It’s the end of your financial year and your board is getting together to go over your grants and funds, see how you’ve performed and look ahead to next year’s goals and budget. They’re going to want to know that the grants you’ve received have been spent appropriately and that you’re in a good position to do the same next year. But how do you make sure you’ve got the info they want in the form they need? The best way to be prepared is to have efficient and effective grant management.
What is grant management?
Grant management is a coordinated set of processes and data flows that track nonprofits’ incoming grants and how the funds received from them are spent. The best way your organization can make strong, data-driven decisions that help you meet your goals is to understand where this money is, how it’s being used, when you expect it to come in in future, and how that affects your month-to-month and year-to-year projections.
What your board will want to know
Let’s start with the questions you’re likely to be asked:
- How much of our grant allocations were spent on salaries?
- What proportion of next quarter’s cash inflows is projected to come from grants?
- How many grants are we waiting for decisions on?
Now let’s look at how you can answer these using information from your grant management system.
1. How much of our grant allocations were spent on salaries?
Your board has a legal responsibility to ensure your spending complies with any local laws and also conforms to the budgets they approved. They’re also accountable to your donors, who will expect diligence and intelligence in how their donations are spent.
If your organization budgeted staff salaries as 4% of a grant in its proposal, you should be able to tell your board clearly what percentage was actually spent on salaries and whether the spending complied with the proposal.
You can dig deeper and provide more value by reporting post-allocation spending broken down by project, account and department.
2. How many grants are we waiting for decisions on?
Nonprofit organizations rely heavily on grants — 80% of nonprofit revenue in the United States comes from government grants or contracts and fees for services, according to the Nonprofit Times.
To give your board confidence in your forecasts, and in the financial health of your organization, you should be able to tell them how many grants and how much of your total funding are scheduled to finish and when, how many proposals the organization is waiting for a decision on, and the likelihood of winning each of them.
If you’re expecting 26 donors worth $3.1 million to exit in the next year, you should have a strong forecast of how much is entering and when. If you’ve only got a 20% chance of winning the largest of 9 outstanding applications, then your board will want to know the chances and values associated with the other 8.
3. What proportion of next quarter’s cash inflows is projected to come from grants?
As cash remains the largest portion of nonprofits’ total assets, your board will want to know how much funding is coming in and out, especially in the short term.
These forecasts are important for your board to see. They need to know where money is coming from and when to understand the financial health of the organization and whether any issues are looming on the horizon.
By having grant tracking reports that you can quickly retrieve — especially ones that monitor restricted and unrestricted remaining grant balances — you’ll be able to more accurately forecast cash flow in and out and you’ll be one step closer to having your budget approved.
The bottom line
Your nonprofit’s financials and grant reports need to clearly answer questions on compliance, revenue and cash flows. The more quickly and confidently you can answer these questions, the more confidence you give your board and your donors that you’ve complied with all your legal requirements, maximized your usage of the funds allocated to you, and that you’re in a good position for the coming financial year.
If your nonprofit is looking for a solution that can quickly and easily deliver these insights, then look no further than Vena. Vena is priced at a point that is accessible for nonprofits, but without sacrificing the functionality or usability you need to do your job well. With Vena’s Excel-native templates, workflows and data modelling functions, your nonprofit will be able to spend less time pushing paper and more time doing what you’re there for — helping others.
