Fiscally Ready Communities Best Practices
Grants Policy Guide

The Fiscally Ready Communities grants policy guide supplements the local government’s process of developing grants policies. Grants are a great way to increase funding for municipal projects and programs; however, they often come with strict requirements. Failure to meet the requirements can have negative consequences such as losing the funding and eligibility for additional grants. Therefore, Fiscally Ready Communities recommends creating grants policies. These policies are essential to ensure the local government can properly oversee grants and meet all the grant requirements.

Fiscally Ready Communities Grant Recommended Policies

• The local unit should establish a grants administration committee to ensure there is proper administrative and operational support.
  • A grants policy should also include a requirement that the government obtains a detailed understanding of the terms and conditions and how the grant will be monitored.
  • Examples of what should be required include establishment of procedures related to (Government Finance Officers Association, 2013):
    • The development of a project plan that would include how new programs or activities funded by the grant would be implemented and who would be responsible for implementation.
    • The provision of training for those responsible for the grant, so they can effectively carry out their roles.
    • Terms and conditions for grant-funded personnel, such as severance and unemployment costs related to employees who are terminated upon expiration of the grant or operating and maintenance costs for assets that are acquired.
    • The system/process that will be used to charge expenses against the grant and to obtain reimbursement.
    • Identify the individual/department responsible for carrying out the grant and ensure that proper resources are available to support that grant.
• The local unit should promote your grant on your website and social media, if applicable.

Fiscally Ready Communities Grant Policies

Key grant policies include:

• A policy on identifying, applying, approving, and monitoring to grants.
  • A grants policy should require that the department or agency seeking a grant provide advance notice to the appropriate authority, such as finance and/or the local board, so that the effects on the government can be reviewed and understood beforehand (Government Finance Officers Association, 2013). 
    • Grants could affect the budget, cash flow, procurement requirements, financial reporting, compliance requirements, or legal requirements (Government Finance Officers Association, 2013).
  • Grant development opportunities may include, but are not limited to, partnerships with foundations; corporate philanthropy; and state, federal and local agencies.
• A policy on ensuring grants align with the strategic goals of the municipality (Government Finance Officers Association, 2013).
  • A grants policy should include a requirement for assessing the extent to which a grant is consistent with the government’s mission, strategic priorities, and/or adopted plans (Government Finance Officers Association, 2013).
  • Accepting a grant that is not consistent with the overall strategic direction of a government creates the risk that the government will spend its own funds to support a grant inconsistent with overall strategic direction or commit the government to own-source spending beyond the grant period (Government Finance Officers Association, 2013).
• A policy on conducting a funding analysis (Government Finance Officers Association, 2013).
  • The grants policy should require a multi-year cost/benefit analysis prior to application or acceptance (Government Finance Officers Association, 2013). 
  • The analysis should include (Government Finance Officers Association, 2013):
    • matching funds (and whether or not they will need to be set aside) and any other direct costs associated with a grant, the extent to which overhead costs will be covered.
    • in-kind contributions.
    • audit and close-out costs.
    • and potential costs that might need to be incurred by the government beyond the grant period.
    • The analysis should also explore whether a grant requires that general revenues or a line of credit or grant anticipation notes be used to cover the gap between cash being expended and the reimbursement that is received by the government. 
• Prior to renewal or grant continuation, the grant should be evaluated.
  • The grants policy should require an evaluation of the impacts of the grant-funded program or asset prior to deciding whether to continue a grant at the end of the initial grant period (Government Finance Officers Association, 2013).
    • Creating outcome measures before receiving a grant will help the government to determine the extent to which the grant program or asset has produced desired benefits (Government Finance Officers Association, 2013). 
      • Such an analysis should also include a review of actual costs and the potential benefits of using general revenues associated with the grant for other purposes (Government Finance Officers Association, 2013).
• The local unit shall establish a way to monitor grant progress and ensure that all reporting deadlines are met (Government Finance Officers Association, 2015).
  • Based on the grant period, there should be multiple reviews of the budget, progress, and goals of the grant. These could occur monthly, weekly, etc.
• The local unit shall establish clear lines of communication for all parties involved in the grant.
  • Develop ongoing communication and knowledge of grantors, and grant partners.
  • Develop an ongoing dialogue with financial statement, single audit, and program auditors concerning grant reporting and compliance.
  • Develop processes to ensure that quality, supportable information is utilized in grant decision making.
• Review GFOA’s Internal Controls for Grants.

Grants Policy Review Table

Please use the table below to consider whether your grants policy needs an overhaul or refresh. This document has been built so you can track where you are in the process.