A Nonprofit's Guide to Stronger Grants Management

ARTICLE | July 08, 2026

Authored by Aprio, LLP

Summary: Some nonprofits treat grants management as a compliance checkbox, creating gaps in oversight, reporting errors, and avoidable funding risk. However, effective grants management requires alignment across finance, program, and development teams. By implementing stronger controls, clear reporting processes, and consistent grant oversight throughout the funding lifecycle, nonprofits can help reduce compliance risk, improve stewardship of grant funds, and strengthen their ability to secure future funding while advancing their mission.

Grants help nonprofits do important work, but they also bring compliance responsibilities. If people are not clear on their roles or the right systems are not in place, problems often surface later through audit findings, delayed reimbursements, or strained relationships with funders. Strong grants management isn’t the job of any single team. It’s a shared discipline that spans finance, programs, and development, and it works best when those functions stay connected throughout the life of a grant.

The central idea is simple, even if it isn’t always easy: grants management. The sections below break down what effective grants management looks like across the grant life cycle, team roles, internal controls, reporting, and the pitfalls to watch for.

What Are the Phases of the Grant Life Cycle?

Grants management is a series of decisions, handoffs, and checkpoints that span two broad stages: pre-award and post-award.

The Pre-award phase of the grant lifecycle is about planning and decision-making. This is when an organization identifies an opportunity, defines its goals and deliverables, and makes a thoughtful and informed go/no-go decision that considers factors such as mission alignment, organizational capacity, financial viability, and whether the organization can produce a competitive proposal.

Developing a realistic project budget is another critical component of the pre-award phase. Best practice is for the program and finance teams to collaborate on developing the project budget, with enough time built in for review before submission. Even when finance only reviews the budget, its involvement helps ensure the numbers are complete, compliant, and manageable once the grant is awarded.

The Post-award phase of the grant lifecycle includes grant execution and delivery, monitoring, and compliance. The first step in the post-award phase should be reviewing, documenting, and communicating to stakeholders the award terms and conditions, including the period of performance. From there, it is critical to ensure the grant is set up properly in the accounting system and that roles and responsibilities are clarified up front. The day-to-day award management and execution, financial and programmatic reporting, and award closeout also live in the post-award phase of the grant lifecycle.

One practical tool worth adopting is a RACI matrix, which maps who is responsible, accountable, consulted, and informed at each stage. Spanning finance, grants management, program, development, legal, and IT, a formal RACI matrix helps operationalize grants management and reduce risk from start to finish. Clear roles across these disciplines can separate the organizations that manage grants well from those that struggle.

Who Is Responsible for Grants Management?

A recurring point is that no single team owns grants management.

Finance Owns the Guardrails

The finance team owns the guardrails: internal controls, cash management, the general ledger and chart of accounts, financial reporting, and time and effort reporting. In smaller organizations, finance often picks up grants administration too.

How grants are set up in the accounting system is foundational. Every restricted grant should have its own distinct identifier, whether that’s a grant code, unique class or fund, or a project ID, so spending can be tracked cleanly by award. Without that structure, reporting becomes manual and painful.

Time and effort reporting is one of the most scrutinized areas in grants management. Salary and benefit costs must be allocated using a documented, reasonable, and consistently applied method that accurately reflects the work that was performed. Timesheets or activity reports offer the clearest, most defensible support, although they aren’t the only option. However, the method used to allocate salaries must be documented, applied consistently, reviewed regularly, and supported by documentation that someone outside the organization could reasonably follow.

Program Teams Manage the Work

In addition to the obvious role of implementing the grant funded projects, the program teams have a role in managing resources, vendor and subrecipient relationships, and understanding what the project scope of work looks like in practice. They’re also responsible for confirming that expenses are allowable in the context of the grant.

Procurement is another area where audit issues often surface, and it’s important for program staff to understand that procurement rules apply directly to them. Ongoing training in this area is important, because funder requirements or organizational policies can change, and the program team will need to understand relevant procurement policies in real time, as purchasing decisions are being made.

Finally, the program teams should review budget-versus-actual reports regularly. A monthly sit-down between finance and program teams to review the numbers is a habit worth building, as it opens the door for questions, surfaces miscodings early, and helps avoid surprises at closeout.

Development Keeps the Funder Relationship Strong

Development teams are often left out of grants conversations, which can be a mistake, especially for organizations with many private foundation grants. Because development typically owns the funder relationship, the team needs to stay in the loop so that they are aware of any grant related issues and can help communicate with a funder as needed.

The handoff from development to program and finance teams is a common place for grant details or funder expectations to fall through the cracks. Ideally, development stays involved enough to flag any issues that might be concerning to the funder.

How Do Internal Controls Strengthen Grant Compliance?

Internal controls may not be an exciting topic, but they’re foundational to establishing a successful grants management function. A common refrain we often hear is that an organization “has controls, they’re just not written down, although auditors generally view undocumented practices as institutional knowledge, not controls. Documented controls help preserve organizational knowledge, promote consistency, and support continuity as teams and responsibilities evolve.

Internal controls are a set of practices that help ensure grant funds are spent as intended, reported accurately, and are supportable under audit. Examples include:

• Authorization and approval: funders and auditors want to know who can approve grant expenses, what limits apply, and where that’s documented. Automated accounts payable (AP) workflow solutions create a clear audit trail when set up thoughtfully.
• Segregation of duties: ideally, the person requesting a purchase isn’t the one approving and recording it. When staffing is limited, compensating controls such as a secondary or board review help, as long as they’re documented.
• Documentation and record retention: approvals, cost justifications, allocation methodologies, and exceptions should all be captured and retained long enough to support questions during an audit.
• Monthly reconciliations: comparing grant spending to drawdowns or reimbursements is a simple but powerful control that catches errors early.

A centralized policy library reinforces these controls. Writing policies is the easy part, but implementing and socializing them across the organization is the real work, and it’s where buy-in from program teams pays off. It’s a useful reminder that the only thing worse than having no policies is having policies that no one follows. Controls are only as good as the discipline behind them.

What Does Accurate Grant Reporting Require?

Financial reports are one of the main tools program staff have to understand how a grant is tracking relative to its budget. When the financial reports are accurate and timely, teams can make informed decisions; when the financials are delayed or the reports contain inaccurate information, project managers may start managing by gut instinct or keeping spreadsheets on the side that don’t reconcile back to the ledger.

A few reporting principles are worth keeping in mind:

• Match the system: financial reports should reflect the accounting system, which means all entries are posted, payroll is allocated, and the books are closed before reporting. Routinely adjusting a report by hand is a red flag that something isn’t set up right.
• Tell one story: the financial report and the narrative report should align. Heavy spending paired with slow programmatic progress, for example, signals that a closer look is needed.
• Build in buffer: late reports are a compliance issue with federal and private funders alike and can affect future funding. Setting internal deadlines ahead of funder deadlines leaves room to catch issues.

How Can You Avoid Common Grants Management Pitfalls?

Even with strong policies, controls, and systems in place, a few pitfalls come up repeatedly: resistance to change, resource constraints, and difficulty building and sustaining the right team. None of these are truly technical or finance problems, they’re simply organizational and communication challenges.

What works is pairing strong processes with intentional change management. That starts with clear communication about the “why” behind each requirement and the risk it addresses. Leadership buy-in sets the tone from the top, signaling that compliance is an organizational priority. Linking compliance back to the mission helps shift the mindset from extra work to necessary stewardship of funder resources.

Success looks different depending on the perspective. For finance, it shows up as cleaner audits, fewer last-minute adjustments, and reliable reporting. Operationally, it means clearer roles and stronger documentation. Ultimately, strong grants management supports sustainability, helps protect funding, strengthens funder trust, and frees program teams to focus on impact.

Final Thoughts

The bottom line is that grants management is a team sport. Organizations that struggle tend to have each function working in isolation: finance tracking the money, programs doing the work, and development chasing the next opportunity, and no one connecting the three.

A few principles tie it all together: your accounting setup is the foundation, documentation isn’t optional, and compliance exists to protect your ability to keep delivering on the mission. Above all, talk to each other. Ongoing communication among finance, program, and development teams throughout the life of a grant makes everything work better — so your organization can Account for Anything™ that comes its way.

Please connect with your advisor if you have any questions about this article.