Managing Pre-Award Administration

While the grant making process can be complex, requiring caution and mindfulness. The pre-award phase represents the beginning of the grant lifecycle, which includes announcing opportunities, submitting applications, and reviewing applications. This part of the cycle consists of three key phases, each with specific requirements that must be completed by both the grant maker and the potential grantee.

Phase 1: Selection of Grantees

There are three possible methods for sourcing recipients for grants:

1) call for proposals

2) active engagement with potential grantees who match your goals

3) a combination of number 1 and 2.

1.1. Call for Proposals

At the beginning of the grant process, the grant-making organization is to plan and develop a funding program based on their mission, vision and values. This preparation prior to a call for proposals is a key moment for the organization. It must be very clear from the beginning what can be achieved with the resources available. A term for references for the program must be prepared, usually in the form of a call for proposals. This formal announcement of funding opportunity is advertised to applicant communities and invites tailored proposals that are in-line with the program’s mission. In general, a call for proposal is the most inexpensive and relatively efficient manner through which a grant maker can bring together a large pool of prospective grantees. To ensure that the right types of applications are received. It is critical that terms of reference for the potential grant be clear and free of misinterpretation by grantees. If there are any reasons why a grantee will be excluded from receiving a grant, this should be made explicit both on the terms of reference and on the funding organization’s website.

To ensure that there is consistency in selection of grantees, it is good practice to develop a scoring tool that mirrors the terms of reference. Not only will this allow for transparency, but it will also allow successors to understand why certain grantees were provided with grants over others. As can be expected, the time between submission of a proposal and receipt of a decision is one of high anxiety for applicants.

Therefore, it goes without saying that each proposal that is submitted should be acknowledged, screened for compliance, and potential grantees provided with a timeline of when they can expect to hear about the decision. Similarly, if there is any information that is missing, the acknowledgement communication is a good time to highlight gaps.

1.2. Active Engagement

In some instances, grant makers require grantees in a certain geography with specific skillsets and reach. In such cases, active engagement that includes site visits is the method of choice when selecting grantees. While this process limits the pool of potential grantees and is also cost intensive, it allows for alignment, where possible, at an early stage. Similarly, it allows both grant maker and grantee to assess whether there is a potential for a partnership and also ensure that both parties lay out their requirements and expectations from the start. While this method is the most effective in forging long standing partnerships with grantees, its downfall is that selected grantees are often times those within the grant makers network or immediate line of vision. Other deserving grantees who perhaps may make an even greater impact, lose out in such instances.

1.3. Combination

Given the strengths and weaknesses of both Call for Proposals and Active Engagement, grant makers have moved towards using a combination of both. Regardless of the method used, communication during this process is of utmost importance. Identifying materials that will be required upfront as well as during the course of the selection process will prevent frustrations on both ends. For example, a grant maker waiting for information that is not forthcoming and a potential grantee needing to compile information at short notice into a presentable format may cause frustration and weaken the possibility of a healthy working engagement before the project even begins.

While different grant-making organizations have nuanced processes based on the type of grant in question, there are general applicable steps to reviewing an application:

  • Initial screening to ensure application is complete
  • Programmatic review and assessment of the substance of the applications
  • Financial review of proposed budgets

 

Phase 2: Due Diligence

Once grantees have been shortlisted for a grant, the next step is to carry out due diligence. Due diligence should be carried out on key areas

  • Grantee reputation: This involves understanding the reputation of the grantee in its operating location as well as the reputation of key management and project execution team members.
  • Management and Operations: Key questions to find answers to when carrying out due diligence on this lever of the grantees firm include: how the leadership of the organization partners with the board, qualifications and skillsets of the organization’s leadership as well as the implementing project team etc.
  • Financial: This is only applicable to existing organizations. Key things to be on the lookout for include – how financial statements are prepared, clearly defined revenue stress or financial plan, audit reports of grantee organizations etc.

Refer to the sidebar information “ Due Diligence Guidance” for detailed information for some of the areas that grant makers are to consider as they carry out this process. While the information is not exhaustive, it provides a starting point for both grant makers and grantees who are new to the grant making process.

Given the range of areas that due diligence covers, it is advisable that a team be set up to carry out the process. At a minimum, the team should include an individual with financing or accounting skills and where possible a legal expert who can advise on findings that may have a legal bearing on the grant maker.

To ensure consistency throughout the process and for purposes of documentation for future use, it is best practice to develop a ranking scale to classify grantees at the conclusion of the due diligence process. This can be as simple as ‘low, medium, high’. A due diligence report should be produced at the end of this process highlighting where a grantee ranks with justification. If there are any red flags, these should be indicated with recommendations made to the grant making team on whether or not to proceed with the grant.

Phase 3: Pre-Award Negotiations

Occasionally, when there is a strong desire by the grant maker to proceed with a grant, there is an informal negotiation phase that occurs before a grant agreement is signed. This can be for a variety of reasons including:

  • The grant maker believes (based on experience) that the requested amount vis-a-vis the work that needs to be completed is too low
  • The grant maker has a strong desire to support the project but resources for the current fiscal year have been exhausted and the grant maker is not able to provide the full amount requested

Whatever the case may be, this stage requires full honesty and transparency. Moreover, any additional resources that the grant maker wishes to provide should be noted at this point. Similarly, if a grant maker is not able to provide the full amount requested, the potential grantee should indicate how the project will be affected and the minimum amount that will be required for satisfactory execution of the project. Where there is a shortfall of funding, potential grantees should take the opportunity to ask grant makers if any of their partners in their grant making network are in a position to provide resources. The negotiation period is also the phase where a grant maker and grantee agree on the disbursement plan, deliverables as well as the dissemination and use of any outputs or knowledge products from the grant.