What Is Grant Management (And How Can Accounting Software Help)?

By their very nature, non-profit organisations’ funding comes from a variety of sources. One of these is grants.

Though it’s not the biggest source (that’s public donations), grants from the voluntary sector still accounted for £787m received by small charities in the year 2019/20.

That’s important money, especially for charities who don’t have huge public profiles. But with each grant having its own set of rules and regulations for how it’s used, and charities often getting grants from different sources, keeping track of it all can be a challenge.

This is where accounting software can be a useful tool. In this article, we’ll give you a refresher on what grant management is, show you how accounting software can make the process easier, and also touch on some best practices that will make sure you’re putting any investment in software to the best use.

What is Grant Management?

Grant management refers to the whole process of a non-profit organisation using grants. This includes the development of grant proposals, allocation of the funds, and continual monitoring that the funds have gone where they’re needed most.

The Role of Accounting in Grant Management

Administrative Bottlenecks

Though the definition above isn’t a detailed one, you can still see that grant management is complex – with each of the stages unable to be reached unless the last one is fulfilled.

Accounting software can help to ease such administrative bottlenecks. Projects – and the tasks within them – can be tracked in a centralised database, meaning members of your team can see where each stage is at, without getting their wires crossed.

Compliance

Compliance is a common obstacle when it comes to grants. 2022 research by the Law Family Commission on Civil Society found that between a third and a fifth of grant applications were ineligible. Accounting software makes sure you’re compliant long before you send off your grant applications, with audit trails for qualified expenses, and the ability to tie deliverables to tasks.

Financial Transparency (and Donor Trust)

Trust may be hard to measure, but it’s one of the most valuable things a non-profit can have. Put bluntly, a non-profit that can’t evidence its finances won’t come across as trustworthy.

With accounting software, you can easily compare budgets to actuals on grants, as well as make your grant records themselves more reflective of how your programmes are delivered. The software also lets you measure defined impact metrics – giving you insights that you can present as part of grant applications that will bolster your approval chances.

Key Features of Grant Management Accounting Software

So, that’s the impact accounting software can have on grant management. But if it’s convinced you to look further into combining the two, there are some key features you should be aware of when you’re selecting accounting software:

Automated Tracking of Grant Funds

This feature will categorise and track grant funds no matter how many different sources they appear from – letting your team focus on putting those funds to use.

Budgeting and Forecasting Tools

With this, you can see what grants are incoming, and prepare for upcoming – or unexpected – events. Additionally, due to the joined-up nature of the system, you’re often able to associate accounting entries with grants, making categorisation easier.

Real-Time Visibility

Of course, actually getting the grant is only part of the story. It needs to be used wisely after it’s secured – which is something accounting software can help with too. It can monitor spending and track the budget as the grant gets processed, also letting you track the progress of specific team members.

Best Practices for Effective Grant Management with Accounting Software

Even though good accounting software automates many aspects of grant management, there are still some best practices that users should keep in mind to help them get the most out of it.

• Regularly check financial data – Though this shouldn’t need to be as extensive with software, it’s still good to sense-check things every once in a while, to make sure there aren’t any glaring errors.
  
• Maintain clear documentation and records – If there’s a change in how these are kept or formatted, make sure that it is implemented across all records.
  
• Engage in continuous learning and staff training – Updates, new features and regulations are changing all the time, so take advantage of opportunities for training from the software providers.

No matter how the nature of giving changes, it’s safe to say that grants will remain a key part of non-profit finances for years to come. But even if the mechanism itself doesn’t change, the way you handle grant management can. With accounting software, your grant management process should be more efficient, and compliant – the end result being more money for your good causes.

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PKF Smith Cooper Systems has been working with businesses across the UK to implement Sage 200 and Sage Intacct for the last decade.

To learn more about why we’re “The Good Sage Guys to Deal With”, contact us on 01332 959008, or use the enquiry form.