Reiterating Why Grant Reports Are So Important
In our October 24, 2023 article titled “Grant Reports Were Meant to Be Read,” we explained how grant reports help funders to fulfill stewardship and oversight responsibilities, and to help monitor grantee accountability, evaluate performance and compliance, monitor use of funding and financial stewardship, assess impact, and make grant-related decisions.
If you’re a grantor and don’t require periodic financial and performance reports from your grantees, you need to! Grant reports serve to show progress and spending of a grant-funded project or program, and should be required annually or more frequently. And if you require your grantees to submit financial and performance reports, be sure to read them closely.
Financial reports are important to show the flow of funding in and out of a grant project. They can be simple and might only show a ledger of total expenses and income for the reporting period; while they may not require details of specific expenses or receipts, they can be used to show potential red flags from planned and actual spending over time.
Performance reports, on the other hand, are often narrative and provide detailed activities and progress for the reporting period. To monitor grant project progress, grantor managers, staff, or consultants should read performance reports thoroughly and compare them to the previous period’s report and the activities and goals stated in the grant application documents.
What Can Happen When You Don’t Read Your Grantee’s Reports
When a grantor fails to read grant reports thoroughly, there can be negative consequences that can impact both the grantee organization and the grantor’s ability to achieve its intended impact. Indications of potential misuse or misallocation of funds can be missed, which can result in the funds not being utilized for their intended purpose. Unseen signs of program inefficiencies, delays, or unforeseen challenges can lead to ineffective or stalled projects. The grantor may miss opportunities to support their grantee and help them succeed. Failure to review reports and assess data can result in uninformed decisions, such as continued funding for programs that are not achieving desired outcomes. Accountability can be diminished for the grantor and the grantee, which can lead to strained relationships – grantees may feel undervalued or unsupported if their efforts and achievements are not acknowledged or considered, which can negatively impact future collaborations.
Colhio Grant Consulting has observed multiple instances of misuse of funds and project scope creep that could have been prevented if the grantor had reviewed performance and financial reports. In the most egregious case, a grantee received several grants from a grantor to build justice centers in two locations; each location was to include a correctional facility and a judicial building. The grant applications stated specific sizes for each building, and the awarded grants totaled about $70 million to construct the four buildings.
An audit was conducted of the grants several years after the award date, after the justice centers had been built and were in use. The audit found that the correctional facilities had increased in size significantly, while the judicial buildings were built smaller than planned. One judicial building had shrunk substantially from what had been planned and stated in the grant applications, and the other judicial building had not been built at all. Meanwhile, both correctional facilities were constructed at nearly triple the size planned in the grant applications. The audit also found the local population did not support the number of inmates that would fill the larger correctional facilities, nor the number of detention officers needed to staff them. As a result, one facility was operating at 0% capacity and the other at 18%.
How did this happen? The changes from what had been planned and approved were preventable, had the grantor’s staff been reading the grant reports. Over several years, the grantee had provided performance reports to the grantor twice per year, and financial reports every quarter. Many of the performance reports had shown incremental increases to the correctional facility sizes from the previous report, and decreases to the judicial building sizes. The auditors met with the grantor’s grant manager, who stated they were unaware about why the building sizes had changed so drastically. When shown the grant reports and a history of changes from one report to the next, the grant manager acknowledged that they had received the grant reports, but had only given them “a cursory review.” As a result of not reading grant reports thoroughly, nearly $36 million in grant funding had been misused and the correctional facilities were vacant and unstaffable. The grantor had to deal with the misused funds, develop procedures to avoid future changes to project scopes, and work through fallout from negative publicity in the media.
Colhio Grant Consulting can help you to evaluate grantee financial and performance reports to track performance and compliance, monitor use of funding, identify and mitigate potential risks, assess impact, and make timely grant-related decisions. Contact us for more information on how we can help you.