Believe it or not, but grant accounting is often overlooked and underappreciated. If you have ever worked in an organization where no resources were given to track and manage the grant fundraising efforts, you will realize that it's a compulsory discipline to keep things running smoothly and proficiently.
Confused? Don’t be…
Grant accounting for non-profits can make a significant portion of the budget. In simpler terms, using non-profit grant accounting can do wonders for your company while making every penny of your revenue count. Not just this, it can make a ripping impact on many projects at the non-profit while increasing funds and helping you achieve the objectives.
By the way, nonprofit organizations rely heavily on the generosity of others to operate successfully. This means that organizations should keep in mind the different forms of fundraising. Plus, such companies should always look for the latest trends prevailing in the market to integrate into their strategies. Individual fundraising revenue is generally some of the most versatile types of funding for nonprofits, as it can be used for both operating and program costs.
However, grants are a significant source of revenue for nonprofit organizations. While this revenue is rarely as adaptable, often being dedicated to specific projects or initiatives, it can still account for a significant portion of a nonprofit's budget.
If you want to know more about the effects of grant accounting on nonprofit organizations… keep on reading.
Wait! What is Grant Accounting?
Grant management is the process of prioritizing and processing grant applications to assist nonprofits organizations with grant administration. The grant management system manages the entire grant lifecycle, including grant money organization, grant tracking, and grant application processing from pre-award to post-award and finally grant closure.
This system is made up of three distinct parts, which are as follows:
- Grantmaking: refers to funding opportunities made available by the federal government.
- Eligibility: To be eligible, you need to provide information about grant reports, stakeholders, staff members, grant profits, future funding objectives, and grant types previously acquired.
- Funding: Nonprofits should meet the grant eligibility requirements to be considered for funding.
Benefits of Grant Management for Non-Profit
When it comes to applying grant accounting for non-profits, there are a few things you can do to make it as efficient and effective as possible.
These include things like setting up a grant calendar that ensures the company is pacing accordingly and applying grant management solutions to streamline the entire processes. We'll go over each of these best practices and show you how to apply them to your own grant proposal process.
Creating a Grant Calendar
A project calendar is a great way to keep your entire team on track during the grant proposal process. Grant accounting can also assist you in keeping track of and organizing which grants you've applied for in order to avoid duplicate work.
- The application window deadline should be on your calendar.
- Timelines for internal tasks
- Any recurring dates related to the grant application process
However, if you want to make the most out of your calendar, find out the communication functionality so that your team members can directly collaborate. Look for a tool that has a timeline feature so you can connect tasks to the goals of your organizations.
Automate Manual Application Process
With non-profit grant accounting, you need business process automation to streamline the workflow. Nonprofit organizations cannot operate without automated processes. Besides all this, by automating the processes you can easily get time to focus on the important tasks – helping your business grow. And, as a nonprofit, more time means more community service.
Consider software automation to automate the application process and eliminate manual labor. By automating the process, you can change the due dates and hand off work to designated workers while increasing cross-functional visibility.
Indirect Cost Recovery
Indirect costs, also known as facilities and administrative cost, overhead, or shared expenses, are expenses incurred in the externally funded research budget that are typically shared across multiple projects. Indirect costs invariably benefit most grant-funded programs, with departments recouping costs that are typically shared among various groups.
You can demonstrate that these costs benefit both the sponsored agreement and other works within the institution by using grant tracking. Tracking the money between people, departments, and locations ensures that you are appropriately compensated for those costs.
Here grant accounting helps…
Generate Data for Reporting
You must be aware of the fact that grant management is commonly linked with audits, which have historically been dreadful and time-consuming processes. Typically, grant funders have reporting requests, such as progress checks and financial updates. To meet frequent requests, grant tracking allows you to track and report on how grants are allocated for campus spaces.
With this ease, you can accurately report without the overwhelming fear of failing an audit and thus risking fund loss.
Staying Compliant
Each of your grants is likely to have multiple compliance regulations that you must understand and follow, and as recipients, you will be subjected to periodic compliance audits ensuring all requirements are met. Some of these necessities include procurement compliance, reimbursement eligibility, and financial management. These requirements can be proficiently managed with grant accounting through excellent and diligent business practices.
Challenges of Grant Management
When you are all set, organized, and have the necessary data, you can be counted on to provide sound advice. Your system can also assist you in establishing yourself as a well-informed grant professional, enhancing the impact of your commendations. An effective grant accounting process also aids in demonstrating the outcomes of your efforts and investments, as well as supporting your need to make data-driven decisions.
If you want to maximize the return on your grant-seeking efforts, you should use tools and processes that save time while increasing the amount of funding you receive. But remember one thing, for non-profit organizations grants are the key source of funding – still, when it comes to accounting for such funds, they become more challenging.
Hence, if you are facing the same challenges, get in touch with Aberny.
