Skip to main content

Grant Management

Accountability & Transparency

  • With respect to utilisation of grant funds

  • Efficient & Effective use of the grant funds

  • Compliance with applicable laws of the land

  • Adherence with terms and conditions of Grant Agreement

  • Internal controls i.e. financial and accounting systems, budgetary control, funds management

  • Timely submission of narrative and financial reports as required under the grant

Principals 

Stages of Grant Management: Grant Lifecycle

Grant Management Lifecycle

  • Pre-award

    • Identify the need

    • Planning

    • Opportunity

    • Apply for grant

  • Awarded

    • Receive grant

    • Share additional information as needed

    • Documentation

  • Post-award

    • Develop current year projection

    • Execute all activities

    • Manage and monitor the project

    • Share program and finance report

    • Documentation/Reporting

    • Close out

    • Close grant

Pre-requisites for robust grant management system:

  • Policies & Procedures (Finance & HR) - ensuring strong internal control environment

  • Accounting - ICAI Technical Guide for accounting of NPOs

    • Fund based accounting for presentation of financial statements

    • Accrual basis of accounting

    • Maintenance of prescribed books of accounts

    • Accounting Standards as framework for recording and reporting

  • Statutory laws of land - understanding and compliance

  • Donor contacts - expectations and reporting fully understood

  • Segregation of duties - checks and balances, dedicated finance staff

  • Encourage audit and assurance - risk mitigation

Income of charitable institutions - Types of Funds

  • Aggregate Income from property held in trust (Schedule AI)

  • Voluntary contribution (Schedule VC)

  • Capital Gains

Types of funds (ICAI):

A. Unrestricted funds:

  • Corpus: non-refundable, non-reducible, reinvestment obligation

  • Designated/earmarked funds: for specific purpose/future, not legally binding

  • General funds: neither designated nor restricted, includes I&E surplus/deficit

Income of Trust and Types of Funds 2/1: Corpus:

  • Comply with Income Tax provisions - Section 11(5), Section 11(1)(d)

  • Donation to another registered entity not considered application

  • Application to be considered in year of replenishment

  • Should be shown as Capital; income earned shown in I&E

B. Restricted funds:

  • Project/program grants: to be used as per terms of award

  • Endowment funds: only income used as per terms

Format of financial statements as per ICAI: BALANCE SHEET:

  • Sources of Funds:

    • UNRESTRICTED FUNDS: Corpus/General/Designated

    • RESTRICTED FUNDS

    • LOANS/BORROWINGS

    • CURRENT LIABILITIES & PROVISIONS

  • Application of Funds:

    • FIXED ASSETS

    • INVESTMENTS

    • CURRENT ASSETS, LOANS, ADVANCES & DEPOSITS

Income and Expenditure Account:

  • INCOME: Operations, Grants & Donations, Other

  • EXPENDITURE: Materials, Employee Benefits, Admin, Finance Costs, Depreciation, Other

  • Surplus/Deficit transfer and carry forward

Cost Principles in grant budgeting:

  • Allowable cost

  • Allocable cost

  • Reasonable cost

  • Consistent

  • Unallowable cost

Budgeting & Budgetary Control:

  • Budget is estimation tool and framework

  • Segregates costs: direct, common, indirect

  • Supports co-financing/multi-donor grants

  • Budgetary control:

    • Track income and expenses

    • Deviation analysis

    • Timely approvals for overspend

Terms and Condition of Grant:

  • Understand full contract

  • Common clauses:

    • Separate accounts

    • Cash expense limits

    • Interest treatment

    • Procurement rules

    • Fixed assets treatment

    • Reporting timelines

  • Compliance Calendar post signing

Robust Grant Monitoring System:

  • Performance tracking

  • Progress review (physical & financial)

  • Risk management

  • Key tools:

    • Budget, LFA understanding

    • Variance analysis

    • Course correction

    • Timely narrative and financial reports

Accounting treatment for grants to NGOs:

  • Grant is trust money

  • Options:

    1. Grant as income

    2. Grant as liability

    3. Hybrid (income = expenditure)

  • Follow principle of prudence

General Conditions of a Grant:

  • Terms definitions

  • Commitments (funder & grantee)

  • Rights, reports, assets, termination

  • Force majeure, dispute resolution, confidentiality, interest, employment, IP

Interest apportionment:

  • With multiple projects in one account: use defined method

  • Not applicable for dedicated accounts

  • Interest treatment as per grant agreement

Common/Core Cost:

  • Shared costs: HR, travel, office, etc.

  • Prorated to donor projects

  • Must have common cost policy

  • Allocation examples: space, staff time, units

Salary Allocation for multiple projects:

  • Allocate as per grant and annual budget

  • Monthly salary register with allocation, deductions, variances

  • Needed for audits

  • FC/local funds booking compliance

  • Timesheet compliance if required

Recipient, Sub-recipient and Vendor:

  • Recipient = Prime = main grant holder

  • Sub-recipient = does substantive project work

  • Vendor = contractor for goods/services

What is a Contract:

  • Binding agreement for goods/services

  • Specific outcomes

  • Payment based on deliverables

What is a Grant:

  • Assistance to achieve result

  • No legal requirement to achieve result

  • Flexible scope and payments

Closure of Grant:

  • Ensure all closure provisions met

  • Submit final program & finance reports

  • Closure report + fund reconciliation

  • Final donor acknowledgment of NO DUES

Tips for effective Grant Management:

  • Build trust

  • Meet targets without under/overspend

  • Spend capital budget early

  • Timely donor reports

  • Maintain files

  • Avoid surprises

Back to top