In the absence of the right tools and processes, gathering, organizing, validating and presenting the information becomes a labor-intensive, manual exercise that must be repeated at each reporting interval. Multiply this by the number of funding sources requiring reporting and it can overcome an organization’s finance team.
When this goes wrong, there is not only a risk to funding. It can also create the appearance of impropriety. It’s one thing to understand the stipulations attached to the funding you receive. It’s something else entirely to design your internal processes and optimize your systems to make compliance automatic. Unfortunately, there are regularly news reports where government funders are threatening sanctions of varying severity to organizations that, for whatever reason, failed to meet the compliance reporting requirements attached to their grant funding.
It’s important to reevaluate your systems and processes from time to time to make sure that you have the right tools and that you’re considering all of the regulatory details and industry best practices in both your tools and your related business processes. Some things to keep in mind:
- Make sure you fully understand the conditions, data collection and reporting requirements attached to each funding stream
- Make sure your financial management system is configured to capture grant-related data at the required level of detail for reporting
- Ensure that the systems can accurately report on the fiscal calendar dictated by the funding source
- Validate that you can track financial performance at the grant level, including budget to actual comparisons, on demand without significant offline manipulation
Using a financial management system that is optimized by its very nature to facilitate grant budgeting, tracking and reporting will go a long way towards keeping your organization in good graces with your funders. It will also free up your finance staff to work on more strategic activities if their productivity is currently being lost due to recurring, labor-intensive manual grant reporting processes.
To learn more about proposed regulatory changes that may impact nonprofit financial reporting and the tools that can help position your organization to successfully and efficiently adapt, please join us at one of our upcoming Executive Seminars in a city near you.