A Guide to Grant Management Systems for Nonprofits

Winning a grant can feel like a major victory, but the real work begins after the award letter arrives. For nonprofits, managing multiple grants from different funders brings a level of complexity that demands more than good intentions and spreadsheets. Grantors expect accuracy. Auditors expect transparency. Your team needs tools that make it all possible without eating up valuable time and resources.

Grant management systems can play a critical role in helping your organization stay on top of financial responsibilities tied to grant funding. They make it easier to track expenses, document compliance and provide the detailed reports your funders require. More importantly, they help your nonprofit stay focused on what matters most: delivering programs that make an impact in the communities you serve.

In this guide, we’ll explore what to look for in a grant management system, how the right tools support accountability, and why investing in these systems can protect your funding and reputation.

Why robust grant management matters for growing nonprofits

These days, funders are doing more than handing out checks. They’re watching how their funds are used and requiring detailed, often highly specific reporting.

If your organization has expanded its funding base, you may already be feeling the pressure. Without a system designed to support grant-specific tracking, reporting deadlines become stressful and manual processes introduce risks. It only takes one reporting error or missing document to jeopardize future funding or attract regulatory scrutiny.

With tight budgets and staffing, it can be a struggle  to track direct costs tied to specific grants. Adopting a system that pools indirect costs and applies your chosen allocation method across grants consistently can improve grant tracking significantly.

Beyond internal efficiency, robust systems are also essential for producing accurate and timely reports. Whether your funders require quarterly statements or reimbursement-based invoicing, you need to be able to produce reports that align exactly with each grantor’s requirements. That level of clarity builds trust and increases your chances of winning future funding.

For organizations filing IRS Form 990, clear segregation of restricted and unrestricted funds is essential. Grant management systems that support this kind of precision can reduce audit risk and support a stronger financial narrative for donors and board members alike.

Key features nonprofits need in a grant management system

The right grant management system should not only help you stay compliant but also support smarter decision-making across your organization. For nonprofits managing complex program portfolios and high volumes of restricted funding, certain features are especially important.

Start with the ability to segregate direct costs by grant. This means your system should allow you to tag every expense to its corresponding funding source. Whether it’s staff time, supplies or travel, the goal is to ensure each cost is linked to the correct grant and properly documented for reporting.

Indirect costs require just as much attention. Look for a system that enables you to pool these costs and apply them across grants using your nonprofit’s approved allocation method. Whether you use a simplified allocation or a negotiated indirect cost rate agreement (NICRA), your system must be flexible enough to support your chosen approach.

You should also be able to track revenue and receivables specific to each grant. This includes recording when funds are awarded, when invoices are sent and when payments are received. Having this visibility helps ensure no funding slips through the cracks and allows you to manage cash flow more effectively.

Another essential feature is invoice generation. If your grantors require reimbursement-based billing, your system should allow you to produce clean, accurate invoices that align with the grant’s approved budget. This can significantly reduce the time your finance team spends building invoices manually and cut down on rejected submissions.

We help our nonprofit clients navigate these issues every day. Through our Business Advisory services, we evaluate your funding mix, assess your reporting needs and recommend solutions that align with your operational realities. The right system can turn grant management into a strength instead of a stressor.

Custom reporting tools that meet grantor expectations

Strong reporting is more than a funder requirement. It’s also how you demonstrate accountability, manage performance and guide internal decision-making. For nonprofits that rely on restricted funding, the ability to generate customized, accurate and timely reports is non-negotiable.

Your grant management system should provide detailed reporting by grant, program, department and time period. It should also allow for comparisons between budgeted and actual expenses, helping you identify variances and adjust as needed. This not only supports compliance but also improves planning and forecasting.

Many funders have unique reporting templates or formats. A good system gives you the flexibility to generate reports that align with those formats, whether you’re preparing a quarterly financial statement, a program impact summary or an invoice for reimbursement.

Systems should also distinguish between restricted and unrestricted revenue, giving you a clear picture of how funds are being used. This is crucial for board reporting, annual audits and grant renewals. The ability to filter data by funding source, activity or grant period allows for more precise communication with stakeholders.

In our experience, funders are more likely to continue supporting organizations that demonstrate both accountability and efficiency in managing their grants. Customized reporting helps you meet that standard and builds trust with the people who support your mission.

These features do more than keep your funders happy. They help your leadership team make data-driven decisions, monitor financial health and respond quickly when adjustments are needed. Nonprofits that use reporting strategically are better positioned to grow, adapt and win new grants.

Invoice generation and receivables tracking: a must-have for financial clarity

Grants are often structured as reimbursement-based funding (also known as cost reimbursement funding), which means you must spend the money first and then request payment. If your nonprofit lacks the ability to generate accurate and timely invoices, delays and errors can interfere with both operations and compliance.

A grant management system should give you the tools to create invoices that directly tie to allowable grant expenses. Ideally, you should be able to pull financial data (including payroll, direct costs and allocated indirect expenses) into a formatted invoice ready for submission. This saves time and ensures that the amounts invoiced reflect actual activity recorded in your books.

Invoicing capabilities also allow your team to document when and how invoices are submitted. That visibility helps you track payment status and follow up when receivables become overdue. For nonprofits managing large grants or multiple contracts at once, this function is vital to keeping cash flow steady and avoiding disruption to program delivery.

In addition to issuing invoices, your system should support full receivables tracking so you can monitor which payments have been received, what remains outstanding and whether any adjustments or corrections are required. By capturing this information within your grant management tool, you can easily reconcile payments with program activity and produce accurate financial statements.

James Moore has helped numerous nonprofit organizations connect invoicing and receivables functions directly with their accounting systems for greater accuracy and efficiency. This approach reduces manual entry and improves accuracy across the board. If your current process involves multiple spreadsheets and separate billing logs, it may be time to consider a more integrated solution.

Choosing the right system: Evaluating solutions for mid-to-large nonprofits

With dozens of grant management platforms available, finding the right fit for your nonprofit begins with a clear understanding of your internal workflows, grant volume, staffing and reporting obligations. The best systems align with your structure and allow your team to operate more efficiently without creating new headaches.

For mid-sized to larger organizations, scalability is key. You need a platform that can handle a growing number of funding sources, complex cost allocations and user access levels across departments or program teams. Role-based access helps protect sensitive financial data while allowing program staff to enter the information needed for timely reporting.

Integration is also critical. Your grant management system should work well with your accounting software, payroll platform and donor database. This reduces duplication, cuts down on errors and saves staff time. Look for options that support automation between systems or offer native integrations with popular nonprofit tools.

Support and training matter too. Whether your team is fully staffed or operating with lean resources, having access to vendor support and professional training can make a big difference in how effectively the system is used. During implementation, it’s helpful to work with an advisor like James Moore who understands the technical side of accounting and the operational side of nonprofit finance.

Finally, consider audit readiness. A well-designed system makes it easy to locate supporting documents, tie costs back to funding sources, and generate reports requested by grantors or auditors. For federal grants, this includes compliance with Uniform Guidance under 2 CFR Part 200. To stay ahead of these requirements, you may find helpful guidance from the Government Accountability Office or the American Institute of CPAs, both of which provide tools and resources for audit preparedness.

Ready to improve your grant reporting process?

Financial complexity is common in nonprofit work, which is why many organizations turn to our team for practical, tailored grant reporting solutions. We bring tax, audit and advisory insight to help align your grant management tools with the realities of your operational and compliance environment. Our team can help you evaluate solutions, implement best practices and improve both your compliance posture and your day-to-day efficiency.

Contact a James Moore professional to learn how our nonprofit specialists can support your goals. Together, we’ll find a solution that fits your organization’s structure, supports your reporting needs and protects your funding relationships.

 

 

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.