Gantt Versus Grant

A grant manager’s guide to selecting the right software

A whitepaper by Geni Whitehouse

It’s a wonder more grant managers aren’t paranoid. They’ve got not only Big Brother watching their every move, but they also have to answer to his Sister Sarah at the AIP (American Institute of Philanthropy), Aunt Edna, who serves on their board, and of course, Uncle Sam. They have to track every expenditure down to the lowest level, slice and dice information in a myriad number of ways, and then manage to create a riveting narrative that tells the story of what they’ve been able to accomplish. In any given day, a grant manager might be dealing with government agencies, private foundations, and charitable organizations, each of whom impose their own set of rules, reporting, and compliance burdens. So how can we expect them to get by with software that kind of/sort of meets their needs?

The Problem

Abraham Maslow said, ““I suppose it is tempting, if the only tool you have is a hammer, to treat everything as if it were a nail.” Apparently, many software companies are easily tempted.

No one would dream of using the same shovel to clear land on a construction site and serve up meals at a soup kitchen. Rather, they would use one piece of equipment for the construction project and different equipment to accomplish their charitable objectives. So why is it that project managers and grant managers have historically been expected to share the same software to meet the needs of their very different stakeholders?

The answer might lie in the fact that projects and grants share two unique operational requirements.

First, both projects and grants require the creation of separate fiefdoms within their respective organizations. In the case of projects, separately identifiable buckets allow the project manager to associate the costs of completing a project with the price of the job. Information gleaned from a single project is used to determine profitability but is also used to determine the bid price of the next job. For grant managers, separate buckets by grant allow the manager to monitor the funds expended in fulfillment of grant objectives. Information gleaned from individual grant expenditures is shared with the grantor organization and others who have strict requirements for how those funds can be used. Associating costs with a discrete set of activities is a common headache shared by both project and grant managers.

Secondly, both projects and grants have a tendency to cross over multiple fiscal years, which can play havoc with many accounting systems. A project is designed to run over a discrete period of time with a defined beginning and end. In most cases, the time period has nothing to do with the organization’s accounting periods or period end. Projects, therefore, require their own system of tracking that allows costs to be associated with the organization’s accounting and reporting periods. Grants begin on the date of an award and end based on agreement with the grantor. They may last for a specified time period or end when a result-based milestone is reached. Grants also cross fiscal years and must provide reporting across the individual grant time period, the fiscal period of the recipient’s organization, and the fiscal period of the grantor organization. The ability to report across different time periods is a necessity for both project and grant managers.

The Solution

Unfortunately, these two similarities have been enough to lead many not-for-profit software vendors to address the needs of both camps with what is essentially the same shovel. In many cases, this decision was made because they had no other choice; historical limitations of their software design forced them to handle both functions in a single application. But we’re not in the Dark Ages anymore. Software has evolved to meet the unique requirements of nonprofit organizations and their grant managers, making the frustration of trying to manage grants with project management software a thing of the past.

However, before you can determine which software best meets your needs as a grant manager, it is important to understand the critical differences between grant management and project management. We’ve already discussed the similarities; now it’s time to concentrate on the differences so you can be sure you’re making the best choice in a nonprofit solution.

In this whitepaper, we will compare these two functions across each of the following areas:.

  • Role
  • Stakeholders
  • Pre-Award
  • Award
  • Funding
  • Tracking Costs
  • Sources
  • Internal Reporting
  • Progress Indicators
  • Restrictions
  • Revenue
  • External Reporting
  • Revisions

Role

What is the primary responsibility of the manager in each of these functions?

Project Management

Grant Management

Role: To ensure that the triple constraints — schedule, cost, resources — are managed properly for each project while also delivering the level of quality expected by the customer.

Role: To ensure that money allocated to a particular cause is expended as specified by the Grantor on activities related to a given cause.

Critical indicator:
Project completion date.

Critical indicator:
Use of funds in accordance with stated purpose – number of constituents served.

For grant managers, the key function of software is to provide real-time visibility into the fl ow of funds from award through to service provided and across all field locations regardless of language or currency.

Stakeholders

Other than the manager, who else is interested in the outcome of the activities being monitored?

Project Management

Grant Management

• General contractor
• Subcontractors
• Customer
• Company management
• Site workers

• Grantor
• Grantor’s board
• Executive director of grantee organization
• Grantee’s board
• Field service workers
• Constituents being served

Key Question: Are we on time and under budget?

Key Question: Are funds being used in service of our stated objectives? How many constituents have we been able to reach?

For grant managers, software should provide real-time information regarding the use of the funds for specified purposes, including timely updates from the field. The system should capture statistical data so that detailed reports can account for constituents served. Information needs to be secure but easily accessible based on roles and the rights assigned to individual stakeholders. Account structures need to be flexible, not rigid or hard-coded so that managers can comply with the diverse requirements of individual grantors.

Not-for-profit software must be able to meet the tracking and reporting needs of both grantor organizations and grantees.

Pre-Award

How is a project or grant initiated?

Project Management

Grant Management

The process begins with a bid for a job.
A project cost estimate is created with high-level costs by phase. Once the job is accepted, total dollars and schedule end dates become more important than strict adherence to the detailed budget.

The process begins with a grant application to a qualified grantor organization.

The grant manager needs a detailed budgeting solution with a flexible account structure that can exist outside of the general ledger.

Award

How is a project or grant awarded?

Project Management

Grant Management

The project is either accepted or not. If the job price is negotiated, it will result in a revised project.
Most projects require an upfront deposit before work begins, which helps minimize the cash flow burden on the organization

A grantor may make a partial award against a given grant proposal. The original proposal will have to be maintained intact, with any additional sources of funds being associated but also separately monitored.

A grantee may receive notification of an award and then wait months or years to receive the cash. Funds are typically received via reimbursement, which creates cash flow pressure on the organization.
When a proposal is awarded, it may also fund field offices, which will need to track funds in their own currency

The grant manager needs to keep a close eye on cash flow, manage multiple funding sources, and get funds to field offices in their native currency.

Funding

How are the funds disbursed over time?

Project Management

Grant Management

Customers are billed as costs are incurred. Often projects include an overhead allocation or pre-defined burden rate.

Grantors are billed for actual costs incurred by the Grantee and are reimbursed after the fact. Overhead rates, if allowed, are dictated by the grantor.

For the grant manager, flexibility in allocations and alignment with the original award document is crucial for timely reimbursement.

Tracking Costs

How are expenditures monitored?

Project Management

Grant Management

Budgets are prepared by phase, which tends to be fairly standard by industry.

Many project accounting tools offer two levels of coding – project and cost code—plus some sort of resource identifier– generally labor, materials, equipment.

Alternatively, for certain types of projects, costs are recorded based on a defined Work Breakdown Structure (WBS), which is basically a hard-coded outline used for many government projects.

Work is often divided between technical or functional disciplines such as engineering, manufacturing, testing, and procurement.

Overhead costs might be allocated to activities, phases, or projects.
 

A budget is prepared showing costs by expenditure category, which varies by grant.

Detailed cost coding and tracking is critical to showing adherence with award terms; any variations must be reported to the grantor.

Each grant might require a separate reporting structure.

Requirements for categories and coding can be virtually unlimited.

Cost allocations are made at the detailed level and might include cross-fund and cross-grant items.

For a non-profit organization, allocating indirect costs to a given grant is not only complicated, it is often key to insuring that the organization can cover operating costs.

The grant manager needs a solution that provides nearly unlimited coding options plus the ability to allocate costs across line items, funds, and grants.

Sources

How are awards from multiple sources managed?

Project Management

Grant Management

Projects are typically billed to a single customer, although a general contractor may work with multiple subcontractors.

Cost-plus projects might require detailed monitoring, but generally, summary reports are acceptable.

In some cases, a grantor will require matching from another source, which will need to be identified.

Gifts in-kind also need to be tracked in compliance with award requirements.

The grant manager needs a solution that not only supports both detailed tracking of individual expenditures, but also helps him associate matching funds and in-kind awards with a given project.

Internal Reporting

What reports does the manager need?

Project Management

Grant Management

Mission Critical :
• Billed versus unbilled
• Critical path activities
• Actual costs as a percentage of estimate
• Project percentage of completion
• Estimated revised completion date
• Resource availability
• Subcontractor scheduling

Mission Critical:
• Expenditures by award line item
• Expenditures by CFDA (Catalog of Federal Domestic Assistance) number or other local or governmental reporting requirements
• Reimbursed and unreimbursed expenditures
• Restricted versus non-restricted fund expenditures
• Results of expended funds – statistics and numbers of constituents served

Focus: Managing the schedule

Focus: Managing the flow of funds

The grant manager needs flexible, timely reporting that allows him to go from detailed line items to summary information as needed. In addition, he needs to be able to show evidence of compliance with all applicable rules and regulations, in conformity with all audit standards including Federal A-133 requirements.

Progress Indicators

What are interim indicators of success?

Project Management

Grant Management

Schedule milestones indicate completed steps in a project. Often the timing of billing is tied to milestone completion.

Progress is measured by number of constituents served. Evidence of adherence to stated terms and conditions is more important than schedule.

The grant manager must show evidence of compliance with a grantors terms and conditions via interim reporting and on-going communication.

Restrictions

How are funds restricted or allocated?

Project Management

Grant Management

There may be construction loans that are tracked separately from other operating funds.
Track costs versus budget – summary information is usually sufficient.

In addition to restricted and un-restricted funds, grantees might need to differentiate fully obligated from committed funds. When funds are fully obligated, a grantee will also need to manage and report against any imposed restrictions.

The grant manager needs to be able to quickly associate grant funds with detailed award line items as well as individual field locations and discrete projects. He also needs to view totals for award estimates, obligations, and amounts by line item.

Revenue

How is revenue recognized by each function?

Project Management

Grant Management

Completed contract or percentage-of-completion methods are widely used in the construction industry. Percentage-of-completion is normally determined by the project manager. Funding advances and actual-to-budget cost variances are calculated using the project budget adjusted to percent-of-completion.

The grant is earned as costs are incurred or as the milestones are completed.

Accurate tracking of costs in conformity with budget is crucial to the grant manager’s ability to receive timely reimbursement. At the same time, the manager needs to stay on top of outstanding funds via rules that he can use to generate invoices that are tracked in a receivables system.

External Reporting

What information needs to be shared?

Project Management

Grant Management

Interim reports of costs incurred and revised schedule might be delivered to customers along with an invoice.

Detailed interim reports are required by grantors at specified periods. They typically include:

1. Financial reports – comparing expenditures to the budget
2. Progress reports – explaining in detail the activities, accomplishments, and difficulties that have occurred since previous reports

Final reports are required in support of grant expenditures and typically include narratives describing an organizations expected and achieved results.

Flexible reporting across a number of different time-periods is a key requirement for any successful grant manager.

Revisions

How are changes handled?

Project Management

Grant Management

When a change to a project is required, the project manager submits a change order to the customer. Approved change orders can result in changes to the project scope or modifications to the overall project cost.

Grants can be modified as requirements change. A manager must keep track of the additional grant and any subsequent revisions.

Grants may also have sub-awards that are associated with the original grant.

The grant manager needs to be able to track expenditures against both the original grant and any subsequent revisions.

Summary

Once you take a closer look at projects and grants, it becomes clear that the two disciplines are very different. From the purpose of their role, to the stakeholders they serve, to the process of bidding and receiving an award, grant managers have some unique requirements to meet. What’s more, grant managers have strict accountability and tracking requirements, specialized reporting and measurement needs, and complex revision tracking requirements. It should be no surprise, then, that grant managers need special tools to support them.

It is no longer acceptable for grant managers to use tools that are not perfectly designed for the task at hand. It is crucial for grant managers to have access to solutions that can simplify reporting and compliance so they have more time to facilitate solutions in support of a cause.

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