Streamlining Government Grant Compliance: A Checklist for Nonprofits

Government grants and contracts can be an excellent funding opportunity if you have the staff to do the reporting work they require. With a duty to taxpayers, government agencies have some of the most extensive reporting demands of any type of funding source for a nonprofit organization.

The good news is that once you have a process in place to manage a government grant or contract, you can often copy and paste that process to scale to other grants.

Use this step-by-step grant compliance checklist to make sure you set your organization up for funding success with the least amount of stress.

Step 1: Understand the grant requirements and expectations

You've found a grant that sounds perfect for your organization. Before you start drafting your application, dig into the requirements and expectations to make sure you understand what you are applying for.

• Do a thorough review of the grant application. Make sure you understand the goal of the grant, what outcomes they are looking for, eligibility requirements, payout timing, and the reporting requirements and timeline.
• Sit in on any training or explanations provided by the grantor where they might go into detail about what they are looking for. This can also help you with tailoring the application to their specific goals of the grant. For example, if you provide afterschool tutoring programs, you may lean in on the STEM work you do if the grant seems to favor math and science projects.
• Make sure both finance and program teams review the application, as well as any partners who might need to be involved if you apply. Your program team may see a red flag that your finance team may not recognize, and vice versa.

Step 2: Establish a grant management system and team

The key to painless grant compliance is a well-organized system and clear expectations across your team. Once you receive your notice of award, establish the team who will oversee the grant and make sure your fund accounting system is ready to properly track and report on the grant activities.

• Assign a manager for this grant who will be the point person for this funding opportunity. You may have a person on staff who manages all your grants, or it might be a program manager where the funding applies. This person will make sure all deadlines are met and will be the primary point person for the funder.
• Build out your grant management team. It should include someone from your finance team, applicable program staff, and any external partners. Establish regular and transparent communication so everyone understands their role and the requirements involved. Set up meetings and preferred collaboration channels, such as all updates are submitted through email and all documents are added to the grant record in your fund accounting system.
• Create a calendar of events, either in your regular calendaring system like Outlook or in a project management system like Asana. Add all the external deadlines, such as reporting, to that calendar as well as internal check-ins and report draft due dates.
• Set up the grant or contract project in your fund accounting system so you know where the funds are, and expenses can easily be tracked as they arrive. If possible, build out reports based on the requirements of the funder so it's only a matter of running the report when the deadline approaches.
• Create a clear budget for the grant. You probably drafted one as part of the application process, but now is the time to fine-tune and get specific. This includes understanding the indirect costs allowed for this grant. As of October 2024, the standard de minimis rate for government grants and contracts is 15%.

 Step 3: Implement the grant activities and deliverables

This is the fun part where you get to spend the money. Build the program. Hire the new staff member. Expand your services. Just keep one eye on the requirements documentation and make sure all expenses and outcomes are accurately tracked.

• Do an early audit of expenses to make sure receipts, invoices, timesheets, and contracts are being submitted, tagged, and stored appropriately. Address any issues or confusion you find early to make sure your monthly and final reporting is as accurate as possible.
• Set up regular reports and share them during your grant team meeting so everyone understands what's been spent, how much is left to spend, and what you are accomplishing with the grant funds. Provide view-only access to non-finance members so they can see progress in between meetings.
• Communicate any deviations from the original plan with the funder. For example, you earned a grant to fund a new technology upskilling course for underemployed members of your community. Since you applied, a major clean energy company announced an expansion to your area, and you want to shift your course to focus on wind and solar technology. Check in with your funder to make sure that the shift still fits within the scope of the grant.

The right fund accounting software will make it easy to streamline your tracking and reporting. You can set up a dashboard to put each grant front and center so you can see at a glance what's been spent and where you stand.

 Step 4: Report and communicate the grant results and outcomes

This is where all your organization, diligence, and communication pay off. The final step of grant compliance is reporting and communicating the grant results and outcomes to the funding agency and other stakeholders. You will likely have monthly or quarterly progress reports throughout the program as well as final reports and audits. Outside of your reporting to your funder, this is also an opportunity to share the outcomes with your broader community.

• Use any templates or formatting requirements provided by the funding agency. You don't want a delay in final payment or reimbursement denied because your financial statements didn't have the correct columns.
• Meet your deadlines. Be transparent with your funder if you think you might have a delay because invoices are still coming in or you are still processing outcomes. They may provide an extension, or they may request you file your reports with the data you have.
• Use clear and compelling language in your reports and create engaging visuals that tell the story of your program. Highlight the positive outcomes and any learnings you found along the way.
• Respond quickly to any funder feedback or questions. You'll want to continue to build rapport with the agency so you can apply for future grants or contracts the come up.

Set Your Organization Up for Future Funding Success with a Grant Compliance Checklist

Earning and managing your first government grant or contract is always the hardest. But once you have a successful process in place, both with your team and your fund accounting software, you can approach other funding agencies and grant opportunities with confidence.

Are you looking to apply for your first government grant or contract and want to make sure you have the best fund accounting system in place? Or are you using spreadsheets to manage your government grants and contracts, causing more problems than you're solving? Learn how Blackbaud Financial Edge NXT can help you streamline your grant and contract management in a system designed for nonprofit organizations. 

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