04 Sep Taking the Fear out of Grant Management: Conflict of Interest By: Kellie Brungard, GPC

Too often, grant management is seen as a scary, messy aspect of grant funding, and we have a vague understanding of the requirements or components. In the nonprofit field, it’s common for staff to be put in a role where they manage grants but might not have the knowledge or resources to understand what that entails. These are common scenarios, and while they may be new or unknown, taking steps to understand how grant funds should be managed is critical to the nonprofit’s success.

The National Grants Management Association (NGMA) defines grant management as “the comprehensive process of overseeing all activities related to a grant.” NGMA divides the grant lifecycle into three phases: pre-award, award, and post-award. A grant manager is anyone involved in the management and administration of a grant. This can include finance staff, grant writers, program staff, consultants, and grant administrators (among others).

Grant management is usually associated with federal grant awards. However, many state and local government grants are pass-through funding from federal agencies and held to the same rules and regulations. Foundation and corporate grants may not be as stringent as federal or pass-through funding, but the principles of grant management still apply. Best practices in grants management indicate an organization should follow the same processes for all grant funding, regardless of the source.

There are two important things to remember when broaching grant management:

1. You don’t have to change everything overnight, so take learning piece by piece and you will continue to grow your understanding and application.
2. It doesn’t have to be scary. Sure, you may learn that something has been done wrong in the past, but making changes now will prepare your organization for the future.

Over the coming weeks, we will outline common grant management practices that are applicable to organizations with foundation funding, state funding, pass-through funding, and direct federal funding, beginning with the conflict of interest policy. Subscribe to our blog to follow along!

Conflict of Interest

A conflict of interest (COI)/financial conflict of interest (FCOI) policy is one of the essential policies a nonprofit board must establish. While this is a requirement for federal grantees and state pass-through (recipient and subrecipient), it’s increasingly required by direct state funding sources as well. Nonprofit organizations are regularly required to validate and document their use of funding; a COI policy ensures board members and staff operate responsibly and provides a strategy for disclosing and addressing potential conflicts of interest among officers, directors, trustees, or key staff. The IRS states, “A conflict of interest (COI) arises when a person in a position of authority over an organization, such as an officer, director, or key employee, may benefit financially from a decision [they] could make in such capacity, including indirect benefits such as to family members and businesses…” The annual IRS Form 990 inquires about nonprofit organizations’ written COI policy and the process used to disclose and manage conflicts. In addition, some state laws and specific funding agencies include directives on what must be included in a COI policy or how conflicts should be handled. Best practices in ethical grantsmanship indicate all nonprofits should adopt a COI/FCOI policy and procedures for ethical and compliant grant management.

Nonprofit organizations should establish a COI policy and review it annually to ensure all stakeholders are familiar with the process and understand its importance. A good COI policy will include provisions for regular COI training. Many nonprofits take time during one board and staff meeting a year to review the COI policy, discuss hypothetical situations, discuss the resolution process, and complete a disclosure form. As a rule, COI policies should include the immediate family members (spouses and children) of the individual completing the disclosure form.

Common COI examples:

• A board member’s spouse owns a construction company hired for the nonprofit organization’s upcoming renovation. The organization elects to contract with the construction company in question without seeking bids from additional companies.
• A board member is the chief executive officer or in a leadership position of an organization with a similar mission and program offerings.
• The organization’s chief executive is a spouse or close relative of the board member.

Additional resources:

• The Office of Justice Program’s Conflict of Interest Guide Sheet for definitions, examples, and sample policies
• A 3-Dimensional View of Conflicts of Interest
• Sample Conflict of Interest Policy and Annual Statement
• The National Institute of Health’s Financial Conflict of Interest training webinar

Strong grant management practices ensure grant funds are used appropriately across an organization and in accordance with funder requirements. AGS developed an on-demand grant management training series covering topics such as pre-award Federal activities, grant management systems, policies and procedures, and award closeout. In addition, our expanded grant management team is here to help with the full lifecycle of grant management needs. If you are interested in learning more about grant management services, Julie Assel, CGMS, GPC, President/CEO, will be happy to talk with you about this opportunity and provide you with a quote for grant services.

This blog post is aligned with the Grant Professional Certification Institute’s Competencies and Skills.

Competency #5: Knowledge of post-award grant management practices sufficient to inform effective grant design and development

Skill 5.1: Identify standard elements of compliance

Skill 5.2: Identify effective practices for key functions of grant management