Grant Management Best Practices for Nonprofits

You just opened the email. Your grant application was approved. The initial excitement hits, followed immediately by a question that keeps many nonprofit leaders awake at night: How will we manage this properly?

Grant funding powers critical work across the nonprofit sector, but managing these funds requires more than good intentions. Each grant arrives with its own rulebook, reporting deadlines and compliance requirements that demand careful attention from the moment the award letter arrives.

Why Grant Management Matters

The consequences of mismanaged grants extend beyond immediate financial concerns. Your nonprofit’s ability to serve your community depends on maintaining strong relationships with funding sources. One compliance failure can ripple through your organization for years, affecting everything from staff morale to program sustainability.

Proper grant management protects your organization’s reputation and future funding opportunities. When you handle grant funds correctly, you build trust with funders who are more likely to renew awards and recommend your organization to other grantmakers. Poor management, however, can lead to audits, financial penalties and closed doors for future funding.

Build Your Foundation With Internal Controls

Strong internal controls form the backbone of effective grant management. These systems help prevent errors and fraud while ensuring funds flow to their intended purposes.

Start by separating financial duties among multiple people. One person should not handle every step of a transaction from authorization to payment to reconciliation. This separation creates natural checkpoints that catch mistakes before they become problems.

Document every financial policy in writing. Your procedures should cover how you receive funds, approve expenses, process payments and track spending against grant budgets. Written policies eliminate confusion about who does what and create consistency as staff members change over time.

Implement a time-tracking system for employees working on grant-funded projects. Many grants require detailed records showing how staff time aligns with project activities. Accurate timesheets also help with cost allocation when employees work across multiple grants or programs.

Understanding Compliance Requirements

Federal grants operate under , which establishes standards for managing federal awards. These regulations cover allowable activities, cost principles and the specific timeframes during which you can spend grant funds.

The period of performance defines when grant funds can be used. Costs incurred outside this window are generally not allowable unless your funding agency provides specific approval. Organizations must also liquidate costs within 120 calendar days after the grant period ends.

Audit requirements have changed recently. As of October of 2024, nonprofits that expend $1 million or more in federal awards during their fiscal year must undergo a single audit. This threshold increased from the previous $750,000 requirement that was in place earlier in 2024.

Restricted funds require particular attention. When a funder designates money for specific purposes, you must track those dollars separately from unrestricted revenue. Mixing restricted and unrestricted funds or spending restricted dollars on unrelated expenses violates grant terms and can trigger repayment demands.

Create Your Post-Award Management System

The real work begins after you receive grant funds. Effective post-award management requires coordination across your entire organization, not just your finance team.

Schedule a project kickoff meeting within the first week of receiving your award. Bring together everyone who will touch the grant, including program staff, finance personnel and development team members. Review the grant agreement together, highlighting key requirements, reporting deadlines and budget restrictions.

Develop a shared calendar that tracks all grant-related deadlines. Include interim report dates, final report submission dates, spending deadlines and any required check-ins with the funder. Make this calendar accessible to everyone involved in grant management so critical dates don’t slip through the cracks.

Monitor your spending regularly by comparing actual expenses against your approved budget. Monthly reviews help you spot problems early when you still have time to make adjustments. If you notice spending patterns that don’t align with your original projections, investigate immediately rather than waiting until the next reporting period.

Manage Multiple Grants Simultaneously

Most nonprofits juggle several grants at once, each with different requirements and timelines. This complexity demands organization and systems that scale.

Create a master tracking document that lists every active grant with its key details: funder name, award amount, start and end dates, reporting requirements and primary staff contact. Update this document whenever you receive new awards or close out completed grants.

Assign a grant manager or coordinator who serves as the central point of contact for all grant-related questions. This person should understand each grant’s requirements and help program staff navigate compliance issues as they arise. Even small organizations benefit from designating one person to oversee grant coordination, even if it’s not their full-time role.

Maintain organized files for each grant that include the original application, award letter, budget, correspondence with the funder and all financial records. Digital storage systems work well for this purpose, allowing multiple team members to access documents when needed while maintaining proper security controls.

Reporting That Builds Relationships

Grant reporting goes beyond checking a compliance box. Well-crafted reports demonstrate your organization’s impact and strengthen funder relationships.

Start preparing reports early rather than scrambling at the deadline. Collect stories and data throughout the grant period so you have compelling content ready when reporting time arrives. Program staff should document client outcomes, success stories and challenges as they happen, not months later when details have faded.

Financial reports must reconcile perfectly with your accounting records. Review every line item before submission to ensure accuracy. Errors in financial reporting damage your credibility and can trigger additional scrutiny from funders.

Be honest about challenges in your narrative reports. Funders appreciate transparency when you explain obstacles encountered and how you addressed them. This honesty builds trust and often leads to helpful feedback that improves future projects.

Technology Tools That Support Success

Grant management software reduces administrative burden and improves accuracy. These systems track multiple grants simultaneously, flag upcoming deadlines and generate reports that satisfy funder requirements.

Choose software that integrates with your existing accounting system rather than creating another data silo. Integration eliminates duplicate data entry and ensures your grant tracking reflects actual financial activity in real time.

Look for features that support collaboration among team members. Cloud-based systems allow program staff to enter activity data while finance staff track expenses, with everyone working from the same information.

Automated alerts help you stay ahead of deadlines. Configure your system to send reminders 30 days, two weeks and one week before reports are due. These gentle nudges prevent last-minute rushes that lead to errors.

Partner for Grant Management Success

Grant management requires specialized knowledge of accounting principles, compliance requirements and nonprofit operations. Organizations that lack in-house expertise or staff capacity often benefit from partnering with professionals who understand the unique challenges nonprofits face.

Experienced nonprofit accountants can help you establish proper internal controls, track restricted funds correctly and prepare reports that meet funder expectations. They bring industry-specific knowledge about what auditors look for and how to structure your systems for long-term success.

When you’re ready to strengthen your grant management processes, professional support can help you build the foundation your organization needs to secure funding and serve your mission effectively. Contact a James Moore professional to discuss how we can support your nonprofit’s financial management needs.

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a James Moore professional. James Moore will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.