Congratulations! You’ve navigated the application process successfully and your grant’s been approved! Time for your organization to roll up its sleeves and get to work managing both its newly funded program or project - and the funds that support it.
The financial management of grants is an important and necessary part of the grants process. Not only does accurate reporting assure your funder their money is being properly spent and accounted for, it also updates them on what your organization has accomplished as a result of receiving the grant funds.
Here are 5 best practice tips for managing the financial aspects of your grant.
1. Make sure your team is on the same page
Once your grant application’s been approved, good grant management starts by getting your team on the same page. Make sure everyone involved in your program or project receives a copy of your grant budget, so they’ll be clear on what the funding can and can’t be used for.
2. Review reporting dates and requirements
Certain grants may require an interim as well as a final report. Therefore, you should identify all the various reporting deadlines ahead of time and plan accordingly. You can plan ahead by:
- Reviewing and making sure that your team is also aware of grant reporting requirements and submission dates
- Allowing adequate time to prepare an accurate and reliable report
- Informing your in-house or outsourced bookkeeper of key dates, so they can support you in preparing your reports
3. Use your accounting software to track grant expenses
Avoid using spreadsheets to track your post-award grant expenses.
Not only do you run the risk of leaving out important data when you track your expenses manually, but there’s also always the chance that spreadsheet formulas will become messed up or invalid – especially when multiple users are involved.
Because it integrates with other programs, using accounting software makes it easy to track your grant expenses by automating your data input. You’ll reduce the chance of human error and have more time to analyze your data output, prepare your reports, and ensure the numbers are accurate and reliable.
4. Set up your accounting system for proper grant management
As mentioned in our previous blog post on preparing grant budgets, mapping your organization’s chart of accounts to your budget makes it easier to manage the financials for your grant report.
The best way to accomplish this is by uploading your grant budget to your accounting software and tagging it to your new program or project. This may sound intimidating, but accounting software like QuickBooks and Xero allows you to customize your accounting system and track your grant financials through their project management feature.
By setting up a new project in your accounting software, you can:
- Track the revenue and expenses associated with your grant budget
- Pull budget variance reports to see the differences in your budgeted amounts vs your actual grant income and spending
- Be more proactive in communicating your needs to your grants program funder
Once your budget is tagged, you’ll have a clearer understanding of how you’re spending grant funds and where your needs truly lie. Here’s an example.
Let’s say your original grant proposal budget allocated $20,000 dollars to renting a space for your program, and $3,000 for technology costs. Due to COVID-19, however, your team has now decided to deliver your program virtually rather than in person.
Not only does this new scenario mean you’ll no longer be spending the full $20,000 allocated to space rental, you’ll also need to spend more money than was originally allocated to improve your technology platforms.
By setting up your fund accounting system to properly track and manage your grant financials, you’ll be in a better position to request a budget amendment to reallocate funds if your program doesn’t turn out the way you’d anticipated.
5. Code your grant expenses correctly
It’s important to train your staff on how to code their grant-related expenses before they start using the funds.
If, for example, your team takes a trip to visit a program partner - and they code the travel costs to Travel, but don’t code them to your grant - those expenses will be missing from your grant reports. Not only will your reporting be inaccurate, but you also won’t be able to properly understand how your grant money is being spent.
The Receipt Bank app is a great way for your team to code their expenses on the go and ensure they get allocated based on what your grants require.
By making it easy for your team to accurately track their expenses, Receipt Bank also makes it easy for you to spot potential coding errors – like when a staff member codes an expense to the wrong grant, or to the wrong account in general.
Using the tips described here for more effective grant management won’t just improve your reporting, it will strengthen your partnership with your funder and make it easier to renew your grant or take advantage of new grant opportunities in future. Remember, if your not-for-profit organization is unclear on any aspect of the financial management of grants, Enkel is here to help.