthropy, the activity associated with the actual management of the grant is estimated to cost 13% of every grant dollar spent.
3 Common Nonprofit Pitfalls

1) Strategic Grant Selection
Specific individual grants can be too costly to manage based on the reporting requirements and the terms of service.

2) Mismanagement of In-Kind Donations
Many grants require matching funds and those funds are often earmarked for specific purposes, and can only be aligned or matched, with one grant. This requires appropriate documentation and explanation, to ensure the grant funds do not need to be returned.

3) Poor Documentation
Often there is not sufficient documentation to support allowable expenses. Adequate documentation must be available to support the purpose of the expenditure, as it relates to allowability, and grant appropriation. Pro Tip: Employees’ times are often the biggest offender.

To reduce the risks of these shortcomings, it is essential that each grant undergo a thorough analyses for compliance, usage, and application, prior to the grant writing process. Work with your accounting team early, to identify these key discriminators. From that assessment, we can strategically assess not only the grant requirements, but the value of future benefits.

Once a grant is received, communicate requirements succinctly, and implement resulting processes and procedures to ensure compliance. Most nonprofit accounting software today, track the inflows and outflows in a manner that will aid in providing the information needed, for grant reporting. Nonprofit financial management is more complex today than ever. CFO Strategic Partners employs a team over over 22 CFO experts, well versed in the many faucets of nonprofit financial management. Contact us today for a diagnostic on your organization’s financial health.