For any grant manager, operating in the ever changing world of public charities and nonprofits, nothing is more difficult and challenging than keeping grants in compliance. Getting compliant and staying compliant was never more important as grants from donor-advised funds topped $45.74 billion in 2021.
This blog will help you understand what exactly grant compliance entails and how to maintain it; what the repercussions of not maintaining it can be; and critically, how Fluxx can streamline this for your organization.
What is Grant Compliance?
Grant compliance requires behaving in a way consistent with the grantor's special terms and conditions. Such terms and conditions are mainly reporting, the budget, and specific milestones concerning the project. In essence, grant compliance ensures that money is put to the right use, and that the objectives are met as stipulated in the grant application.
How to Keep Your Grants Compliant
With just a few key practices, you can easily maintain grant compliance. Following these steps will help keep your organization in good standing with grantors, steering your organization clear of common pitfalls.
- Understand what is expected of the grant:
Remember to review the grant agreement carefully, to be aware of your every obligation: when to report, what expenses are allowed, and what performance is measured. Should the grant agreement you've signed stipulate that you need to submit financial reports every quarter, make appointments in your calendar and do the necessary preparations multiple times during the year.
- Establish a compliance team:
Establish a dedicated team to manage the monitoring of compliance. This unit should be representative of the departments of finance, program management, and administration. For example, monitoring expenditure can be undertaken by a finance officer, and ensuring that milestones for projects are met can be done by a program manager.
- Develop a compliance calendar:
Create a thorough timeline for key reports, financial audits, reporting package reviews, and any other compliance-related activity showing critical deadlines that cannot be missed. But even more important, especially for repeatable things: setting up reminders on—say, Google Calendar or a more elaborate system management tool. You'll do things like setting up reminders a week before each reporting deadline to prepare the requisite data.
- Put in Place Robust Financial Controls:
Ensure that solid financial systems are in place and track the grant money spent to avoid the misuse of funds. This can be made possible by subjecting itself to regular audits to regain financial integrity. Monitor expenses using accounting software such as QuickBooks; track and categorize according to guidelines in the grant money.
- Be Organized:
It is vital to keep records of every activity regarding the grant performance. These are quite vital for showing compliance during an audit. For instance, one should keep records of electronic copies of all original receipts, filed in an orderly manner.
- Routine Trainings and Updates:
Train staff perennially on the compliance requirements and changes. This helps them to remain abreast of their roles and new introductions or changes in grant terms. Carry out quarterly training that pertains to reviewing the compliance protocols and updating staff on new regulations.
Consequences of Non-Compliance in Grants
Individual Grant Fund Recipients who fail to adequately meet requirements can suffer severe consequences:
- Loss of Funding: Failure to comply may result in the cancellation of funds, hence interrupting the smooth running of projects. In addition, this may lead to organizational instability. Organizational instability may occur whereby any grantor who discovers that his funds are being misused may withdraw their support at any time.
- Legal Issues: Legal actions may be brought against the organization for misuse of funds or non-compliance with reporting requirements. For example, manufacturing a financial report may bring a lawsuit or a fine.
- Reputation Knock: Non-compliance can hurt the very reputation of the organization, where future grant and partnership acquisition becomes really hard. A reputation for non-compliance may spread through the grantors, subsequently losing trust.
- Repayment of Funds: Not implementing the terms of the fund used to the latter can incur possible demands for refund from the organization to which the financial burden might be heavy. A common example is where grant money was paid out in the wrong expenses; it will have to be paid back.
Steps to Ensure Compliance With Your Grant
It is systematic in ensuring and maintaining compliance with grants. Here are some steps to ensure your organization remains in compliance:
Review the grant requirements and compliance status, and check if the organization fulfills the grant parameters through the review of past compliance record gaps and areas of improvement.
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Develop a Compliance Plan
Develop a comprehensive plan showing steps that lead to compliance achievement and maintenance, including roles and responsibilities. Assign particular responsibilities to individual team members, for example, making them responsible for financial reporting or milestone tracking.
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Carry out Different Continuous Monitoring
Set up monitoring systems that ensure continuous compliance in areas including financial, implementation process milestones, and regular audits—for example, regarding the use of software tools for automation of allocated budgetary resources disbursed and progress against established project milestones.
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Explain the Integration Requirements
Keep an open line of communication with stakeholders, grantors included, to be always aligned and solve possible problems for the possible drawback intervention, such as regular check-ins with grantors on the progress and any kind of trouble that might be arising.
Periodically review the compliance processes, and update them to adapt to grant requirements, which can sometimes become demanding and sweeping on compliance wall guidelines, or changes in organizational life and needs. For example, conduct annual reviews of procedures for compliance and at the introduction of new legislation or new feedback-based updates.
How Fluxx Makes Your Grant Compliant
Fluxx offers end-to-end grant management, streamlining the compliance of public charities and nonprofit organizations. Here's how:
- Centralized: A single one-stop location for all the grant's activities to guarantee the orderly and easy traceability of all compliance requirements. One place for all grant documents, reports, and communications.
- Automated Alerts: Automated alerting and reminding help an organization stay on its toes with regard to meeting deadlines and reporting requirements, therefore reducing the possibility of non-compliance. This can help send email reminders of reports that are due soon.
- Customizable Reporting: Creating a customizable template aligns with grantor requirements for the information to be distributed and ensures accuracy and timely submission. All details related to the budget and project updates can be included in your preferential template format.
- Real-Time Tracking: Real-time tracking of grant money spent and project status helps a nonprofit organization monitor compliance on an ongoing basis and make the right adjustments timely. Use our dashboard to display current spending against budget.
- Training and Support: Fluxx also provides training and support to ensure your staff is proficient and effective with the platform and tailors all your requirements on compliance. Utilize Fluxx webinars and help resources for keeping your team informed.
Ensuring Correct and Complete Grant Compliance
A nonprofit or public charity can't successfully, sustainably exist long without being compliant with grant requirements. Your organization can succeed in funding, avoid legal trouble, and have a solid reputation by understanding the importance of compliance, utilizing effective strategies you have in place, and the tools with solutions, such as Fluxx, that enable you to maintain compliance.
Make the next step for your lean grant and compliance management—schedule a call to discuss how Fluxx can support your organizational needs.
