March 18, 2021

Grant Compliance Best Practices for Grantmakers

Grant compliance can be a heavy lift for grantmakers, but is imperative in order to ensure continual management of your program. Learn more about what compliance standards may apply and how to navigate them.

In these times of increased belt-tightening, being able to award grants to worthy organizations and individuals is an honor — and a responsibility. No matter what, you want to ensure that you use the funds you are awarding in ways that provide the highest benefits to the common good. It’s why you do what you do. For those managing pass-through grants, you want to be responsible to the entity funding the award, whether it is a private organization or a government entity that is drawing from a tax pool. And those in particular industries with additional oversight will want to provide transparency about the programs they are funding. Being responsible and ensuring that funds are used in ways that they intended is called grant compliance

What is grant compliance? 

Grant compliance means following the standards set by government, oversight boards, or even your own organization. These standards will differ across the board, but most will include program rules and requirements, documentation of program processes, progress, and impact, and reporting of data. Achieving compliance is crucial to maintain your funding stream or to be allowed to continue investing in programs that further your mission. It can also set the stage for future funding by demonstrating your ability to fulfill requirements and achieve impacts. 

Sounds like a lot of extra work, right? It doesn’t have to be: The burden of grant compliance can be made lighter by understanding the requirements for the grants you manage, devoting appropriate amounts of time and people-power to compliance, and using a grants management software to record data, document program impact, and generate progress reports on demand.

Common grant types with compliance regulations

Let’s start by looking at some common types of awards and their grant compliance requirements:

  • Pass-through grants are federal grants that “pass through” local government entities. Though government pass-through grants are not directly administered through the federal government, they are still subject to federal, and sometimes state, compliance requirements and policies. 
  • Programs with minors as applicants are subject to the Family Educational Rights and Privacy Act (FERPA). FERPA is a federal law that protects the privacy of certain information about students. Organizations that receive certain funds disbursed by the U.S. Department of Education or that award funds to minors must be FERPA-compliant. 
  • Research programs in the areas of manufacturing pharmaceuticals, medical devices, or medical supplies must comply with the Physician Payments Sunshine Act if they receive federal funding. The Sunshine Act, as it’s commonly known, requires researchers to document and report their financial relationships with doctors and hospitals, in order to increase transparency. Researchers whose work involves human participants must also comply with Institutional Review Boards in order to ensure that their work meets safety and ethics standards. They must also obtain documented consent of each participant. 
  • Programs managed by banks and financial institutions will likely need to document and report data pertinent to the Community Reinvestment Act (CRA). The CRA is a federal civil rights law that ensures equitable lending. If applicable, your organization will need to maintain annual records of data related to CRA performance, such as geographic and demographic information related to the populations you serve. 
  • Programs managed by nonprofit hospitals will need to document their community benefits in order to comply with the Affordable Care Act and maintain the hospitals’ tax-exempt status. States and many hospitals themselves will create community benefit compliance standards, which will often align with a program’s intended health-improvement outcomes. 

Tips for ensuring you stay compliant

Compliance is work, but it’s work that ultimately benefits your organization by helping you maintain good relationships and helping to form your organization’s impact narrative. Here are some tips for optimizing your compliance workflow: 

  1. Do your research. You can’t be compliant unless you know exactly how to be compliant. These requirements will often be included with your funding agreement, but it’s crucial to ask questions about any requirements that you don’t understand or data aren’t sure how to capture. 
  2. Appoint someone to be in charge of compliance. Think of this role as a grant compliance project manager: They can delegate compliance-related tasks, ensure that your organization stays on a proper timeline for data collection and deliverables, and be the point person for grantees’ compliance-related questions. 
  3. Create internal process documents. Even if you are an old pro at grant compliance, every cycle can be slightly different or present new externalities (pandemic, anyone?). That’s why it’s important to thoroughly document your compliance regulations and your organization’s policies for fulfilling them. A cloud-based grants management software can keep all of this information accessible to employees and stakeholders, whether they work on site or remotely. 
  4. Practice safe and thorough data collection. It’s crucial to show funders that your organization is capturing all necessary data and safeguarding it against data loss or breeches. This goes double for government agencies. When reviewing grant management software requirements with customer liaisons, ask about the system’s security and privacy capabilities.
  5. Ensure all reports can be easily pulled and shared. Some compliance standards require sending periodic grant reports with up-to-the-minute data on your program’s progress. You’ll save a tremendous amount of time with a grant management software that can generate this information at the click of a mouse.



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