For organizations that depend on the billions of dollars awarded in grant funding every year, grant management is mission critical. Oversight of the grant life cycle is also quite complex, made more difficult by the continued use of manual processes, paper forms, and ineffectual legacy systems. Resource constraints and compliance requirements add to the obstacles. But with a clear understanding of the challenges they may face — and with the integration of current AI-powered technology solutions — organizations can be well-prepared to tackle any issues that come their way.
Key Takeaways
- Grants play a vital role in the growth and operations of many organizations.
- Their management is equally as vital, but organizations face many common challenges.
- Understanding these issues, preparing for and addressing them is critical to the timely flow of grant funding.
- Some technologies, processes, and approaches, such as AI-powered constituent relationship management platforms, can help organizations overcome these typical challenges.
15 Major Grant Management Challenges
Grants are a type of financial support awarded to nonprofits, research institutions, universities and other organizations to fund their programs, operations, and growth. Grant sources include government agencies, corporations, and foundations. But managing grants across multiple internal and external stakeholders and sources can be overwhelming, particularly without dedicated, centralized resources. Limited budgets, small staffs, and the dated technology used by many nonprofits also put accurate grant accounting at risk.
Grant management, from the applicant’s perspective, refers to oversight of all phases of the grant life cycle, beginning with the pre-award research phase and ending after the post-grant closeout phase. Effective grant management involves continual communication across departments and organizations, meeting deadlines, tracking funds, creating reports, complying with specific rules and regulations, and more.
While the institutions that depend on grant funding have varied missions and structures, they tend to face similar issues when it comes to managing the grant life cycle. Understanding what these prevalent challenges are is the first step in adopting better solutions for streamlining grant management. The following covers the major challenges often faced in grant management.
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Poor Records Management
Failure to keep adequate records and documentation of spending, project progress, workers’ time sheets, correspondence among stakeholders, and much more make managing the grant life cycle significantly more difficult. Such records are critical for both internal governance, compliance with external requirements from the grant funder (also known as the grantor), and receiving reimbursement of reimbursable grants. In addition, those involved with applying for and managing grants may have their own siloed systems for filing and organizing grant documents, which can make organization-level grant management difficult, at best. In addition, many of the challenges outlined below (such as manual methods, lack of internal controls, and inefficient systems) further exacerbate the ability to maintain accurate records throughout the grant management life cycle.
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Manual Methods
Siloed, paper-based methods of grant management create significant bottlenecks in the grant management process. Those involved in grant management wind up becoming document-handlers, managing revisions, deadlines, and to-do lists by hand. This approach can lead to reporting inaccuracies, redundancies, delays, and other inefficiencies. As documentation passes from person to person, these problems (literally) pile up over time.
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Communication Issues
Grant management involves coordination among multiple stakeholders, departments, and organizations. Without clear communication and use of common communication and collaboration tools, it can be difficult to ensure that everyone is on the same page. For example, vague grant guidelines could lead to noncompliance. Failure to transparently communicate with the grantor about a possible project delay could potentially damage the relationship and put funding at risk. Suffice it to say, the ability to communicate quickly and effectively with relevant parties is essential to good grant management.
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Compliance Issues
Grants are often accompanied by a multitude of rules and requirements, set forth externally by the grantor and the government, as well as internally by the grantee. For example, the grantor might mandate monthly financial and progress reports or environmental assessments. The inability to comply with these demands exposes an organization to audits, fines, loss of funding, and other penalties. It might even prevent it from receiving future funding. Organizations with manual or siloed processes, which can lead to mistakes throughout the grant management process, risk even greater impacts from noncompliance.
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Workflow Issues
Effective grant management requires the participation and integration of multiple departments in the process — such as the development office and grant management and research staff — as well as that of the grantor. Without a centralized solution that manages workflows across these user groups and automatically routes the grant to the next responsible party, institutions will struggle to create common processes that all stakeholders can understand, access, and use.
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Inconsistent Reporting
Compiling, tracking, and reporting on grant-related data in order to comply with relevant rules and regulations is critical. Manual efforts create challenges to accurately and quickly provide these reports. The inability to provide consistent and correct reportage can lead to audits or the revocation of existing or future funding. In addition, consistency in reporting is important for grantees, who require an accurate understanding of what they have spent and what remains available so as not to overspend or miss their project goals.
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Lack of Internal Controls
Internal controls in grant management should track the way funds are received, allocated, and documented. They should also ensure that everyone involved understands their roles and responsibilities, and that checks and balances are in place. Without such controls, grant management can quickly become inefficient and error-prone, veer into noncompliance, and unwittingly open the door for fraud.
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Grant Delays
On the grantee side of the equation, grant delays can occur for a multitude of reasons. For example, organizations commonly underestimate the time involved with properly and thoroughly writing a grant proposal. Similarly, those that send an incorrect or incomplete application might have to start over if they hope to be considered for the grant. For reimbursable and some conditional grants, such as matching grants, grantees must demonstrate the ability to meet specific milestones before receiving funds from their grantors. Notably, the ability to track and report grant life cycle performance data in real time enables institutions to step in and take corrective action should problems occur.
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Lack of Expertise
Grant management requires specific skills. In many cases, the individuals in charge of the grant funds operate autonomously throughout the grant management life cycle, yet lack actual grant management expertise. Likewise, if others in administrative or financial positions are tasked with performing grant management by default, they don’t necessarily have the skill set and experiences to do so effectively. It’s important for an organization to develop subject-matter expertise in grant management or to outsource the responsibility to others who can oversee the process, thus freeing up personnel who benefit from grant funding to focus on their designated roles.
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Limited Resources
Many organizations that rely on grant funding tend to have small staffs or be understaffed, and function with limited administrative support budgets. This can result in individuals accepting grant management in addition to the responsibilities they already have, which can lead to burnout, errors, and other problems. Ideally, organizations for which grants are a significant form of funding should allocate specific personnel and budgets to most effectively manage their precious resources.
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Traceability Issues
Manual, paper-based grant management processes, as described above, impede visibility and, perhaps, accountability, as information moves across the grant management life cycle. Application status checks, compliance with grant requirements and proper budget utilization are just a few examples of activities that need to be traceable and transparent. Traceability is also central to both risk management and accurate reporting. Detailed recordkeeping, communication tools, and centralized software are key components to maintaining traceability.
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Inefficient Systems
Speaking of software, having AI-powered tools and processes for grant management goes a long way toward increasing efficiency, reducing errors, enabling accurate reporting, improving compliance, and increasing traceability. Automation and AI agents are also a productivity boon in that it allows grantees to remain focused on their projects. However, many organizations continue to work with legacy software — which may not be up to the task of digital grant management — or worse, utilize no advantageous software solutions at all.
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Inadequate Planning
Because grant management is such a wide-ranging effort involving the coordination of multiple stakeholders over progressive phases, planning is essential from the very start. Which grants are worth pursuing? Who will manage the process? How much funding do we need? How will the money be allocated? Those are but a few questions an organization needs to be able to answer ahead of time. Those that fail to plan for all phases of grant management are likely to suffer inefficiencies, increased administrative costs, delays, and noncompliance.
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Measuring and Communicating Impact
The quantity and quality of a nonprofit’s impact are key metrics needed for everything from annual reports to internal accounting to stakeholder outreach. Accuracy, though, can be a challenge, particularly for small teams that may not have clearly defined metrics in place. When nonprofits are assessing items such as community impact, proving causality can be difficult, which puts greater pressure upstream to accurately identify and define metrics. Communicating that impact can be complex even with those in place, as different stakeholders may use different metrics, especially if appeasing them ties directly into receiving funds.
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Budget Management
Large corporations have the benefit of running accounting through large established systems, known revenue streams, and established supply chains and expenses. Nonprofits do not, even if they’ve been in a community for years. This starts with revenue, which can come in fits and spurts due to grants, donations, and fundraising. On top of that, nonprofits have to deal with accounting specifics that for-profits don't deal with, such as industry rules for grant accounting and required donor restrictions for usage. Finally, nonprofits may not have the resources available to implement and use nonprofit-specific accounting software that can simplify budget management.
Overcoming Grant Management Challenges
Addressing these common grant management challenges is critical to ensuring that the process goes smoothly. Investing in common, streamlined approaches and appropriate technologies can enable organizations to increase grant approval rates, better manage funding, and continue to grow. The following are several best practices institutions can take to prevent or address the issues laid out above:
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Develop a Grant Management Plan
An essential first step in overcoming grant management challenges is deciding on the best grant management process. Process mapping is one useful approach to use to visualize the grant management workflow end to end, looking for opportunities to increase efficiency, transparency, and accuracy. Documenting these processes as part of an overall grant management plan, establishing a clear understanding among all relevant stakeholders, and developing a thorough checklist lays the groundwork for addressing common grant management issues.
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Use Technology to Streamline Processes
With a clear plan and process map in place, it becomes easier to identify tools that can streamline and centralize grant management. With the right technology, organizations can automate much of the grant management process. Robust, AI-powered tools can increase efficiency and visibility into the grant life cycle by tracking terms and conditions, time and expenses, and milestones reached across the duration of the grant, whether it’s a few weeks or a few years. Implementing a single system ensures that everyone has access to common information. Integration with other critical business tools, such as accounting software and customer relationship management software, makes the technology even more powerful. When integrated throughout the organization, nonprofits experience fewer errors, simplified reporting and more responsible stewardship of grant funding.
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Invest in Staff Training and Professional Development
Many grantees find it valuable to appoint a grant manager, who “owns” the end-to-end grant management life cycle to ensure effective compliance, recordkeeping and reporting. Even organizations that do not designate a person or team for grant management will benefit from offering grant management and technology training to all stakeholders involved in the grant management process.
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Build Strong Relationships With Funders
Despite much emphasis on the accounting and data tracking involved, successful grant management needs more than effective administration. Organizations with high grant approval rates make it a priority to build relationships with their funders. Researching the funder, the grant opportunity, and the application process is a start, but those seeking to up their grant management game go the extra mile. In a competitive grant funding marketplace, they learn, for example, about the funders’ priorities, highlighting the ways in which their organization’s mission aligns with the funders’ goals and treating contacts from funding organizations with respect and gratitude.
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Foster Effective Communication and Collaboration
Grants involve multiple internal and external stakeholders, including grantors, grantees, partners, beneficiaries, evaluators, and administrators. Fostering effective collaboration and communication across all parties is critical, not only for proper grant management but to achieve the goals of funded projects. Steps to take to improve communication and collaboration include defining roles and responsibilities, being clear about expectations, using common technologies (for communication, collaboration and data sharing), proactively managing conflict, communicating at a regular cadence, and gathering lessons learned to improve the process over time.
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Standardize Internal Procedures and Practices
Nonprofits are often strapped for time and resources, and one of the simplest ways to mitigate that is by standardizing internal procedures and practices. This may require extra effort up front, as processes across the organization may have grown haphazardly on an individual level over the years. However, creating standards for processes and practices establishes a foundation for both growth and efficiency. Standardized and repeatable processes for tasks such as generating reports and marketing outreach allow them to scale as needed, or even propagate across the organization as the foundation for other tasks. Standardization also makes it easier to introduce AI-powered automation, as repeatable workflows will likely have steps that can benefit from AI’s capabilities.
How Does Software Help Minimize Grant Management Challenges?
Grant management inherently comes with a number of challenges, from application logistics to post-grant usage requirements. With so many steps relying on so many external factors, overwhelmed nonprofits can easily fall behind or lose track. Fortunately, software tools offer a path to centralize, even automate different elements of the process. For the application process, grant management software can help organizations handle tasks such as eligibility screening, workflow review, and disbursement tracking. To help prepare related documents for the application process, nonprofit constituent relationship management platforms provide transparency while connecting data regarding funders, stakeholders, and beneficiaries. On a more granular level, nonprofit accounting software can intake, categorize, and track finances related to grants, as well as generate reports and audit finances. Current tools for each of these often come with AI features that automate repeatable tasks, or even proactively monitor for compliance issues and other potential headaches.
Solve Your Grant Management Challenges With NetSuite
AI-powered tools can improve grant management at a number of levels. NetSuite provides a suite of nonprofit cloud software built especially for nonprofits of all sizes to improve their operations. NetSuite’s built-in grant accounting capabilities increase efficiency and visibility across the grant management life cycle, offering the ability to use AI to expedite tasks such as tracking terms and conditions, automating time and expense tracking, and personalizing marketing outreach. Having all critical information in a single system unifies the grant management process, and integrated dashboards provide drill-down reporting into all grant-related transactions. Implementing a unified system to manage transactional data simplifies a number of financial reporting processes and ensures that all stakeholders have access to up-to-date information on key terms, conditions and milestones.
By implementing software like NetSuite’s, institutions can more consistently apply governance, compliance, and risk management principles across their grant programs to prevent fraud, waste, and abuse. Having a single system in place can also facilitate collaboration, data sharing, and communication, and foster strong relationships among all grant-related parties.
The grants management process can be far-reaching and complex, extending to many parts of an organization and requiring detailed tracking and reporting over weeks, months, or years. Many grant recipients face similar grant management challenges, particularly if they continue to use manual, siloed, or one-off systems and processes. However, by allowing time for planning, process, technology, skills development, and relationship management, organizations can improve their grant management approach to clinch the continued flow of critical funds to their organizations.
Grant Management Challenges FAQs
What is the common rule in grants management?
Sources generally refer to the “common rule” in two ways: in the context of the uniform administrative requirements for government grants and subcontracts, or in the context of protecting human subjects when they participate in research.
What makes a good grants manager?
Effective grant management demands strong organizational and communication skills. The most effective grant managers are also good at relationship management, working well with a variety of stakeholders both within the organization, and externally, with funding organizations.
Why is effective grant management important for nonprofits?
Lack of resources is a common situation for many organizations that rely on grant funding, particularly nonprofits. Grant funds play a critical role in financing a nonprofit’s mission, supplementing income received from traditional donation channels. Thus, it’s particularly important for nonprofits to execute effective grant management to oversee what can be a complex process that involves multiple internal and external stakeholders and can span years. Lack of staff, experience, budget, or technology for effective grant management can lead to errors, inefficiencies, and noncompliance, which can trigger audits, fines, and even loss of grant funding.
What are 4 tips for responsible grants management?
Effective grant management is important to ensure ongoing funding, but there are some prevalent challenges facing organizations. Four tips for responsible grant management are 1) establish clear communication channels with the grantor; 2) develop a system for financial tracking and reporting; 3) maintain detailed documentation of all grant-related activities; and 4) encourage a culture of continuous learning.
What are 3 cons about grants?
Grant funding plays a critical role in the ongoing operations and growth of many organizations, such as nonprofits and educational institutions. However, grant funding has downsides, too. The following are three cons of grant funding:
- Grants are conditional. Put simply, grants are entirely free — but they come with strings attached. Most grantors are very specific about their requirements for grant recipients. Failure to comply with a funder’s rules can invalidate the funding or even result in criminal liability.
- Grants require detailed reporting. Because of the conditions grantors place on their grantees, organizations that receive grants must be able to execute an accurate accounting of how the funds are spent. In many cases, such accounting must meet the funder’s specific reporting requirements. Failure to provide accurate and on-time reporting can result in a loss of existing or future funding.
- Grant awards take time. Beyond the time spent applying for the grant, there is often a long waiting period to find out if you were awarded the funds. In addition, there is no guarantee that the time and effort spent on applying for grants will result in an award. Thus, it’s important for organizations seeking grant funds to plan appropriately.
How can limited resources impact grant management for nonprofits?
From small staffs, to scant budgets, to outdated technology, limited resources can make it difficult for a nonprofit to manage the grant life cycle. Current AI-powered management and accounting platforms can ease this burden by introducing automation into workflows for marketing, accounting, and records management.
