Navigating the grant landscape requires precision and persistence. While compliance is nonnegotiable, the evolving and often intricate requirements can pose significant challenges for even the most experienced teams. Organizations must navigate myriad laws, regulations, and standards to avoid penalties, protect their funding, and maintain operational integrity. Losing focus on compliance in this environment can lead to significant risks for your organization, including hefty fines and penalties, revocation of tax-exempt status, and loss of funding. Is a review of your compliance framework overdue? Here’s how to start your journey now.
The path to achieving compliance begins with a thorough evaluation of the people, processes, and technology within your organization, an examination of each grant to ensure proper adherence to the rules, and a durable framework to maintain compliance into the future.
Take a team approach
Compliance can’t fall on the shoulders of a single individual. It requires a dedicated team of knowledgeable professionals with a deep understanding of relevant laws, regulations, industry standards and best practices, whether Uniform Guidance, state-specific regulations, or other requirements. When building your compliance team, focus on the following key areas.
- Define roles and responsibilities: Clearly distinguished roles ensure accountability and efficiency. Each team member must understand their specific duties and how they contribute to your organization’s compliance strategy. If a shortage of qualified professionals leaves your organization without sufficient staff to handle critical duties, consider adding team members from outside of your organization. Outsourcing specific functions can be a cost-effective and time-efficient solution to address these needs.
- Foster collaboration across departments: A comprehensive approach to compliance requires cooperation among various departments such as grants, accounting, legal, and IT. Clear communication between departments ensures a good flow of information around compliance and fosters a collective mindset of adhering to the rules. Working together as a team helps reduce the risk of noncompliance that often occurs in isolated operations. This collaborative approach fosters a comprehensive organizational response to compliance challenges.
- Cultivate an ethical culture: An ethical culture naturally promotes compliance. Encourage individuals to act with integrity and to report concerns without fearing retribution. Leadership plays a pivotal role in setting the “tone at the top” for ethical behavior.
- Train your team: Ensure that individuals responsible for grant administration have a sound understanding of the compliance requirements and established processes needed to perform their tasks. Grant requirements can be complex and sometimes evolve, and training — both internal and external — is necessary for individuals involved in grant management to meet compliance requirements. Update training programs regularly to cover new policies and best practices, reinforcing the commitment to compliance.
Review your processes
Every organization needs a comprehensive, systematic approach to identify and address compliance risk exposure. This requires processes that result in strong internal controls, thorough risk management, diligent monitoring, and detailed documentation to support your compliance efforts. To streamline compliance efforts while mitigating risk, focus on the following.
- Risk assessment and management: Start with a proactive enterprise risk management framework to ensure that risks and related dependencies are identified, evaluated, and mitigated. Regular assessments help reveal potential compliance issues before they escalate into something more serious.
- Internal controls: Implementation of controls across all compliance-related areas and operations is essential. Effective internal controls are built around key focus areas — including risk assessment, control activities, monitoring, information flow, and the overall control environment — that help organizations safeguard assets, ensure compliance, and achieve operational objectives. To maintain operational integrity, occasional assessments should be conducted to confirm that segregation of duties aligns with each employee’s role and responsibilities. Technology access must be restricted to authorized individuals. Implementing internal controls isn’t a one-and-done task; it starts with education, followed by regular monitoring, and finally updates to existing measures to maintain compliance.
- Comprehensive policies and procedures: Establish clear policies and procedures as your foundation for compliance. They should be broad enough to apply to a variety of grants but specific enough to address unique circumstances. Involve all key stakeholders during development to ensure the guidelines are practical and applicable.
- Monitor operational compliance: Monitoring grant compliance acts as a safeguard to ensure compliance efforts, i.e., processes and controls, are effective and incorporated into daily operations. Utilize internal and external audits to get an unbiased look into your compliance status. This dual approach results in a solid understanding of your organization’s performance and allows for course correction as necessary.
Leverage your technology
In our digital age, technology can help effectively streamline your compliance efforts. With the right tools in place, you can automate strenuous and time-consuming tasks while helping to ensure an accurate compliance record. Start with these four strategies.
- Maximize your existing technology: Where possible, maximize the utility of your existing technology to increase efficiency and reduce the risk of errors. For instance, your chart of accounts can be designed to align your organization’s financial transactions with grant requirements, elevating financial reporting accountability and helping to demystify the compliance process.
- Adopt specialized software: Assess whether the volume and importance of your grant activity justify implementing an integrated compliance and grants management system to streamline tracking and oversight within your organizational structure.
- Assess your data security and privacy posture: Protecting sensitive data is a critical aspect of compliance. Advanced security measures, such as encryption and access controls help safeguard information from unauthorized access and breaches. The Office of Management and Budget’s cybersecurity requirements provide a good starting point for building your organization’s cybersecurity framework.
- Build real-time reporting and analytics capabilities: Real-time reporting and analytics provide valuable insights into compliance status. These tools enable organizations to identify trends, monitor key performance indicators, and make informed decisions. Dashboards and reporting tools can offer a visual representation of compliance metrics, making it easier for stakeholders to understand and act on the information. Data analysis tools can provide real time insights such as trends or anomalies in spending to catch noncompliance earlier and more frequently.
Looking ahead
A robust compliance framework protects your critical funding, mitigates risks, and fosters organizational integrity and trust. By ensuring each element of a successful framework — developing your team, enhancing processes, and integrating technology — your organization can have a resilient compliance environment and a strong foundation for accountability and long-term sustainability.
