Three Reasons Public Sector Must Transform Grant Management NOW

by Alex Saric

Reason No. 1 – Grants are Mission Critical

The U.S. Office of Management and Budget (OMB) estimates federal grants to states and local governments in FY2019 totaled nearly three quarters of a trillion dollars. To put that in perspective, the US GDP that year was just over $21 trillion and federal spend was $4.4 trillion, making grants roughly 17% of the total federal budget. 

Federal grants often make up a large portion of any state, county or municipal budget. In some cases grants contribute as much as half of annual expenditures. The mission critical nature of grants becomes clear, for instance, when one considers state agendas are driven by focus priorities (such as response to the Covid pandemic). 

In order to address broad, influential priorities like emergency management or public safety, administrations must find ways to deliver necessary funding. Typically they’re presented with three options; increase taxes, increase fees, or pursue federal resources.

Obviously, increasing access to and utilization of federal funds is preferable to increasing constituency tax burden. The best way forward, therefore, would be the aggressive pursuit of federal programs and federal resources. The management of these programs is ultimately what defines the success of the intended economic impact.

Reason No. 2 – Grant Management can be Burdensome and Complex

Solicitation, award and distribution of grant funding requires significant effort from government administrators and experts in the areas of grants compliance. Alternatively, applicants must dedicate many hours (often hundreds) into writing and submitting grant applications with often unpredictable  results. When a grant is awarded, many recipients have difficulty managing and tracking funds.

They may lack resources required to meet programmatic and financial reporting requirements or mitigate the many risks of non-compliance. With limited staff and budget restrictions, recipients quickly find there aren’t enough resources to manage the full lifecycle of the grant. Inefficient, often disparate systems, as well as duplicative processes add to that complexity. The management process is often inefficient, and worse, subject to waste, fraud and abuse.

To reduce inefficiencies and fraud, grant activities are governed by several regulations including these two relatively recently enacted laws:

• The Digital Accountability and Transparency Act of 2014 (DATA Act) – This law expands on federal awards reporting reforms that began with the Federal Funding Accountability and Transparency Act of 2006. The DATA Act is intended to improve the quality and transparency of the Federal Government’s award data through implementation of government wide spend reporting standards set by the OMB and Department of Treasury.
• The Grants Oversight and New Efficiency (GONE) Act of 2016 – The goal of this law is to provide visibility into aged grants and enable efficient closeout of expired grants.

In response to the changing landscape of legislation and accountability requirements, there’s been a  movement towards normalizing and standardizing these processes. Replacing inefficient legacy systems and manual processes with technology capable of automating the entirety of the grants  process has become the goal. Automation can deliver improved forecasting, monitoring and collaboration in addition to a more predictable and sustainable means of managing federal resources.

Reason No. 3 – It’s Timely

Earlier this month, the American Rescue Plan Act of 2021 was signed into law. The $1.9 trillion stimulus package provides the country’s public health workforce needed support totaling nearly $93 billion. Some of this funding will be distributed by HHS to state and local health departments tasked with providing regional Covid-19 management. Other notable provisions include:

• $58 billion for employer pension plans
• $52 billion for transit agencies, airports, and the aviation industry (including airlines and manufacturers)
• $50 billion for small business businesses severely affected by the pandemic
• $40 billion for childcare and childcare providers (including Headstart)
• $15 billion for small businesses in low-income communities
• $28 billion specifically for food services businesses such as bars, restaurants, and caterers
• Over $1 billion for business whose primary activity is live events such as theatres, museums, and performance venues

The stimulus funding and projects it will benefit will require responsible management, stewardship and oversight for years to come.

The Procurement Link

Grant solicitations are much like procurement solicitations in that, to be successfully managed, require contracts, budget tracking, purchase orders, invoicing, and audit preparedness.

Ivalua’s grant solution enables grantors, applicants, and awardees to perform these activities effectively and efficiently. Developed natively on Ivalua’s industry leading procurement platform, the grants package provides grant managers:

• Full and unmatched visibility into the grants process
• Capability to scale by automating complex manual, often disparate, processes
• Audit capabilities which help mitigate risk of fraud, waste and abuse

With the passage of the American Rescue Plan Act of 2021 and its impact on the volume of funding being managed at all levels of government, the need for improved processes and technology has never been greater.

Please do not hesitate to reach out to Sean Correll and Tom Grimes if you have further questions related to Grant Management and Ivalua’s Grant Management Software.