Grant Management and Payroll: How They Coexist

July 7, 2021

The use of payroll software and/or payroll services can be a valuable tool to support nonprofit organizations throughout the grant life cycle. From the time a grant writer begins the grant application process right up until the final grant report is submitted, the wage, staffing, and programmatic information stored in a payroll system is a critical component of grant management.

What Is The Grant Management Life Cycle?

The grant life cycle starts when a possible funder is identified and can be roughly divided into six components:

Grant Management

Grant funding

Identifying possible funders whose philanthropic interests align with your agency’s mission and service delivery is the first step in the grant life cycle.


Grant preparation

Grant writing is the most time intensive and nuanced part of the grant life cycle. Funders will provide specific guidelines for applying for funding. This could include a letter of inquiry, full application, program budget and other documents. Every funder’s requirements are unique.


Grant submission

Once a grant application has been completed, it is submitted to the funder following their deadlines and submission procedures. Then the waiting begins.


Grant acceptance

When your agency receives the news that the grant has been awarded, there may be conditions and restrictions placed upon the funding. The acceptance phase is where you acknowledge that you are aware of these restrictions and agree to spend the grant funds according to the parameters of the award.


Grant management

This is the most active part of the grant life cycle for agency program staff and leadership, when grant funds have been received and the funds are put to use in direct service to the organization’s mission.


Grant closure

The final phase of the grant life cycle. This is when the grant period is finished, all grant funds have been spent, and final reports have been submitted.

What Do Grant Managers Do?

Grant managers, as the name implies, manage all aspects of implementing a grant once a grant is awarded. Even for experienced grant managers, learning how to fulfill the requirements of a grant can seem daunting at first. Many funders place restrictions on what their funds may be spent on, and also require detailed reporting on how funds are spent, including an accounting of staff time spent on the specific project or initiative funded by the grant. This is where payroll, and specifically, tracking of staff time within payroll, comes in to play.

When grant funding is used to pay for staff time related to projects and programs, accurately tracking hours worked, and allocating to the appropriate program is a critical component of the grant management process. A payroll service can significantly reduce grant management administrative time for nonprofits. Yet, many nonprofits do not utilize a payroll service and must rely on manual tracking of staff time to properly allocate restricted funding.

What Impact Does Payroll Have on Grant Management?

Grant Management: How Payroll Can Have An Impact

If a funder requires reporting of staff time allocated to a funded program, it is necessary to accurately track what percentage of employee time is being spent on each funded program. If an organization is running multiple programs funded by separate grants, or if an employee’s salary is paid by more than one grant source, the tracking becomes more complicated:  accurate recordkeeping is critical. Payroll software or a managed payroll service can ease the burden of recordkeeping by creating labels for each program and assigning employees to a program or programs within the system.

Payroll service is one tool that can ease the recordkeeping and reporting burden for nonprofits as they manage grant funding.

Is it difficult to hire a payroll service?

It is very easy to hire a payroll service. At Capital CFO+, we get to know you, your nonprofit and listen to your payroll, human resources, or bookkeeping challenges. Our methods take the uncertainty out of these processes so that you can simply do what you do best. Schedule a time to talk with one of our managers and see how Capital CFO+ can provide you with payroll and nonprofit consulting services.