What Is Grant Financing?
When most non-profit organizations are in need of financing, the question they ask is whether they will receive federal funds from their state, or from a grant. When they get a grant, it is often a one-time grant of a fixed amount of money.
Grants for non-profit organizations often come from a government body, like the city in which the organization resides. Forms known as contracts or Cooperative Agreements give out grants to non-profits.
What Is a Grant?
Grants exist to assist non-profits in accomplishing a certain task, or an outcome, such as a specific program. To receive a grant, an organization must meet certain criteria. The grant must be one-time, as opposed to annual.
The goal of the grant is often measurable, and it must have a plan to achieve it. And most importantly, the grant can't conflict with the organization's mission. On top of these criteria, finding grants can be quite a challenge for an organization.
There are national committees to assist non-profit organizations in their grant efforts. For example, the Association of Certified Grant Professionals (ACGP) is a not-for-profit professional association of nonprofit professionals. Its goal is to help its members grow their careers through education and advocacy. The ACGP provides educational resources to help non-profit organizations with their financial needs.
To better serve its members, the ACGP spearheads a committee dedicated to educating non-profits about grant management and grant funding opportunities. The committee hosts a series of articles on its website to teach non-profit organizations more about the process of applying for grants and how to prepare for and execute them.
Grant Account Compliance
Assigning your nonprofit a new fiscal year, you should start the year by auditing your funds, processes, and taxes to make sure you meet the criteria required by your state. By law, every non-profit must have at least two CPAs and one clerk qualified to accept gifts, donations, and pledges.
Every state is unique in the requirements they have for donors. You may find one state requires $250,000, but another state allows for an unlimited gift donation. Every state is unique in the requirements they have for donors. Working with an experienced consul
tant can help you navigate these issues.
Accounting for Grants Issued and Reimbursement Timing
Non-profit accounting is a subject that receives frequent criticism. These processes can become complex fast.
To combat this problem, the Association of Fundraising Professionals (AFP) released the Nonprofit Professional Handbook. The publication seeks to address the information gap that exists with regard to non-profit accounting.
The fact that non-profit accounting is complex is true, but it does not have to be so hard. There are some organizations out there that offer free accounting software. This is great news, but it can be tough to put together a well-funded non-profit organization regardless of the help you hire.
Timing your reimbursement is also critical when receiving a grant. Try not to cut any corners here. Fudging the numbers can land you in even greater trouble.
Non-Profit Budgeting and Forecasting
It’s important to get a firm grasp on your non-profit’s finances, but when you approach your budgeting and forecasting process you should ask yourself: How big do we want to get?
This should be a reasonable number to shoot for based on your mission and operations. While it might be necessary to clear some wiggle room as you move forward, know that the final decision will not depend on the manner in which you establish your initial budget.
The bottom line is that you have the autonomy to decide how to divide funds based on your mission and its objectives. You can gain insight into the advantages and disadvantages of your non-profit’s finances by keeping up with your budget and forecasting.
Preparing for Your Grant Reporting Requirements
It's a hot topic in the non-profit world, and for good reason. A new set of requirements and guidance for grant reports came about last year.
This material won't cover every scenario. It still helps provide insight and direction for the specific documents you need to complete in your grant report.
Before you begin, it's important to remember that the IRS is growing stricter on non-profits, and complicating your accounts will lead to even bigger headaches and paperwork. Whether you have federal, state, or local tax documents to report, be sure to prepare thorough documentation.
Finding More Funding Sources
In the United States, the number of charities that provide aid is growing. As a result, the amount of funding they receive is also on the rise. It is also becoming more difficult for non-profits to receive donations because of this growth in the number of charities and increasing competitive pressures in the non-profit landscape.
There are several avenues of funding that non-profits can take advantage of to help grow their organization. Don't stop at the traditional routes. Ask around to discover funding sources within your industry and the wider world.
You can connect with other non-profits to get things started. You can also connect with industry experts and decision-makers. We also suggest using state and local resources as you seek funding for your mission.
Streamlining Your Grant Financing
It's easy to ignore some of the minor yet important nuances and oversights of accounting for non-profit grants. These little things can send your nonprofit down the wrong path and derail your project for good. Don't be the one who throws away your hard work by giving yourself the runaround on your paperwork.
To learn more about how you can streamline your grant financing, accounting, and more, check out some of our services.