Managing Nonprofit Grants: 8 Tips  

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Grants are critical for your mission but carry a high burden of monitoring and accountability.  

After your nonprofit receives a grant, it’s essential to use proper tracking to note the funding conditions. Improper grant management could result in the loss of future funding or even having to return the grant money you were awarded.   

Showing you’re a good steward of granted and donated funds highlights your commitment to donors and showcases how your organization is meeting its mission.   

TIP: Read the complete guide to nonprofit financial storytelling to learn tips and tricks to telling your organization’s financial story 

These eight tips and resources are essential for nonprofits looking to improve grant management:  

1. Ensure every dollar of grant spending is fully traceable in the event of an audit 
   • From pre-audit preparation to what to do when undergoing an audit to how to learn from the results, the guide to Nonprofit Audit Fundamentals helps nonprofits ensure proper compliance.  

2. Maintain ongoing internal controls to prevent fraud and document changes to your organization’s finances 
   • Internal controls limit who accesses your organization’s financials and keep your nonprofit compliant with laws and regulations. 

3. Optimize the funds allocated to each program with budget-to-actual reporting 
   • Grants play a key part in your annual budget. Ensure your nonprofit accurately tracks its spending and updates its budget as your fiscal year continues.   

4. Compile regular financial reports to keep your board and stakeholders informed of your financial position. These reports can then be easily referenced when creating your year-end annual report.  

• Here’s a collection of resources to further guide nonprofit reporting:  
  • Grant Reporting Best Practices for Nonprofits
  • Supercharge Nonprofit Financial Reporting   
  • Must-Have Elements for EOY Reports 

5. Use specific ledger codes for each grant, including layers of codes to track nuances of the requirements 

6. Create segments to allocate grant dollars across multiple fiscal years, reflecting how your organization spends money 
   • A segmented account structure is the best way to track grants and customize reports to meet the requirements of each grantor. 

7. Report on funding according to your unique general ledger structure. Your organization’s chart of accounts should be easily customized and segmented to reflect and be able to report on each individual funding source.  

8. Municipal and federal grants are often tied to audits; substantial grants may even trigger additional audits  
   • Federal grants carry additional risk because they’re typically reimbursed rather than paid in advance, so compliance issues appear after they occur, and the government may not repay your expenditures.  
   • After receiving a federal grant, it’s crucial to track expenditures to ensure spending remains on pace and within the limits of the grant. Dedicated time to regularly checking spending or set-up a dashboard that shows real-time views of spending.  

When it comes to grants management, Humanities North Dakota needed to account for various types of funding, such as state funding, foundation grants, gifts and donations, restricted gifts, and many others. Discover how they supercharged financial grant management.

As your nonprofit grows and receives additional grant funding, staying on top of these best practices is crucial. Learn more about grant management as well as other essential nonprofit financial operations in the Go-To Nonprofit Accounting Guide.