Introduction — Receiving Funding Is the Beginning, Not the End
Receiving a grant can be an important milestone for a business, nonprofit organization, or community initiative. Months of planning and preparation may finally result in resources becoming available to move a project forward. But an award also creates responsibilities. Once funding is accepted, the recipient should understand what the funding was approved to support, the applicable conditions, the project period, documentation requirements, and any reporting or monitoring obligations associated with the award. This principle is well established in formal grant management. For example, federal grant guidance divides the grant lifecycle into pre-award, award, and post-award phases. During the post-award phase, recipients implement their projects, report progress and expenditures, and eventually complete closeout requirements.
The exact requirements vary considerably between grant programs. This AGAC guide therefore provides a practical management framework rather than replacing the terms and conditions of any particular award.
1. Read the Award Documents Carefully
Before spending grant funds, review the documents associated with your award. Do not assume that everything originally proposed in an application was necessarily approved exactly as requested. Identify important information such as the approved award amount, project purpose, project start and end dates, approved activities, spending restrictions, reporting requirements, milestones, special conditions, and important contacts. Create a simple internal summary of these requirements so the people responsible for implementing the project understand them.
Create a One-Page Award Summary
2. Identify Who Is Responsible for the Grant
Someone within the organization should have clear responsibility for overseeing the funded project. For a small business, this may be the owner, finance manager, or project manager. For a nonprofit, responsibility might be shared among an executive director, program director, finance officer, and other staff. Define who is responsible for project implementation, financial oversight, document retention, vendor management, progress tracking, and required reporting. Clear responsibility reduces the likelihood that an important deadline or requirement will be overlooked.
3. Build a Grant Management File
Create a secure, organized location for all records associated with the award. A useful folder structure might include:
- Award Documents: Award notice, agreement, approved application, amendments, and official correspondence.
- Approved Budget: Final budget, budget narrative, estimates, and approved revisions.
- Financial Records: Invoices, receipts, payment confirmations, payroll records where applicable, and transaction documentation.
- Contracts & Vendors: Contracts, quotations, purchase orders, vendor information, and deliverables.
- Project Documentation: Schedules, photographs, attendance records, work products, implementation notes, and other evidence of activities.
- Reports: Progress reports, financial reports, supporting schedules, and final reports.
- Correspondence: Relevant communications concerning the award or project. This structure makes records easier to locate if questions arise later.
4. Start With the Approved Budget
Your approved budget should become one of the primary financial controls for the project. Create a working budget that shows, for each category:
- Approved Budget
- Amount Spent
- Committed but Not Yet Paid
- Remaining Balance
For example:
- Budget Category: Approved Spent, Remaining.
- Equipment: $80,000, $52,000, $28,000.
- Personnel: $65,000, $21,500, $43,500.
- Training: $20,000, $8,750, $11,250.
- Supplies: $15,000, $6,300, $8,700.
- Project Services: $40,000, $25,000, $15,000.
This gives management a much clearer picture than waiting until the end of the project to determine how much money remains.
5. Separate Grant Expenses From Ordinary Business Expenses
Grant-related transactions should be identifiable within your financial records. Your organization may accomplish this through an accounting code, project identifier, dedicated ledger category, or another appropriate accounting method. The objective is simple: if you need to determine how much has been spent on the funded project, you should not have to reconstruct the information from hundreds of unrelated transactions. Grant reporting frequently involves financial information. grantadvancement.org, for example, describes financial data concerning expenditures as one of the principal categories used in federal grant reporting and oversight.
6. Keep Documentation for Every Significant Expense
A bank statement showing that money left an account does not necessarily explain what was purchased or why it was related to the project. Maintain appropriate supporting documentation. Depending on the expense, that could include invoices, receipts, contracts, purchase orders, vendor quotations, payroll documentation, delivery confirmations, or other relevant records. The records should allow someone reviewing the project later to understand:
- What was purchased?
- How much did it cost?
- Who was paid?
- When was it purchased?
- How did it relate to the funded project?
7. Do Not Assume Every Business Expense Can Be Paid With Grant Funds
A cost may be legitimate for your organization while still being outside the approved purpose of a particular award. Before charging a significant or unusual expense to a grant, compare it with the approved budget and applicable award requirements. If the expense falls outside the approved project or appears restricted, obtain appropriate clarification before proceeding.
Awarded Funds Are Not Unrestricted Cash
8. Control Changes to the Project
Real projects do not always proceed exactly as originally planned. A supplier may become unavailable. Equipment prices may increase. Construction may take longer than expected. Staffing requirements may change. When this happens, document the issue before making significant changes. Ask:
- Does the change alter the project's purpose?
- Does it materially change the budget?
- Does it move funds between important categories?
- Does it affect the completion date?
- Does the award require approval before this change can be made?
- Where approval is required, obtain it before implementing the change.
9. Track Project Milestones Alongside Spending
Financial management is only half of grant management. A project could spend exactly according to budget and still fail to achieve its objectives. Create a milestone tracker showing:
- Milestone
- Target Date
- Responsible Person
- Status
- Evidence of Completion
For example:
This connects expenditures to actual implementation.
10. Document the Work as It Happens
Do not wait until the final report to reconstruct what occurred. Maintain ongoing project records. Depending on the project, useful documentation might include photographs, before-and-after images, attendance records, training records, completion certificates, equipment installation records, construction progress photographs, service-delivery data, employment records, participant counts, or project notes. Good documentation can later support progress reports, success stories, internal evaluations, and audits.
11. Measure Results, Not Just Activities
There is an important difference between an activity and an outcome. An activity describes what the organization did.
An outcome describes what changed.
Another example:
Whenever possible, connect project activities to measurable results. Federal grant guidance likewise notes that post-award monitoring can use performance metrics and project data concerning progress or community impact.
12. Maintain a Reporting Calendar
Do not rely on memory for important deadlines. Create a calendar containing required financial reports, progress reports, project reviews, milestone dates, renewal dates where applicable, and final reporting or closeout deadlines. Assign each deadline to a responsible person and create internal preparation dates ahead of the actual due date. For example, if a report is due June 30, your internal deadline might be June 20. That gives the organization time to collect information, reconcile financial records, review the report, and correct errors.
13. Prepare Strong Progress Reports
A useful progress report should explain more than how much money has been spent. Depending on the award requirements, it may cover what activities were completed, progress toward objectives, measurable outcomes, challenges encountered, significant project changes, financial status, and activities planned for the next reporting period. Grants.gov describes regular performance/progress reports as a mechanism for documenting a project throughout its lifespan. Always follow the reporting format required by the actual funding organization.
14. Keep Financial and Program Information Consistent
The financial story and the project story should agree. Suppose a report states that all equipment has been installed, but the financial records show that only 20% of the equipment budget has been spent. That discrepancy may require explanation. Similarly, if most of the grant has already been spent while the project remains in an early implementation stage, management should understand why. Review financial and programmatic information together before submitting reports.
15. Prepare for Monitoring
Some funding organizations may review a project while it is underway. Monitoring could involve document requests, financial reviews, progress meetings, technical assistance, or site visits depending on the program. Federal grant oversight, for example, may involve progress reports, site visits, technical assistance, and audits. An organization that maintains orderly records throughout the project is much better positioned for such a review than one attempting to organize everything after receiving a request.
16. Maintain Internal Controls
Even small organizations should establish basic safeguards around funded money. Depending on organizational size, appropriate controls might include separating payment approval from payment processing, requiring supporting documentation before reimbursement, limiting access to financial accounts, periodically reconciling grant transactions, maintaining approval records, and reviewing significant purchases. The objective is accountability—not unnecessary bureaucracy.
17. Address Problems Early
Projects sometimes encounter difficulties. Perhaps a contractor misses a deadline, a key employee leaves, costs rise unexpectedly, equipment is delayed, or a project milestone cannot be completed on schedule. Ignoring the problem usually makes management more difficult. Document what happened, evaluate its effect on the project, identify corrective actions, and determine whether communication with the funding organization is required.
18. Protect Sensitive Information
Grant management files can contain financial, organizational, employee, banking, vendor, and participant information. Store sensitive documents securely. Restrict access according to staff responsibilities and avoid placing confidential information in public-facing project updates or success stories. Good grant management includes responsible information management.
19. Prepare for Project Closeout
Do not treat the final day of project activity as the end of grant management. A project may still require final financial reconciliation, outstanding invoices, final program reports, final financial reports, return or disposition of certain funds or property where applicable, confirmation of deliverables, or record-retention requirements. Federal grant guidance explicitly treats closeout as part of the post-award lifecycle after implementation and reporting. Review the actual award requirements well before the project end date so closeout does not become an emergency.
20. Preserve the Project's Impact
When the funded project is complete, document what changed because of the investment. Capture measurable outcomes, photographs, organizational improvements, community impact, jobs created or retained where relevant, increased capacity, participants served, and other meaningful results. This information is useful not only for reporting. It can help the organization evaluate its work, communicate with stakeholders, improve future projects, and prepare stronger future funding proposals.