Grants management: The ultimate guide for grantmakers
Updated: December 2022
Grants management is a complicated process involving several steps before and after the distribution of funds. Fortunately, there are ways to streamline the process so that your grantmaking organization spends less time reporting, tracking applications, and seeking administrative approval and more time evaluating where your funds will make an impact.
Whether you’re looking to improve your current efforts or you’re starting a program from scratch, this guide will help you navigate grants management.
What is grants management?
Grants management refers to the steps that grantmaking organizations, such as corporations, foundations, and government agencies, must take to distribute funds. It typically involves setting strategic goals, evaluating regulations, reviewing applications, tracking finances, and awarding grants to nonprofits. When done correctly, grants management helps you build stronger relationships with grantees and support worthy causes.
6 steps to the grants management processFollow these steps to ensure your team stays on track throughout the grants management process:
As a grantmaker, your role is to develop a funding program that reflects your purpose, values, and company culture. Whether your grant focuses on funding after-school programs for at-risk youth or advancing cancer research, be sure to set pre-qualification criteria to streamline the application process. Common criteria include having a valid 501(c)(3) nonprofit status and an audit of recent financial statements. Applicants who fail to meet these standards will not be considered.
Once you’ve narrowed the focus of your program, formally announce the funding opportunity by sending marketing materials to applicant communities and inviting proposals that fit your criteria.
Completing an application can take some grantseekers months to complete. To streamline the process, ask for enough information to make an informed decision but refrain from overwhelming applicants with lengthy questions. However, keep in mind that the length of your application should reflect the size of your grant. For instance, a government grant worth millions should require a more thorough application than a small business grant.
As the applications start pouring in, assemble a review board to evaluate applicants and select successful grant proposals. Their determinations should be based on a scoring rubric or grading system that takes the applicant’s level of need and the feasibility of their project into account.
Once all stakeholders have approved the applications, the grant recipients will be notified of the award. As the grantmaker, you should send out an award schedule including all upcoming deadlines and information required from the grantseeker, such as insurance information, financial statements, and an updated staff directory. Once the agreement is signed by both the grantseeker and funder, the grant will be officially awarded.
During this phase, you should also reach out to the applicants who did not receive funding and store their information for recordkeeping.
In the disbursement phase, you’ll work with the award recipient to establish the legal framework for funding. These requirements could include terms about how the funds should be used and when to report back with administrative, financial, and program-related information. Once that has been completed, the grant funds are disbursed. The way that happens varies between organizations. For instance, grantmakers may choose to disburse the award in a series of payments or in one lump sum.
After you have disbursed funds to an organization, collect data based on the results of your funding, including:
- Financial data: Financial data accounts for the expenditures that were funded through your award. This helps to confirm that the funds are being used as intended.
- Compliance information: Compliance information, such as a nonprofit’s tax exemption status prevents fraud and abuse of funds.
- Impact data: Impact data is important because it shows how the funding has driven results. For instance, you might include information regarding the number of people impacted by the grant or the amount of services delivered.
By collecting this information, you can prove the effectiveness of your funds and help inform future contributions.
Grant recipients should submit regular reports, known as performance progress reports, that document expense-related data and quantitative information about the project’s impact. These reports should be given to a designated grants management officer who will assess the metrics and conduct on-site visits to the nonprofit to ensure the funds are being used as agreed upon.
For in-depth insight into these steps and actionable tips you can use within your own grants management process, download our 8 Facets of a Seamless Grantmaking Process.
Tips for improving the grantor-grantee relationship
Another important aspect of grants management is maintaining strong relations with grantees. Studies show that 48% of nonprofits feel like grantmakers don’t understand their needs, meaning your organization has to work even harder to ensure that the grantees feel valued and that your funds are being put to good use.
Follow these tips to support nonprofits through grantmaking:
- Provide resources and transfer operational knowledge to grantees so that they have the business expertise they need to make the most of your funds.
- Be up-front with applicants to let them know that a formal assessment of additional needs will be conducted after the grant is awarded. This gives nonprofits the reassurance that any additional needs they have may be considered.
- Map out a monthly budget to clarify how much your organization can afford to give and where available funds can go.
The relationship between grantseekers and grantmakers is business-oriented. In order for both sides to benefit, it’s important to understand each other’s needs and motivations.
How to find the best grants management software
Grants management software can be a gamechanger for grantmakers and grantseekers alike. Going paperless not only improves accuracy, but it also streamlines and simplifies the entire grants management process. With the right solution, you can analyze impact metrics, track pending applications, and automate disbursements all from one location.
As you begin the search for a software solution, your team should:
- Establish your needs
- Determine a realistic budget
- Prioritize ease-of-use
- Demo the options
After this process, you should have a clear winner, in which case you can happily sign on the dotted line and begin implementation. However, if you’re still having trouble deciding, reevaluate your budget and consider what the return on investment will be. Some providers that seem out of reach might offer personalized solutions that start small and grow with you and your team.
Thorough research and relationship cultivation help make the grants management process more feasible. However, remember to keep your organization’s toolkit in mind. With grants management software, the entire process of marketing, overseeing, and reporting on grants is streamlined so that you can focus on what matters most: powering social impact.
For more insight into grantmaking, grants management systems and the ways foundations and nonprofits can work together, explore the rest of these related topics: