Grants Management Systems: Primer for Best Practices, Part 1

To read the full "Primer for Best Practices," click here.

The following article is an excerpt adapted from the research report "Benchmarking Study of Best Practices in Grant Management Software for State Arts Agencies," conducted on behalf of the Pennsylvania Council on the Arts in 2014.

By Sally Cao, Lauren Harrison, Graciela Kahn, Signe Lindberg, Lillian Mo, Kimmy Nguyen, Ana Vazquez-Trejo, and Ying Zhu, Heinz College, Carnegie Mellon University.

In 2012, the nation’s 62 state and regional arts agencies distributed approximately $215 million in grant monies. Compare those figures to the nearly 82,000 grant-making foundations in the United States, which collectively distribute over $49 billion annually.

Assisting these arts agencies, foundations, and other money distributing bodies are grants management systems—automated systems that track a grant through its entire lifecycle, as well as store data for relationship management between the grantor and an applicant. Recognizing the complexity of grants management systems (GMS) and the relative lack of resources in the arts sector, best practices must be followed to achieve the maximum value of each dollar spent on a GMS.

Structure the Application

The grant management process begins for grantees when an application is submitted. But for arts agencies, the process begins in the grant program’s design and the development and publication of corresponding guidelines. The book Effective Grants Management by Deborah Ward recommends that organizations applying for a grant “build grants management into a proposal.” In other words, applicants should make a grant easy for funders to manage by including all necessary, relevant information in the application, especially in the following areas: solid methodology, clear objectives, qualifications of personnel, comprehensive evaluation plan, and a budget of all program expenses. However, because arts agencies determine program requirements and design application forms, they have the ability to give applicants an opportunity to provide this information in a clear and structured manner through a well-designed application process.

 A report by the Center for Effective Philanthropy further illustrates the benefits that clear program guidelines provide to applicants and grant makers. “Clear, specific funding guidelines can help nonprofits assess for themselves whether they are likely to fit within a foundation’s grant making priorities and thus avoid wasting time writing proposals that are unlikely to be funded. With clearer guidelines in place, the proposals that applicants do submit are likely to be of higher quality and relevance.”

 It is oftentimes difficult for applicants to efficiently collect information required by funders. Project Streamline, a collaborative initiative of the Grants Managers Network and several fundraising associations, proposes four principles to make the grant making process more efficient for all parties:

 Principle 1: Take a fresh look at information requirements

Begin with a rigorous assessment of what kind of information is really needed to make a responsible grant.

 Principle 2: Right-size grant expectations

Ensure that the effort applicants expend to obtain a grant is proportionate to the size of the grant, appropriate to the type of grant, and takes into consideration any existing relationship with the grantee.

 Principle 3: Relieve the burden on grantees

Funders can reduce the burden that grant seeking places on applicants. By minimizing the amount of time, effort, and money that nonprofits spend obtaining and administering grants, funders increase the amount of time, effort, and money devoted to mission-based activities.

Principle 4: Make communications clear and straightforward

Good communication is critical to a streamlined process and essential for fostering a mutually respectful relationship between grant makers and grant seekers.

While these principles are applicable to all stages of the grant lifecycle, for a funder to effectively apply them, they need to be considered during the initial stages of the process. For example, a useful way to approach the streamlining process when developing guidelines and building application forms is to consider (and maximize) the real value of any given grant. This concept, known as “net grants,” equals the award amount minus the cost (to the applicant) of applying and administering the grant. Information on the award amount, as well as if the applicant is an individual or an organization, should be taken into consideration when funders request information from applicants.