By Peter Gamache, Ph.D. & Jackie Sue Griffin, MBA, MS, Turnaround Life, Inc.
Grant seeking is the lifeblood activity of nonprofits. As a way of providing funds to nonprofits, it’s essential that these organizations perfect their grant management processes.
It’s not a straightforward task by any means, as it involves the analysis of current grant-seeking success rate and potential new funding avenues. To make this process more efficient for nonprofits, we’ve compiled four practical ways to fiscally manage grant funding:
Have the Grant Writer Work with a Finance Professional
Securing a grant is no easy task, and many nonprofits make it harder than it needs to be by making one crucial mistake. They don’t conduct a full financial evaluation while writing the grant. The finance department and the grant writer have to work together on the proposal from the start of the project.
If not, it will be very difficult to determine the correct budget, which leads to all sorts of financial issues down the line. Reimbursable grants can further complicate matters, so always make sure the grant writer understands how the grant would impact the organization’s financial status.
Control and Manage Cash
Once your organization receives the funds, it is imperative to adhere to best practices of cash management. That means you need to track all the revenue that’s coming in, as well as outgoing funds. But cash management isn’t only about tracking — the organization has to set rules to adhere to when spending the funds.
They also have to know precisely when they’re receiving them and spending them. If an organization is well aware of the predetermined ways to distribute funds and track their spending, cash management is going to be much more comfortable.
Prepare for Regular Expenditure Reports and Tracking
Funders will want to see reports on the nonprofit’s expenditures, whether they’re in the government or the private sector. That’s why it’s essential to prepare for creating regular financial reports, and to make sure you have an accounting department handling all the tracking. Track your revenue and expenses separately for an easier time creating the reports.
Understand that There Will Be Indirect Costs
Unfortunately, indirect costs are inevitable in the grant-seeking process, and you have to be ready for them. You’ll likely have to perform audits, pay for utilities, staff training, printing, and purchase miscellaneous supplies, among other things. Some of these costs can pile up, and you may need additional funding to handle them.
Getting into financial trouble because of piled up indirect costs can be avoided with proper budget planning. Still, it is crucial for organizations to be aware of this risk, and to be ready to handle it. One of the ways to do that is to allocate the organization’s administrative budget to cover the indirect costs.
With grant funding management, nonprofits have to be aware that they’re getting into a complicated process. It’s essential to plan thoroughly, track all activities, and be financially responsible about funds.
Here at Turnaround Life, Inc., we aim to help organizations and programs that make it possible for people to turn their lives around.