Nonprofit organizations play a vital role in addressing the world’s most pressing challenges, from humanitarian crises to social justice issues. Due to the increasing number of global conflicts and crises, the scope and scale of nonprofits’ services continues to grow rapidly, with increasing demands for impact, transparency, and accountability from donors, partners, and beneficiaries. They also have to deal with complex and changing requirements, regulations, and reporting standards.
Nonprofits rely on grants and awards from various sources (e.g., governments, multilateral institutions, foundations, corporations, and individuals) to fund their programs and operations implemented directly, as well as through partners. However, managing these grants and awards effectively is not an easy task. Many nonprofits still use outdated and inefficient systems and processes to manage their grants and awards, which often result in problems such as data silos and duplication, manual information handling, unclear workflows, limited integration, low scalability and flexibility, poor user experience and accessibility, and limited visibility and reporting. These problems affect the efficiency and effectiveness of nonprofits in managing their grants and awards and their ability to demonstrate their impact, comply with their obligations, and achieve their mission.
Nonprofit technology leaders wonder: “How can I improve grants or awards management systems to support scale, scope, and complexity of growing programs and operations?”
The challenge is to find a balance between innovation and stability, while ensuring that grants make a difference in mission-driven work. To meet these challenges, nonprofits need to transform their grants and awards management systems and processes, using technology as an enabler and a catalyst, to meet their current and future needs, while being secure and transparent.
Technology-Driven Transformation: A Strategic Approach
A structured transformation approach helps nonprofits to gain a comprehensive understanding of their current and future state of grants and awards management systems and processes. It also helps them to identify the key pain points, challenges, and opportunities for enhancement. The approach involves four key steps:
1. User-centric perspective: understanding the needs, preferences, and expectations of the various user groups (e.g., strategic leaders, grant coordinators and managers, data analysts and process leaders, business development advisors, contracts and frameworks specialists, system administrators/product managers/developers) who interact with the systems and processes by developing tailored user personas and user stories
2. Process prioritization, mapping, and improvement: identifying, documenting, evaluating, and improving the core processes and activities across the full grants and awards management lifecycle — from Pre-Award, Negotiations and Agreement (Contracting) to Post-Award phases. This typically involves process and sub-process identification and prioritization, process mapping showing the responsible actors, process flows, and variations, evaluating the maturity of process documentation and developing process narratives, and reengineering processes for future state
3. Functional and technical requirements gathering: defining and prioritizing standard and unique requirements based on the criticality and impact for the system functionality and user satisfaction, and the feasibility and complexity for the system development and implementation. This exercise must consider full grants and awards management lifecycle, all major grants and award mechanisms (e.g., agreements, contracts, fund management, subawards), all entities and program areas and all major donors and funding sources. Requirements include:
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- Functional features that the system should provide to the user groups to enable their core processes and activities in the grants or awards management lifecycle, e.g., document management, reporting and analytics, automated workflows, data accuracy, compliance management, finance and budgeting, communication and collaboration, partner and donor relationship management
- Technical aspects and characteristics that the system should have to ensure the system reliability, availability, and accessibility, e.g., security and access management, system integration (e.g., with finance, supply chain, HR, program management), data access and integrity, scalability, performance, usability, mobile application, customization and configuration
- General capabilities e.g., multilingual and multicurrency support for diverse regions and countries, ability to work efficiently in low-bandwidth environments and support offline data collection with auto-sync
4. Fit gap analysis: assessing the suitability of the existing systems and platforms for meeting the requirements, finding the gaps and the best solutions to fill them based on defined fit criteria:
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- Priority: the importance of the requirement for the solution’s core functionality
- Gap severity: the degree to which the solution can support the requirement
- Complexity: the number of sprints needed to meet the requirement
Choosing the Right Solution
Choosing the right solution for grants and awards management systems and processes is a critical decision that can have a significant impact on the organization’s performance and outcomes. The best solution depends on the specific needs and context of the organization. There are various types of solutions available in the market — custom-built solutions, commercial off the shelf (COTS) solutions, and workflow-based solutions.
Custom-built solutions are typically developed in-house on legacy technologies in order to digitize manual processes with additional features being built over time. They enable customized workflows with short-term improvements but are not fit for purpose over the longer term due to lack of scalability and functionality to consistently match complex business processes, limited integrations with other systems, challenges with upgrades and inadequate user-friendly features.
COTS platforms are ready-made solutions that offer features and functionalities, with little customization and configuration. They enable data-driven decisions, with powerful reporting and analytics and ensure seamless data flow and interoperability, and integration with various systems and applications. But COTS platforms also pose challenges, such as feature overload, vendor dependency, compliance issues, performance bottlenecks, and cost escalations.
Workflow-based solutions automate processes and improve efficiency and effectiveness. They ensure data quality and integrity, with strong data management. They enhance their versatility and functionality, and integration with third-party tools. But workflow-based solutions also have limitations, such as implementation complexity, limited flexibility, scalability risks, and customization and configuration difficulties.
A thorough and objective market scan analysis identifies and evaluates potential solutions’ strengths, weaknesses, and alignment with the organization’s needs and vision utilizing a three-level approach:
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- Level 1: Preliminary Screening: Screen solutions based on core functionality, vendor profile, and fit for purpose. Eliminate irrelevant or inadequate solutions.
- Level 2: Detailed Evaluation: Evaluate solutions based on functionality (e.g., features, automation, reporting, interface), technicality (e.g., integration, security, scalability, performance), and general requirements (e.g., cost, vendor profile, implementation time). Score and rank solutions using a weighted model.
- Level 3: Shortlisting: Shortlist solutions based on alignment with vision, mission, objectives, user feedback and peer reference analyses for each solution.
Building the Case for Investment
Building the case for investment is a crucial step in securing the funding and support for the transformation project. The case for investment should demonstrate the value proposition, cost-benefit analysis, and scenario analysis of the proposed solutions, and show how the solutions can address the current problems and gaps and align with the strategic vision and mission of the organization.
The scenario analysis should present the likely scenarios of the project and show the impact of various assumptions and uncertainties on the project outcomes. Typically, three scenarios emerge:
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- Scenario 1: retaining and customizing existing systems to meet future state requirements
- Scenario 2: replacing existing systems with an end-to-end COTS solution that provides extensive out-of-the-box functionalities, simplified implementation, and industry standard features
- Scenario 3: replacing existing systems with a workflow-based accelerator solution that enables high customization, modern integration, and high scalability
The scenario analysis criteria includes functional and technical fit, scalability, flexibility, accessibility, ease of implementation, maintenance complexity, adoption readiness and multi-lingual/multi-currency support.
The cost-benefit analysis should compare the costs and benefits of the proposed solutions and build a robust business case by considering the following costs:
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- Capital expenditure for software license, hardware, and implementation
- Operating expenditure for maintenance, support, and enhancements
- Transition costs for data migration, training, and change management
The case for investment should be clear, concise, and compelling, be communicated and presented effectively to the decision-makers and influencers and should address their questions and concerns.
The Future State Road Map: A Phased Approach
The future state road map is a high-level plan that outlines the timeline and milestones for selecting and implementing the best solution for grants and awards management systems and processes. It consists of four key phases:
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- System selection and procurement: choosing the best solution based on the fit gap analysis and market scan analysis, procuring the software license, hardware, and implementation services
- System implementation and integration: deploying, configuring, and integrating the solution with the existing systems and data sources, ensuring the system security, performance, scalability, and usability
- System testing and deployment: testing the solution for functionality, reliability, compatibility, deploying the solution to the users and stakeholders, ensuring the data access, integrity, accessibility and availability
- System stabilization and optimization: stabilizing the solution for operation, resolving issues, updating, and maintaining the solution, optimizing the solution for user satisfaction and adoption, continuous improvement and enhancement
The road map should follow a phased approach, starting with pilot projects or specific grant programs and gradually rolling out the solution across the organization. This way, nonprofits can ensure a smooth and successful transition to the new system, with minimal disruption to operations and impact.
The Path Forward: Transformation as a Strategic Imperative
As nonprofits look to deliver on their vision and mission more effectively and efficiently, investing in transforming grants and awards management systems and processes has become a strategic imperative. It enables nonprofits to improve their efficiency and effectiveness, enhance their decision-making and reporting, increase their scalability and flexibility, and improve their user satisfaction and adoption. It also enables nonprofits to reduce their maintenance and operational costs, and to demonstrate their impact, transparency, and accountability. To achieve this transformation, nonprofits need to follow a strategic approach, select the right solution, build a strong case for investment, collaborate with their peers, technology providers, and donors, and learn from their insights, experiences, and best practices.
By Rajarshi Chatterjee, Director