Being awarded a grant isn’t just a question of asking for and receiving free money.There is a multistepprocess involved in applying for, winning and managing funding while complying withcontractual terms — andaccounting regulations — until the money is spent and the grant is closed out. Thesteps in this grantmanagement life cycle fall into three phases: pre-award, award and post-award. The recipientand awarding agencyhave unique roles to play during each phase, but the durations of the individual phases varydepending on the typeand amount of the funding and the characteristics of the project.
What Is the Grant Management Life Cycle?
The grant management life cycle covers the complete end-to-end processes of managing grants— everything fromsearching for funding opportunities to closing out a grant upon completion of a project.Each of the three stages ofthe life cycle requires recipients to complete multiple steps before moving on to the nextstage.
Meticulous recordkeeping and adherence to the terms of the grant, as well as to GenerallyAcceptedAccounting Principles (GAAP), are absolutely critical for successful completion ofthe grant management lifecycle— especially for nonprofits, which typically fund their operations with multiplegrant awards frommultiple sources. Additionally, having an automated system, such as a customer relationship management (CRM) solution, isimportant for suchorganizations to make sure they meet deadlines, correctly allocate expenses to the rightgrants and handle reportingin a timely and compliant manner. In fact, some CRM systems are tailored to the needs ofnonprofit organizations inthe form of constituent relationship management.
Key Takeaways
- The grant management life cycle consists of three phases: pre-award, award andpost-award. Each phase consistsof multiple steps that must be completed before a grant is closed out.
- Careful recordkeeping and attention to detail are required for nonprofits to staycompliant with eachgrant’s unique terms and conditions, as well as Generally Acceptable AccountingPrinciples (GAAP).
- Using a software system to help automate the tracking and reporting aspects of the grantmanagement life cycleis critical to success once a nonprofit organization is managing more than one grantsimultaneously.
- Nonprofit-awarded grantees should look upon their grantors as collaborative partners anduse every step in thegrant management life cycle as an opportunity to learn and improve upon the relationshipand outcomes.
Grant Management Life Cycle Explained
The grant management life cycle is the end-to-end process of managing a grant, from the timean organizationidentifies a grant opportunity until the funded project or activity is concluded and all thefunds are accountedfor. Although different organizations might employ slightly different versions of the grantmanagement life cycle, atypical life cycle includes the following three stages:
- Pre-award phase: This initial phase is all about a nonprofit’sresearching grant opportunitiesand planning and preparing its proposals and completing applications.
- Award phase: If, after review, a grantor accepts an application, anynegotiations about money orterms are concluded and the grantor formally awards the funding to the grantee.
- Post-award phase: This final stage centers on the implementation of theproject, along with all themonitoring, reporting, evaluating and closeout processes.
Both public and private grants are available. Public grants are administered by governmentalbodies or agencies. Themoney comes from tax revenues or other public funds, and their disbursem*nt is to supportactivities that arealigned with government policies or that further specific public objectives. Private grantsare offered by privateorganizations, many of them funded by wealthy individuals or families, although they canalso be crowdsourced;collected through the fundraising initiatives of special-interest societies, charities orgroups; or provided bycorporations. According to the National Philanthropic Trust, in 2022, individual Americansdonated $499 billion,while corporate giving hit $21 billion and foundation giving rose to $105.21 billion. Bothpublic and private grantsprovide financial support for educational initiatives, medical research, public worksprojects, the arts and othercauses. Most grants are competitive — that is, multiple applicants are seeking thefunds being offered. Onaverage, grantors accept only about one in every 10 grant proposals.
Pre-award Phase
The pre-award phase of the grant management life cycle is not as straightforward as it mightseem at first glance.The nonprofit organizations that get the most out of their awards — and are typicallyawarded the most funding— carefully research and plan their projects in advance and make sure their objectivesalign with those of thegrantor.
Definition
Nonprofit organizations in the pre-award phase identify potential grant opportunities thatfit their mission andgoals, develop proposals and submit their applications to the relevant funding bodies.
Steps Involved
The pre-award phase involves the following steps:
- Do preliminary planning: Nonprofits must take the time to carefullyplan and perform duediligence to determine their fundraising needs and assess whether they have enoughinternal resources toproperly manage grants. Once this is complete, nonprofits are properly prepared to seekspecific grants that fittheir revenue gaps. Some key questions for a nonprofit to consider at the pre-awardphase include:
- Do we have a clear funding objective?
- Do we know the revenue projections?
- How many volunteers do we have on staff?
- Will this funding help us succeed in our missions?
- Research grant opportunities to identify potential matches: The nextstep in the pre-awardphase is to identify opportunities that align with the nonprofit organization’smission, goals andcapabilities. It’s important that nonprofit organizations vet these opportunitiescarefully to understandthe grantors’ goals, requirements and criteria so they don’t waste theirtime applying for grantsthey’re not eligible for or that don’t meet their needs. For governmentgrants, nonprofits shouldstart with the Grants.gov search tool to identify opportunities.
- Develop a proposal: Once an opportunity has been identified, anonprofit then creates a grantproposal. This usually involves outlining the proposed project or program, detailing theexpected outcomes,providing a proposed budget and showing how the project aligns with the grantor'srequirements and objectives.This process can take weeks. For many government grants, businesses and individuals mustfirst register withGrants.gov. Applicants should also carefully check the funding opportunity descriptionfor additionalregistration requirements specified by the grant-making organization. For example, somemight requireregistering on the System for Award Management or eRA Commons websites.
- If, as is typical for most nonprofits, the organization is using the sameproject proposal for multiplegrant applications, it will need to modify the proposal to meet the specificrequirements of each grant.Because different grants have different deadlines, nonprofits should seriouslyconsider implementing asystem that keeps track of required documentation so that deadlines aren’toverlooked.
- Review and submit application: Once a proposal is complete andthoroughly reviewed, thenonprofit submits it with an application to the grantor within the specified time frame,either through awebsite or portal or by email. An application may include supporting documentation andcredentials, as requiredby the grantor.
Importance
The pre-award phase is crucial because the quality of a proposal and application determineswhether a grantor willprovide the funding. When reviewing an application, a grantor will perform a detailedassessment of the feasibilityof the project, the organization’s capacity to carry it out and how well the projectaligns with its ownmission and priorities.
Award Phase
The award phase is the briefest of the three grant management life cycle phases, and itbegins when a grantornotifies the nonprofit organization that it has been awarded a grant.
Definition
The award phase starts with the funding organization’s reviewing applications andinforming applicants whetheror not they have been awarded a grant. The grantor then begins working with the awardrecipients to go over thelegalities of the funding agreement and to negotiate any fine points. After accepting theaward with a legallybinding contract, a grantee receives the funds and can embark on the project.
Steps Involved
The award phase involves the following steps:
- Get notified of award/non-award: After reviewing all applications, thegrantor decides whetheranaward will be made, and to whom. The grantor notifies all successful applicants withwhat federal governmentagencies call a Notice of Award. Nonprofit organizations that are denied are alsonotified, and typically thegrantor will provide specific details that led to its decision so that organizations canlearn from each failedgrant application and apply those lessons next time around.
- Review the grant offer: Nonprofits should carefully review grant offersor award lettersreceivedfrom funding organizations. These documents outline the details of the grant, includingthe funding amount,duration, terms and any specific conditions or requirements.
- Negotiate details as necessary: If a proposal is successful, there maybe some negotiationaroundthe terms and conditions of the grant. Some grants may have fixed terms and conditionsthat are non-negotiable,while others may allow for more flexibility. For example, a nonprofit organization maywant to clarify anybudgetaryrestrictions, the expected outcomes or milestones of the project or how thegrant’s effectiveness will beevaluated. This step should be considered as a critical planning opportunity, where anonprofit workscollaboratively with the grantor to nail down the details of the project, adjust thetimeline and lay outpreciselyhow tracking and reporting will work.
- Accept the grant: Successful applicants are typically required toformally accept the grant,usuallyin writing with a signed acceptance letter that commits them to fulfilling the terms andconditions of thefunding.
- Receive funds: Finally, the funds are dispersed, either all at once orin stages based upontermsand conditions. One mistake that nonprofits often make is to put all the funds into asingle bank account.Frequently, grant funds are earmarked for certain uses only — for example, topurchase supplies or pay thesalary of a consultant. Organizations should be careful to separate such funds intospecial accounts. Failure todoso can cause problems if an audit is performed.
Importance
While actually being awarded a grant is important, the ancillary activities that make up theaward phase are equallyso. They set the stage for a successful collaborative partnership between the grantee andgrantor and establish afoundation for what will be accomplished, in what time frame and using which successmetrics.
Post-award Phase
The moment a nonprofit is notified that it has won a grant can be very exciting. But the hardwork has just begun.Now comes the time to put the proposal into action and hopefully prove that theorganization’s vision is onethat will result in the desired — and measurable — outcomes.
Definition
The post-award phase begins when a nonprofit starts to expend its awarded funds to achievethe outcomes of the grant.From this point forward, the nonprofit is responsible for meeting the administrative,financial and programmaticreporting requirements of the award. This phase involves continuous monitoring of projectactivities and ends whenthe money is accounted for and closeout activities are completed. It, therefore, requiresrobust administrationguardrails, transparent and frequent communication, a dedication to compliance andmeticulous recordkeeping.
Steps Involved
The post-award phase involves the following steps:
- Implement and manage: This step involves starting the project orprogram outlined in theproposal,managing the budget and ensuring that the project is delivered as specified in theagreed-upon plan. If indoubt, anonprofit should return to the proposal and final negotiated terms and conditions tostay on course. Keepflexible,however. Even the best-laid plans don’t always work out. Things inevitably changeover the course of aproject, especially as an organization acquires more knowledge and information. But beprepared to explaindivergences from your original plan to the grantor’s representative who isoverseeing compliance.
- Monitor and report: Grantors usually require regular updates andprogress reports. Thisincludesfinancial reports and updates on the project’s outcomes relative to theexpectations raised by theproposal,such as progress toward goals, important milestones completed and adherence to budgets.Grantors might evenperformon-site visits with project managers and implementation staff. Nonprofit granteestypically compile two types ofreports for the funding organization: financial reports and programmatic reports. Theseprovide informationaboutboth the overall financial status and program performance of the project. Recipientsmust also respond to anyrequests for audits. Many nonprofits turn to automated tools to generate simple andconfigurable compliancereporting for executive leadership, board members, external auditors and accountingteams.
- Undergo evaluations: At the end of a project, the grantor will conductan evaluation todetermineits impact and effectiveness. This is also a chance for a nonprofit to learn and improvefuture proposals andprojects.
- Close out the project: This step involves wrapping up all projectactivities, includingfinancialreconciliation, final reports to the grantor and ensuring that all the requirements ofthe grant have been met.Nonprofits usually share final numbers, challenges and wins, best practices and othertakeaways with thegrantor.This is where all the careful tracking and recordkeeping pay off.
- Follow up and continue to manage the relationship: After grants havebeen closed out, nonprofitorganizations should take care to maintain connections with their grantors. Theseefforts could include sendingregular updates on the lasting impact of the project; sharing media exposure the projectearned; acknowledgingthegrantor’s part in the success of a project in press releases, interviews or otherpublic communications;andkeeping the relationship strong for potential future references or fundingopportunities.
Importance
This post-award phase is where the bulk of the work on a funded project gets done.It’s also the longestphase, not uncommonly lasting for years. Meticulous recordkeeping and reporting help anonprofit prove to itsgranting organization that it is fulfilling the terms and conditions of the contract, andanalyses of reports anddata are extraordinarily helpful in improving an organization’s finances, operationsand ability to win moregrants in the future.
Manage Your Grant Life Cycle in NetSuite
When a nonprofit organization is managing only one grant, it’s possible to use aspreadsheet or chart tomanually track money spent and to meet deadlines and generate reports. But as anorganization grows and begins towin multiple grants — each with its own terms and conditions — it shouldconsider implementing softwareto help automate the grant-management life cycle.
NetSuite’sSocial Impact program provides a suite of cloud software built for nonprofits of allsizes to improveoperations and grow their mission. Features include financial management, accounting,reporting, financialsegmentation, key performance indicators (KPIs), program tracking and CRM,known in the nonprofit arena as constituent relationshipmanagement. NetSuite Nonprofit maintains all relevant grant milestones so that vitalinformation is in a single,unified system. The solution helps nonprofit organizations streamline all three phases ofthe grant management lifecycle, eliminating manual work and facilitating cross-functional collaboration andvisibility.
The grant management life cycle is complex. From searching for and identifying fundingopportunities to staying ontop of expenses, budgets and reporting requirements, doing it manually using Excelspreadsheets or paper forms isnot the best use of a nonprofit management’s time. With the help of specializedsoftware tools, nonprofits canautomate and streamline many of the tasks involved in all three phases of the grantmanagement life cycle, fromplanning to final closeout, affording management more time to work strategically to furthertheirorganizations’ mission and goals.
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Grant Management Life Cycle FAQs
What are critical steps in the grant management process?
There are three phases to the grant management life cycle process: pre-award, award andpost-award. Each of thesephases contains multiple steps, beginning with a nonprofit’s examining its needs andresearching fundingopportunities, and ending with closing out a grant once the funded project is complete orthe money has been spent.
What are the key components of grant management?
The seven key components of effective grant life cycle management are identifying andassessing grant opportunities,developing a proposal, performing contract management, managing and reporting on finances,implementing andmonitoring program operations, ensuring compliance, and managing relationships.
How can technology help with the grant management life cycle?
By leveraging technology, nonprofit organizations can streamline and automate administrativeprocesses, enhancecollaboration and communication, improve financial management and compliance and optimizetheir grant managementefforts.
Why is it important to understand the grant management lifecycle?
Understanding the grant management life cycle enables nonprofits to effectively navigate theentire grant process,from identifying opportunities to closeout. By understanding each phase, nonprofits canidentify suitableopportunities, develop strong proposals, implement projects in alignment with grantrequirements and ensurecompliance and accountability. This knowledge enables nonprofits to maximize their chancesof securing funding,efficiently manage grant money and demonstrate impact to grantors.
What are four tips for responsible grant management?
First, establish clear communication channels with the grantor and maintain regular contactthroughout the grantperiod to ensure alignment, address concerns and provide timely updates. Next, develop arobust system for financialtracking and reporting to ensure accurate and transparent use of grant funds, timelysubmission of financial reportsand adherence to budgetary guidelines. Then, maintain meticulous documentation of allgrant-related activities,including project milestones, expenses and outcomes, to support compliance, auditing andfuture reportingrequirements. And finally, foster a culture of continuous learning and improvement byregularly evaluating the grantmanagement process, identifying lessons learned and implementing necessary adjustments toenhance future grantseeking and management efforts.
