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Nonprofit grant management for beginners

Learn the basics of how to manage grants for nonprofits, including five steps toward successful grant management, finding the right funding opportunities, and crafting effective proposals.

Anna Bean
December 29, 2023
Nerd Mr Butter

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Grants are the lifeblood of many nonprofit organizations. They get projects off the ground, keep programs going, and generally move the needle on those all-important changes you’re working towards.

But grants aren’t all about getting funding and running off to do good with it. Boring as it may sound, grants need to be managed. Stakeholders want to be certain that you’re doing the right thing with all that lovely cash, and that means making a paper trail, creating reports, and generally doing your due diligence.

Don’t worry—it’s not as arduous as it sounds! And it gets easier all the time with improvements in digital accounting tech. If you follow a few simple best practices, nonprofit grant management is actually pretty simple. Let’s take a look at how to manage grants for your nonprofit in the smoothest way possible.

Why effective grant management matters

Grant management is a vital part of fundraising and is crucial for long-term nonprofit success. Here are just a few reasons why you should stay on top of this process:

  • Social proof ✅ Good grant management practices provide solid proof that you are a responsible organization that uses its funds properly. This is a big help when seeking future grants.
  • Compliance ✅ In many cases, grant management is a legal requirement for nonprofits. You’ll need to prove that you’re using your money in the right ways to gain or retain your tax-exempt status.
  • Networking ✅ Organizations that are good at managing grants tend to form stronger and more trusting relationships with funders. This can lead to even more opportunities, not only for funding but also for networking and building relationships. 
  • Smooth sailing ✅ Budgeting correctly, staying on top of your accounts, and keeping your money management processes running smoothly makes life easier for everyone—especially your accountant.

Clearly, there are many benefits to getting grant management right. But that’s not all. There are also significant risks associated with getting grant management wrong:

  • Loss of funds ❌ The most common consequence of poor grant management is that you lose awarded funding or have to return the money. The repercussions of having your funding pulled could be devastating for your program and even your organization as a whole.
  • Audits ❌ Any inconsistencies in your accounting can result in getting audited. If your grant system really is a mess, audits are likely to be long, complicated, disruptive, and generally a pain you could do without.
  • Reputation ❌ Money mismanagement is one of the fastest ways to tank your nonprofit’s reputation and find yourself blocked from future funding.
  • Legal issues ❌ If your grant mismanagement strays into illegal territory, there could be serious repercussions. You could even be accused of fraud if things don’t seem to add up.

Best practices for grant management in five steps

Let’s make sure you get started on the right foot with the best practices outlined in these five steps of nonprofit grant management, including how to find the right funding opportunities and craft effective grant proposals. 

1. Identify grant funding opportunities 👀

Before you start applying for grants, it’s important to understand exactly what you want funded and how your nonprofit or program will get the work done, including:

  • How much you need 
  • What you will do with the money once you get it
  • The resources available to help you reach your goals (including volunteers and employees)

Once you are able to fully articulate your situation, you’ll be able to target the kinds of funders who are most able to meet your needs. 

Finding funding opportunities can involve searching databases like grants.gov or GrantWatch, applying for corporate grants, networking with other nonprofits, and even simple Google searches. Some grantmaking institutions will require you to send an initial Letter of Inquiry (LOI) before they accept a full grant proposal, so make sure to follow the specific directions each funder lays out for you.

2. Craft compelling grant proposals ✍️

Having identified funding opportunities, you can boost your chances of acceptance with compelling grant proposals. It’s critical to keep records of all applications and closely monitor everything stated in your proposal. You may need to prove that you are using the money as detailed in your proposal at a later date.

A good grant proposal will have a clear objective, revenue projections, a strategic outline for using the money, and lots of well-researched supporting evidence. It will explain how the money and its uses will help to advance your cause. If the grant has conditions, the proposal should explain how and why your nonprofit meets relevant criteria or will fulfill any conditions.

3. Follow through to make your case 🌟

Once your application is complete and submitted, you will enter the award phase. At this stage, the funder will evaluate your proposal. Don’t worry! Even if this is your very first application and you have no proven track record, proving your grant management credentials will go a long way in the process.

If you are interviewed for a grant, be sure to bring a well-organized strategic outline to present. Show that you have a coherent plan for the money and that you are well capable of managing the grant properly. 

If your grant application submission is effective, you will move on to the execution stage.

4. Leverage technology for grant management 🤖

Technology can be a real game changer when it comes to grant management. Rather than having to constantly fill out paperwork and keep on top of accounting admin, various software platforms can automate a huge amount of the management burden. 

For example, you can use order management software to track your income from other sources, such as merchandise sales. 

Other nonprofit software solutions to aid your grant management process may include: 

  • Work management platforms to set workflows, assign tasks, and monitor your program’s progress
  • Communication tools to keep everyone who’s involved in spending, tracking, or otherwise has a stake in your grant, connected 
  • Document creation and management tools for outlining responsibilities to creating reports
  • Data management tools to keep your records organized and up to date
  • Accounting platforms to make both grant tracking and reporting go much smoother

Many of these tools should come with analytics, which will, at the click of a button, help you to see how you’re progressing towards your goals and where you may need to make changes. Regularly checking your analytics tools can also let you know when your grant is getting low or where you can adjust your spending to use the money more effectively.

5. Follow through on compliance and reporting ✅

Reporting and ensuring compliance is a huge part of grant management. To do this properly, you need to be diligent about recording funds and what they’re used for. It’s a good idea to give one person or team the express responsibility of recording money usage and making sure that everything can be traced back to the original grant it came from. 

Spend management software is one solution that can automatically assign spending limits to departments and team members. This can help you track how you’ve used your grant and make sure you comply with any requirements, especially in the case of restricted grants.  

If your records are up to date, your reporting should be easy. Generate basic reports from your accounting and analytics software, then cross-reference those reports with other related reports to build up a detailed picture of your progress. Often, funders will want regular reports as a condition of their grant. But even if they don’t, reporting is still good grant management practice, keeping everyone is on the same page and inspiring trust in your program.

Reporting can also be very helpful when proving regulatory compliance. The rules and regulations governing nonprofit grant usage can be complicated. Still, if you’ve been recording all your data properly and regularly reporting on grant status, you shouldn’t have too much to worry about.

And don’t forget to include impact results in your grant reporting. After all, the whole aim of the game is to make an impact!

Grow your toolkit for nonprofit success  

Grant management sounds like a chore, but as long as you stay on top of it, it doesn’t have to be so cumbersome. With a well-organized grant strategy, sticking to the conditions of your grant, leveraging the right technology, and diligently recording and reporting your spending and progress, you’ll be a grant management pro in no time. 

And, as is the case with many nonprofits, if grassroots fundraising and individual giving are also part of your funding strategy, Givebutter is a free, all-in-one platform that can make your donor management, engagement, and reporting as smooth as butter. 

Create your free account to see how Givebutter can make your nonprofit fundraising toolbox even better, without the cost of other software solutions. 

Get started
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