How the Pandemic Has Impacted Grants Management

A new survey shows that administrative costs have spiked, while funding agencies struggle to measure outcomes.

REI Systems, the George Washington University, and the National Grants Management Association recently presented the results of their fifth annual grants management survey to an audience of more than 350 grant managers. Those survey results included some that could be easily foreseen, and some big surprises. All of the results have important implications for federal managers and policy-makers.

Among the easily foreseen results: COVID-19 has had a big impact on grant management and grant managers have a hard time measuring performance.

The surprises illustrate the challenges grantors face:

  • Administrative costs for grant management spiked in 2020.
  • Although compliance is still the biggest focus of grant manager time and effort, technology innovation holds promise for reducing that burden.
  • A majority of respondents said COVID-19 significantly impacted performance.

Grant Managers Are Key 

The pandemic has impacted grant management in substantial ways: Large, new grant programs have been created to tackle COVID-19. The Paycheck Protection Program and funding for vaccine development and therapeutics attracted inexperienced new grantees and created complex new challenges for grantors. At the same time, old ways of managing grants aren’t all possible. For example, training, technical assistance, and site visits to grantees all happen virtually now. Likely as a consequence, more than 75% of survey respondents indicated that COVID-19 impacted grantee performance, with two-thirds of federal grant managers indicating a significant impact (of more than 5%). 

The pandemic will almost certainly present a continuing challenge for grant managers as the nation moves to recover economically and Americans recover their health. Grant managers should focus on those challenges and be ready to point to successes that would not have been possible without strong grants management.

However, many grant managers have a hard time measuring performance. Although 67% of federal survey respondents indicated that their grant recipients’ outcomes have improved over the past 12 months, nearly the same portion of state managers say that performance has declined, or that they don’t know whether performance has changed. It isn’t surprising that measuring recipient outcomes is challenging. Grant managers are accustomed to measuring and reporting funding flows and uses, timeliness, and compliance. But data about quality, customer satisfaction and mission impact are harder to define, harder to gather, place a greater burden on recipients, and are rarely validated by an independent entity, such as a financial auditor. 

A recent illustration is the success of NASA’s Perseverance Rover as it landed on Mars. NASA Small Business Innovation and Research grants funded development of key technologies that aid the Rover’s navigation, and it is easy to measure the amount and timing of those funding flows: they are inputs. It is also relatively easy for NASA to determine that it received the navigation software and hardware from the awardee: an output of the grant process. But the outcomes (the quality of the navigation technology, its success helping the Rover survive the landing, and its effectiveness guiding the Rover’s movement to make scientific discoveries) were not known until last week. Those results are hard to quantify and do not fit neatly within a grant reporting system. They must be captured from data sources outside the realm of most IT systems used to manage grants. 

We believe that if grant managers want to measure performance—and understand what they are getting for grant funds disbursed—they will have to look for that hard-to capture data from outside grant systems. With respect to COVID-19, grant managers should measure results that include:

Controlling Costs

Administrative costs for grant management spiked significantly in 2020, increasing by half at the federal level. Specifically, federal respondents indicated that their organization’s administrative budget made up 15% of the value of grants disbursed, up from 10% in 2019. State-level grant managers reported an increase from 11% to 13%, while non-governmental organizations reported an increase from 9% to 10%.

These consistent and significant increases in the cost to administer grants were explained by panelists who discussed the survey results during a February 24th Grants Management Breakfast Forum hosted by REI Systems, George Washington University, and the National Grants Management Association.

We believe that business process streamlining and technology that automates data entry and data sharing are ways to reduce time spent on administration. Craig Fischer, innovation program manager at the Treasury Department and a panelist at the Feb 24th event, suggested that innovations such as blockchain technology to track payments from the grantor to recipients and subrecipients may offer ways to manage and reduce these administrative costs. Another panelist, Eric Russell, a senior manager at Crowe LLP and NGMA vice president, suggested that more time planning a grant program, with technical assistance from a grantor, will make it possible to gain much more control over the administrative burden through the life cycle of each grant. 

Other panelists noted that administrative costs for federal agencies are not controlled (as permissible indirect costs are limited for grant recipients). New programs have a learning curve, and a larger error rate than established programs. In some instances, agencies have brought in new staff, or reassigned current staff to support new grants associated with pandemic relief programs. Finally, several new requirements were implemented in 2020, including uniform guidance and subaward reporting, perhaps increasing costs for new systems.

Vision for the Future 

The survey results tell us that time spent on financial compliance and reporting is still the biggest use of grant manager time and effort and that administrative costs are increasing.  These findings are discouraging. But, there may be reason for optimism. Pilot demonstrations of distributed ledger technology (“blockchain”) are promising. One by Treasury focusing on the pre-award phase (use the password “fit_gps” to gain access) and another by Mitre, REI Systems and several partners focusing on the post-award phase would allow grant-makers to better track the money they disburse to recipients, sub-recipients and end users, and receive comprehensive information back about the recipients and uses with no additional effort for reporting required of recipients and subrecipients. 

According to results of this survey, respondents said they spend 25% of their time monitoring financial administrative requirements. Thus, if effective implementation of blockchain in the coming years allows this effort to be reduced, the grants management community may free up a tremendous amount of effort and expertise to focus on improving program results, whether those be better health outcomes, new scientific discoveries, or more good jobs.

COVID has presented new challenges to grant managers—widespread telework, a steep learning curve, pressure to issue new grants quickly yet accurately, and a big increase in administrative costs. But by sharing experience and lessons, and by continuing to innovate, the future looks bright.

Jeff Myers is a senior director at REI Systems. He leads partnerships with universities, research programs, and customer engagement with federal agencies.

Rujuta Waknis is a director at REI Systems. She leads the company’s Grant and Innovation Research Systems offering.

Jason McGill is a director at REI Systems. He is responsible for helping federal, state and local grant making agencies strengthen their capabilities and performance.