The Grant Management Life Cycle Defined & How to Optimize

Being awarded a grant isn’t just a question of asking for and receiving free money. There is a multistep process involved in applying for, winning and managing funding while complying with contractual terms — and accounting regulations — until the money is spent and the grant is closed out. The steps in this grant management life cycle fall into three phases: pre-award, award and post-award. The recipient and awarding agency have unique roles to play during each phase, but the durations of the individual phases vary depending on the type and 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 from searching for funding opportunities to closing out a grant upon completion of a project. Each of the three stages of the life cycle requires recipients to complete multiple steps before moving on to the next stage.

Meticulous recordkeeping and adherence to the terms of the grant, as well as to Generally Accepted Accounting Principles (GAAP), are absolutely critical for successful completion of the grant management life cycle— especially for nonprofits, which typically fund their operations with multiple grant awards from multiple sources. Additionally, having an automated system, such as a customer relationship management (CRM) solution, is important for such organizations to make sure they meet deadlines, correctly allocate expenses to the right grants and handle reporting in a timely and compliant manner. In fact, some CRM systems are tailored to the needs of nonprofit organizations in the form of constituent relationship management.

Key Takeaways

• The grant management life cycle consists of three phases: pre-award, award and post-award. Each phase consists of multiple steps that must be completed before a grant is closed out.
• Careful recordkeeping and attention to detail are required for nonprofits to stay compliant with each grant’s unique terms and conditions, as well as Generally Acceptable Accounting Principles (GAAP).
• Using a software system to help automate the tracking and reporting aspects of the grant management life cycle is critical to success once a nonprofit organization is managing more than one grant simultaneously.
• Nonprofit-awarded grantees should look upon their grantors as collaborative partners and use every step in the grant management life cycle as an opportunity to learn and improve upon the relationship and outcomes.

Grant Management Life Cycle Explained

The grant management life cycle is the end-to-end process of managing a grant, from the time an organization identifies a grant opportunity until the funded project or activity is concluded and all the funds are accounted for. Although different organizations might employ slightly different versions of the grant management life cycle, a typical life cycle includes the following three stages:

1. Pre-award phase: This initial phase is all about a nonprofit’s researching grant opportunities and planning and preparing its proposals and completing applications.
2. Award phase: If, after review, a grantor accepts an application, any negotiations about money or terms are concluded and the grantor formally awards the funding to the grantee.
3. Post-award phase: This final stage centers on the implementation of the project, along with all the monitoring, reporting, evaluating and closeout processes.

Both public and private grants are available. Public grants are administered by governmental bodies or agencies. The money comes from tax revenues or other public funds, and their disbursement is to support activities that are aligned with government policies or that further specific public objectives. Private grants are offered by private organizations, many of them funded by wealthy individuals or families, although they can also be crowdsourced; collected through the fundraising initiatives of special-interest societies, charities or groups; or provided by corporations. According to the National Philanthropic Trust, in 2022, individual Americans donated $499 billion, while corporate giving hit $21 billion and foundation giving rose to $105.21 billion. Both public and private grants provide financial support for educational initiatives, medical research, public works projects, the arts and other causes. Most grants are competitive — that is, multiple applicants are seeking the funds being offered. On average, 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 might seem at first glance. The nonprofit organizations that get the most out of their awards — and are typically awarded the most funding — carefully research and plan their projects in advance and make sure their objectives align with those of the grantor.

Definition

Nonprofit organizations in the pre-award phase identify potential grant opportunities that fit their mission and goals, develop proposals and submit their applications to the relevant funding bodies.

Steps Involved

The pre-award phase involves the following steps:

1. Do preliminary planning: Nonprofits must take the time to carefully plan and perform due diligence to determine their fundraising needs and assess whether they have enough internal resources to properly manage grants. Once this is complete, nonprofits are properly prepared to seek specific grants that fit their revenue gaps. Some key questions for a nonprofit to consider at the pre-award phase include:
   1. Do we have a clear funding objective?
   2. Do we know the revenue projections?
   3. How many volunteers do we have on staff?
   4. Will this funding help us succeed in our missions?
2. Research grant opportunities to identify potential matches: The next step in the pre-award phase is to identify opportunities that align with the nonprofit organization’s mission, goals and capabilities. It’s important that nonprofit organizations vet these opportunities carefully to understand the grantors’ goals, requirements and criteria so they don’t waste their time applying for grants they’re not eligible for or that don’t meet their needs. For government grants, nonprofits should start with the Grants.gov search tool to identify opportunities.
3. Develop a proposal: Once an opportunity has been identified, a nonprofit then creates a grant proposal. This usually involves outlining the proposed project or program, detailing the expected outcomes, providing a proposed budget and showing how the project aligns with the grantor's requirements and objectives. This process can take weeks. For many government grants, businesses and individuals must first register with Grants.gov. Applicants should also carefully check the funding opportunity description for additional registration requirements specified by the grant-making organization. For example, some might require registering on the System for Award Management or eRA Commons websites.
   1. If, as is typical for most nonprofits, the organization is using the same project proposal for multiple grant applications, it will need to modify the proposal to meet the specific requirements of each grant. Because different grants have different deadlines, nonprofits should seriously consider implementing a system that keeps track of required documentation so that deadlines aren’t overlooked.
4. Review and submit application: Once a proposal is complete and thoroughly reviewed, the nonprofit submits it with an application to the grantor within the specified time frame, either through a website or portal or by email. An application may include supporting documentation and credentials, as required by the grantor.

Importance

The pre-award phase is crucial because the quality of a proposal and application determines whether a grantor will provide the funding. When reviewing an application, a grantor will perform a detailed assessment of the feasibility of the project, the organization’s capacity to carry it out and how well the project aligns with its own mission and priorities.

Award Phase

The award phase is the briefest of the three grant management life cycle phases, and it begins when a grantor notifies the nonprofit organization that it has been awarded a grant.

Definition

The award phase starts with the funding organization’s reviewing applications and informing applicants whether or not they have been awarded a grant. The grantor then begins working with the award recipients to go over the legalities of the funding agreement and to negotiate any fine points. After accepting the award with a legally binding contract, a grantee receives the funds and can embark on the project.

Steps Involved

The award phase involves the following steps:

1. Get notified of award/non-award: After reviewing all applications, the grantor decides whether an award will be made, and to whom. The grantor notifies all successful applicants with what federal government agencies call a Notice of Award. Nonprofit organizations that are denied are also notified, and typically the grantor will provide specific details that led to its decision so that organizations can learn from each failed grant application and apply those lessons next time around.
2. Review the grant offer: Nonprofits should carefully review grant offers or award letters received from funding organizations. These documents outline the details of the grant, including the funding amount, duration, terms and any specific conditions or requirements.
3. Negotiate details as necessary: If a proposal is successful, there may be some negotiation around the terms and conditions of the grant. Some grants may have fixed terms and conditions that are non-negotiable, while others may allow for more flexibility. For example, a nonprofit organization may want to clarify any budgetary restrictions, the expected outcomes or milestones of the project or how the grant’s effectiveness will be evaluated. This step should be considered as a critical planning opportunity, where a nonprofit works collaboratively with the grantor to nail down the details of the project, adjust the timeline and lay out precisely how tracking and reporting will work.
4. Accept the grant: Successful applicants are typically required to formally accept the grant, usually in writing with a signed acceptance letter that commits them to fulfilling the terms and conditions of the funding.
5. Receive funds: Finally, the funds are dispersed, either all at once or in stages based upon terms and conditions. One mistake that nonprofits often make is to put all the funds into a single bank account. Frequently, grant funds are earmarked for certain uses only — for example, to purchase supplies or pay the salary of a consultant. Organizations should be careful to separate such funds into special accounts. Failure to do so can cause problems if an audit is performed.

Importance

While actually being awarded a grant is important, the ancillary activities that make up the award phase are equally so. They set the stage for a successful collaborative partnership between the grantee and grantor and establish a foundation for what will be accomplished, in what time frame and using which success metrics.

Post-award Phase

The moment a nonprofit is notified that it has won a grant can be very exciting. But the hard work has just begun. Now comes the time to put the proposal into action and hopefully prove that the organization’s vision is one that will result in the desired — and measurable — outcomes.

Definition

The post-award phase begins when a nonprofit starts to expend its awarded funds to achieve the outcomes of the grant. From this point forward, the nonprofit is responsible for meeting the administrative, financial and programmatic reporting requirements of the award. This phase involves continuous monitoring of project activities and ends when the money is accounted for and closeout activities are completed. It, therefore, requires robust administration guardrails, transparent and frequent communication, a dedication to compliance and meticulous recordkeeping.

Steps Involved

The post-award phase involves the following steps:

1. Implement and manage: This step involves starting the project or program outlined in the proposal, managing the budget and ensuring that the project is delivered as specified in the agreed-upon plan. If in doubt, a nonprofit should return to the proposal and final negotiated terms and conditions to stay on course. Keep flexible, however. Even the best-laid plans don’t always work out. Things inevitably change over the course of a project, especially as an organization acquires more knowledge and information. But be prepared to explain divergences from your original plan to the grantor’s representative who is overseeing compliance.
2. Monitor and report: Grantors usually require regular updates and progress reports. This includes financial reports and updates on the project’s outcomes relative to the expectations raised by the proposal, such as progress toward goals, important milestones completed and adherence to budgets. Grantors might even perform on-site visits with project managers and implementation staff. Nonprofit grantees typically compile two types of reports for the funding organization: financial reports and programmatic reports. These provide information about both the overall financial status and program performance of the project. Recipients must also respond to any requests for audits. Many nonprofits turn to automated tools to generate simple and configurable compliance reporting for executive leadership, board members, external auditors and accounting teams.
3. Undergo evaluations: At the end of a project, the grantor will conduct an evaluation to determine its impact and effectiveness. This is also a chance for a nonprofit to learn and improve future proposals and projects.
4. Close out the project: This step involves wrapping up all project activities, including financial reconciliation, final reports to the grantor and ensuring that all the requirements of the grant have been met. Nonprofits usually share final numbers, challenges and wins, best practices and other takeaways with the grantor. This is where all the careful tracking and recordkeeping pay off.
5. Follow up and continue to manage the relationship: After grants have been closed out, nonprofit organizations should take care to maintain connections with their grantors. These efforts could include sending regular updates on the lasting impact of the project; sharing media exposure the project earned; acknowledging the grantor’s part in the success of a project in press releases, interviews or other public communications; and keeping the relationship strong for potential future references or funding opportunities.

Importance

This post-award phase is where the bulk of the work on a funded project gets done. It’s also the longest phase, not uncommonly lasting for years. Meticulous recordkeeping and reporting help a nonprofit prove to its granting organization that it is fulfilling the terms and conditions of the contract, and analyses of reports and data are extraordinarily helpful in improving an organization’s finances, operations and ability to win more grants in the future.

Manage Your Grant Life Cycle in NetSuite

When a nonprofit organization is managing only one grant, it’s possible to use a spreadsheet or chart to manually track money spent and to meet deadlines and generate reports. But as an organization grows and begins to win multiple grants — each with its own terms and conditions — it should consider implementing software to help automate the grant-management life cycle.

NetSuite’s Social Impact program provides a suite of cloud software built for nonprofits of all sizes to improve operations and grow their mission. Features include financial management, accounting, reporting, financial segmentation, key performance indicators (KPIs), program tracking and CRM, known in the nonprofit arena as constituent relationship management. NetSuite Nonprofit maintains all relevant grant milestones so that vital information is in a single, unified system. The solution helps nonprofit organizations streamline all three phases of the grant management life cycle, eliminating manual work and facilitating cross-functional collaboration and visibility.

The grant management life cycle is complex. From searching for and identifying funding opportunities to staying on top of expenses, budgets and reporting requirements, doing it manually using Excel spreadsheets or paper forms is not the best use of a nonprofit management’s time. With the help of specialized software tools, nonprofits can automate and streamline many of the tasks involved in all three phases of the grant management life cycle, from planning to final closeout, affording management more time to work strategically to further their organizations’ mission and goals.

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 and post-award. Each of these phases contains multiple steps, beginning with a nonprofit’s examining its needs and researching funding opportunities, and ending with closing out a grant once the funded project is complete or the money has been spent.

What are the key components of grant management?

The seven key components of effective grant life cycle management are identifying and assessing grant opportunities, developing a proposal, performing contract management, managing and reporting on finances, implementing and monitoring 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 administrative processes, enhance collaboration and communication, improve financial management and compliance and optimize their grant management efforts.

Why is it important to understand the grant management life cycle?

Understanding the grant management life cycle enables nonprofits to effectively navigate the entire grant process, from identifying opportunities to closeout. By understanding each phase, nonprofits can identify suitable opportunities, develop strong proposals, implement projects in alignment with grant requirements and ensure compliance and accountability. This knowledge enables nonprofits to maximize their chances of 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 contact throughout the grant period to ensure alignment, address concerns and provide timely updates. Next, develop a robust system for financial tracking and reporting to ensure accurate and transparent use of grant funds, timely submission of financial reports and adherence to budgetary guidelines. Then, maintain meticulous documentation of all grant-related activities, including project milestones, expenses and outcomes, to support compliance, auditing and future reporting requirements. And finally, foster a culture of continuous learning and improvement by regularly evaluating the grant management process, identifying lessons learned and implementing necessary adjustments to enhance future grant seeking and management efforts.