Don’t Take Grants for Granted: Tracking Grants and Restricted Funds
Foundation support is a significant revenue stream for any nonprofit. Money from grants can fund everything from office space to new programs or initiatives. Moreover, a successful record of grant management improves your chances of gaining future financial support and increases the professional profile of your organization and its excellent work.
That said, grants do present a series of unique challenges. Researching and writing grants proposals is only half the battle. Once your organization has been given any foundation support, these funds must be carefully managed and tracked.
Unfortunately, managing grants can be an overly stressful and complicated experience for many organizations. That does not have to be the case, however.
Here are a few essential tips and resources that can make tracking grants and restricted Funds far less nerve-racking.
Foundation support is a significant revenue stream for any nonprofit. Money from grants can fund everything from office space to new programs or initiatives. Moreover, a successful record of grant management improves your chances of gaining future financial support and increases the professional profile of your organization and its excellent work.
That said, grants do present a series of unique challenges. Researching and writing grants proposals is only half the battle. Once your organization has been given any foundation support, these funds must be carefully managed and tracked.
Unfortunately, managing grants can be an overly stressful and complicated experience for many organizations. That does not have to be the case, however.
Here are a few essential tips and resources that can make tracking grants and restricted Funds far less nerve-racking.
Follow the Funder
This might seem like a simple rule, but it is imperative: Follow the financial reporting regulations or guidelines that your funding source gives you.
Different foundations will require different methods of accounting and accountability. This is especially true if your funds come from government sources.
Monitor Spending
Among the most important things to do with your grant money is monitor how it is spent. Keeping careful and detailed records of who spent how much on what is the basis of any successful grant management program.
As part of the grant application process, you were most likely asked to devise a budget for how this money would be spent. That budget should now be used to allocate those funds and organize your expense records.
Track Funds
Nonprofit financial reporting must segregate revenue into two main categories: without donor restrictions and with donor restrictions. Foundation support is typically a restricted funding source. That is, the money must be used for a specific purpose. For example, if you get a grant to buy new computer software, you cannot spend that money on new computers.
As such, you need to track restricted funds separately from unrestricted funds. A best practice is to treat your grant funds simply as if they were a “mini organization” within your non-profit. Each grant or “mini organization” will have its unique budget and financial statements.
The more specific your accounting records are, the better you will be able to track the progress of your funds, report on that progress, and ensure audit-ready transparency for your organization.
Track Progress
It is not simply enough to keep careful records of how grant money is spent. Reporting that 5,000 dollars were used to upgrade a website is not enough. It would help if you showed how that expense drives the work you do.
Foundations want to know exactly what your deliverables are and the things you were able to do or provide as a product of the grant’s support. What key organizational objectives or programs were accomplished by spending that money?
Tracking deliverables is essential to your grant management and accounting program. Such records will make it easier for you to provide the detailed reports most foundations require. Here is an excellent example of the general information you will need to track: Sample Grant Report Template.
Internal Reporting
Internally report on your progress at key intervals. Reporting results to a foundation will be much easier if you have been making useful internal reports on your restricted funds.
Though they might all use the same set of numbers, different financial reports can be tailored to the needs of your program staff, grant managers, executive director, and Board. Not all these people will need reporting on the same metrics.
References & Resources
Here are a few additional sources of information about tracking grants and restricted funds.
● What Is Fund Accounting: Guide to Proper Stewardship of Funds.
● "After You Get The Grant" - An ASPCA PowerPoint Presentation.
