Grant and budget management

At most US universities and non-profits, a dedicated grants manager will manage the grant budget. Regardless of whether this is the case, it is important to clearly assign responsibilities, such as who is responsible for managing the grant and budget or for communicating with the grants manager and Principle Investigators (PIs). Research associates (RAs) and other field staff are typically the first to know of project delays, differences in projected costs versus actual costs, and so on; as a result, it is important to set up (and communicate) a system for relaying this information. 

It is also critical to regularly communicate with the person responsible for managing the grant to avoid missing any key grant deadlines and ensure that spending is on track (or to adjust spending if needed). Regardless of whether there is a dedicated grants manager, field staff in charge of the budget should understand the systems the institution uses for accounting.

Roles of PIs, RMs, and RAs

As with grant proposals, each member of the team plays a key role on delivering the grant. While principal investigators (PIs) will have primarily responsibility on achieving grant deliverables, research staff such as research associates (RAs) and research managers (RMs) will also be involved in accomplishing the deliverables outlined in the grant. This will require RAs and RMs to set timelines for achieving deliverables, communicating with PIs (and possibly the funder) about potential delays, working on reports to the funder, and managing the budget.  More details on typical responsibilities are listed below. Two important reminders for PIs, RMs, and RAs are to 1) be aware of relevant grant deadlines and 2) be in regular communication with the institution’s grants manager.

PIs: The PI is ultimately responsible for conducting and reporting on funded research projects, as well as fiscal management of the sponsored project, including management of the project within funding limitations.

RMs: The RM may be asked to manage the budget (such as staffing assumptions and timelines), write reports to the funder, and manage the relationship with the funder. The RM may also be responsible for ensuring all roles (of PIs, RAs, grant managers) are clear. If working within an organization, the RM should be working in close coordination with the finance manager about budgeting and expenses. 

RAs: RAs may be tasked with preparing periodic progress reports, managing the budget for field operations, keeping spending records, and making sure deadlines are met. This means understanding the project timelines, deliverables, budget line items, and payment conditions and cash flow (e.g., tranches, conditions for payment, deadlines for reporting and initiating spending). It is important to know who is the point person for support on these tasks. In addition to this resource, RAs should read budgeting principles and budget justification in the grant proposals resource; while RMs and PIs are more likely to write the annual or final report, RAs may be called upon to contribute to the report, such as by producing tables.

Grants / Finance / Administrative staff: While they may not be directly working on your project, if you are working at an organization, your finance team will help prepare financial reports for the donor. They can help you compare the total or monthly spending on your project and how it fits with your budget. They may or may not be responsible for authorizing major purchases, and can be useful for thinking about communications with funders.

Tips

• If you are joining an ongoing project, read through the entire grant award at least once within your first few weeks of work and take special note of all the deliverables on the project and their delivery dates. Make sure you take note of the deliverables that have already been met, the deliverables that are due in the near future, and the status of meeting those deliverables. 
• Be sure to understand the award set-up. Some awards are disbursed in tranches, some provide advances, some are disbursed over pre-fixed time intervals, and some are cost-reimbursable, meaning funds are received as reimbursement for costs that have already been incurred. For example, all of J-PAL North America’s sub-awards are set up as cost-reimbursable, and the office prefers monthly reimbursement to help with monitoring project activities and ensuring actual expenses line up with projections.
• Set up a system to track key timelines and deliverables in one place. One example of this could be a Gantt chart. Gantt charts are able to connect tasks with personal assignments on a timeline, which can be useful for the entire research team to share. TeamGantt has a resource to create your own. Another example would be project management tools such as Asana.
• Keep receipts for everything. Even the small expenditures add up.
  • If the institution (and the funder) allow it, taking pictures of receipts helps keep track of them. Not all funders allow electronic copies for reimbursement, however, so be sure to understand the institution’s/funder’s policy.
  • Similarly, be aware of how the institution’s policies and grant guidelines interact to remain in compliance with both. 
• All documentation of expenses on a grant should tell a story so that an auditor can understand how the funds were used and why each cost was justified without needing additional follow-up. For example, receipts for a business meeting should include who was there and what was discussed. These should also help in classifying expenses to match donor budget categories, thereby making it easier to compile donor reports. 
• Set up a budget with anticipated costs, and update it as costs are incurred. It would be ideal to have a document that is accessible to all project staff. JPAL has created a template budget to assist in tracking costs before and during the research process. 
  • Set up a system that will flag when you are nearing the budgeted amount on budget categories so that you do not overspend on line items. This can help you decide if you need to re-budget or stop spending on a certain category. 
  • Set up a system for reporting to the PI on the budget. It is most straightforward to agree at the start of the project what information PIs would like to see and how frequently, and to schedule time to review the budget with PIs at least every six months.
• J-PAL South Asia has created a resource for budgeting for phone surveys in reference to the COVID-19 Outbreak. As explained in a JPAL blog post, it is key to: budget for additional days of training, be conservative in productivity estimates, consider budgeting for a supervisor for every 3-4 surveyors, and keep in mind that costs will change.

Essential Terms

Before reading this section, it may be helpful to review the essential terms that were discussed in the grant proposals resource.

Timelines

Be sure to understand the financial year, sub-contract dates, and other deadlines for invoicing and spending—and put them in your calendar. In particular, note that fiscal years do not necessarily coincide with calendar years and may differ by institution. For example, MIT’s fiscal year begins July 1, while the US Government’s begins October 1. Your spending deadlines may depend on the financial year, so it is important to know when it is and to plan accordingly.

• Similarly, be aware of when your budget will be over- or under-spent and counteract this as needed. This means keeping track of what you’ve spent so far but also having a clear way of coming up with projected expenses (based on past expenses, adjustments for inflation, etc.).

Tranches and pre-spending

Policies around pre-spending and disbursement of funds differ by institution, and it is important to be familiar with these policies when planning out project timelines. Large institutions such as MIT will allow spending before any funds are disbursed, provided you have an agreement in hand that the funder will pay you. Other institutions, typically small nonprofits, may not let you spend anything until the cash is in hand. Moreover, the last tranche is often conditional on completing all deliverables (this is the case with IGC grants, for example). In these cases, or if your institution allows pre-spending, you will likely need to work with your organization’s finance department to spend funds before they are in your account.

Adjusting costs ex post

Grant agreements typically assign budgets according to budget categories (line items) that are set by the funder. You must adhere to these categories but may have some flexibility in the amount you actually spend on a given line item—though not in the total amount of the donor’s funds you can spend. Any changes in spending for a given category that go beyond the amount of variance allowed by the funder (often 10%) must be approved by the funder, preferably before the money is spent. As flexibility in line item expenses varies by funder, make sure you know the funder’s policy before you start spending.

No-cost extensions and final deadlines

Understand the difference between no-cost extensions and final deadlines:

• No-cost extensions: A no-cost extension is very common. It extends the project period beyond the original project end date, but no additional funding is provided. It may be granted when certain conditions are met and may be needed when there are project delays. The bar for obtaining a no-cost extension is lower than for securing funding in the first place (as the funder is not providing additional funds), but funders typically need a good explanation for the delay (e.g., project delayed due to political protests, or you gained access to new data that will help the project in X way) and what will be gained by giving the extension. Not spending all of your money in the grant period is not a good explanation. Note that you need to apply for such an extension well in advance of your project end date. Failure to request a no-cost extension could result in you losing your money. You should NOT assume that the money will be available if you do not use it;  you need to ask for an extension. So, be sure to monitor project activities and how it tallies with planned project timeline. Moreover, try to avoid asking for more than one no-cost extension and be realistic about timelines.
• A final deadline is, as the name suggests, final. Do NOT spend any funds after the final deadline, even if you have some remaining.

Procurement

Some funders have specific processes for contract procurement. These procedures are often outlined in their grant agreements, but if you are in doubt then reach out to the finance/admin personnel in your office or to your grant manager. Procurement procedures can be based on the cost of the purchase or contract. You should expect that large contracts may require you to open a Request for Proposals or a multiple bidding process. In some cases, funders must approve large purchases or contracts before they are made.

Procurement of large purchases or contracts may take time, and your project might not be reimbursed for money spent if you did not properly follow the procurement procedures. Therefore, it is important to go through the correct procurement processes. 

Sub-contracting and sub-awards

Timelines
Whether you are hiring sub-contractors or your co-PI is a sub-award on the grant, allow additional time for institutional review. This review can take considerable time, and you may be subject to additional (internal) requirements, so check with your grants manager or a relevant person at your institution as soon as possible.

Note also that the sub-award may not line up exactly with the full award. For example, you may have a project where the full award is for six years, but a sub-award is for only three years. Some institutions will set up sub-awards for only one year at a time. If you follow this practice, you need to keep on top of deadlines and set up the following year’s sub-award in advance of the current year’s expiring.

Be sure you get the information you’ll need from your sub-awardee well in advance so you can incorporate it in your final report to the funder—and keep this in mind when setting up the sub-award.

Exchange rates and budget risk
As above, be conservative in estimating foreign exchange rates and use a long term (e.g., six month) average. Your institution likely has an exchange rate calculator, or you can use OANDA or see the links at MIT Libraries' resource page. Note also that whether the sub-award is a co-PI or implementing partner (such as a J-PAL or IPA office), the prime awardee takes on the budget risk and is responsible for ensuring all activities are done according to their institution’s standards. The sub-awardee is responsible for adhering to their institution’s standards and may be responsible for writing and justifying their own budget.

Quality control and tranches
If you are hiring sub-contractors, build quality control checks into the process. This can include paying in tranches, so that the sub-contractor does not receive the full payment until completion of the agreed tasks. Again, for both sub-awards and sub-contracts, check the other institution’s requirements and policies around tranches and pre-spending, and be sure to plan accordingly.

If your project's timeline is multi-year, you may have to make both annual and final reports to the funder. Even if not a multi-year project, your grant may require interim reports, and sometimes part of the funding will be released only after interim reporting requirements are completed. An annual report covers what you accomplished in that year and what you expect to accomplish in the next period, while a final report sums up the entire project. Reports shouldn’t be a surprise: check on reporting requirements (if you are an RA, your PI, RM, and grants coordinator should know these) and mark both the due date and when you will start working on the report in your calendar. 

Monitoring Systems

If there are particular metrics that you must report on at regular time intervals, it is useful to set up a system that will allow you to regularly monitor them. This system can be built into your processes for monitoring and reporting on the intervention itself. See the real-time monitoring and response plans resource for more information.  The key is to understand the deliverables and metrics required to be reported on and to create a system that allows you to capture those metrics so that when it is time to start writing the report, you will have easy access to them. Your monitoring system could be something as simple as an Excel document, or something as complex as a Microsoft Access database or a set of Stata scripts. It does not matter how you collect this information, but it is important to make sure you are collecting it frequently throughout the life of your grant. 

Reports

The funder will usually provide a template or format requirements. Reports typically include whether the objectives from the original grant were met and reasons for any changes to the study design, procedure, or budget. The funder will also want to know about any unexpected challenges and lessons learned. In some cases, you will only need to produce a financial report, and explanations may only be needed for things such as over/underspending or assignment of spending to a particular category. Before completing reports, ensure that you have the most recent template from the funder. 

In addition to preparing the report in advance of the deadline, be sure you can access the systems you need to submit the report. If you are reporting on a J-PAL-funded project, the means through which to do so will be specified in your award letter, but other funders may have a grants portal for which you need an account.

Funder relations

It is important to maintain communications with your funder throughout the life of your grant, not just during the annual reporting period. Funder preferences with regard to communication vary, with some preferring frequent updates about the project. For example, some funders prefer being informed about new developments with the project, a conference the PIs are attending, or a local news story featuring the research project or intervention. You should talk with the PI or RM about the relationship with the project funder and whether information communications via email are appropriate.

Projects may be funded by multiple grants. If this is the case, each grant may have different deadlines, relevant dates, deliverables, and requirements. It is important to stay on top of all of them and to maintain separate and comparable (as far as is possible) records of spending for each grant, though funders often have their own templates for maintaining the budget, making it impossible to keep records for both grants on the same template. Reports to both funders can include similar topics but should distinguish which pot of money covered which activity to justify the need for multiple separate grants. While RAs may not know which grant is funding which activity, it is important to know the budget for each activity. 

Kathryn McDermott from J-PAL South Africa has developed a template budget tracker (direct download) that can track spending from multiple grants.

Last updated February 2021.

These resources are a collaborative effort. If you notice a bug or have a suggestion for additional content, please fill out this form.