Grant management software for nonprofits: How to control grant spend

Most nonprofits already have two systems for grants: one to track awards and funder reporting, and a fund accounting system for the books. Both do their jobs well, but neither one can stop a program manager from putting a $400 team dinner on a federal award.

That charge usually surfaces weeks later, during review or at audit. Catching it earlier takes spend controls that sit between the award and the ledger and check each purchase before the money moves.

This guide covers what grant management software does, why fund accounting can't catch unallowable spend on its own, and how to add spend controls without replacing either system.

Quick picks: grant management software by need

• Best for finding funders and applying: a grant database or prospecting tool with deadline tracking.
• Best for managing awards and funder reporting: grant management software that tracks award terms, reporting calendars, and deliverables.
• Best for restricted-fund books: fund accounting software that keeps restricted and unrestricted money separate. See our guide to accounting software for nonprofits.
• Best for stopping unallowable spend before it clears: spend controls like Ramp, which sit between the award and the ledger.

What does grant management software do

Grant management software, sometimes called grant tracking software, covers the award lifecycle:

• Pipeline and applications: deadlines, funder contacts, submissions
• Award tracking: amounts, periods of performance, reporting calendars
• Reporting: post-award deliverables, narrative and financial reports to funders
• Budget vs. actuals: award budgets compared to what's been spent

Common tools include Aplos, Blackbaud Financial Edge NXT, MIP Accounting, Sage Intacct, and QuickBooks with class tracking. Some focus on donors and grants, and others are full fund accounting suites. For a comparison of the accounting side, see our guide to accounting software for nonprofits.

All of these tools record and report on spending after it happens.

Fund accounting and unallowable spend

Fund accounting separates money by restriction. Under U.S. GAAP for nonprofits, that means net assets with donor restrictions and net assets without. Each grant gets its own fund or class, so you can show a funder where their dollars went.

The catch is timing: coding happens after the charge. In a typical month, it goes like this:

1. A program manager buys software with a team card.
2. Three weeks later, finance gets a statement line with no context.
3. Someone chases the receipt, guesses a fund, and codes it.
4. At reporting time, a reviewer asks whether the charge was allowable under the award.

By step 4 the money is spent, and fixing it means a journal entry and an awkward email to the program officer.

2 CFR 200 allowable costs

If you spend federal award dollars, either directly or through a pass-through entity, 2 CFR 200 (the Uniform Guidance) sets the cost rules. Under 2 CFR 200.403, a cost has to pass several tests to be allowable. Four of them matter most when someone is about to make a purchase:

• Necessary and reasonable for the award
• Allocable to that award, as defined in 2 CFR 200.405
• Consistently treated like similar costs across your organization
• Adequately documented

A cost also has to conform to the award's own limits and not be counted as cost sharing on another federal program. It must also fall within the award's period of performance (2 CFR 200.309).

Some costs are unallowable outright. Under 2 CFR 200.423, alcoholic beverages are unallowable on federal awards, and private funders set their own terms. Entertainment, fines and penalties, and lobbying are unallowable with narrow exceptions your award terms may carry. Other costs need prior approval from the funder.

Most organizations check all of this in review, after the money is spent. Enforcing the rules at the point of purchase is cheaper and leaves less to fix at audit.

Spend controls for restricted funds

Spend controls decide what can be bought, by whom, against which grant, and with what documentation. Four controls cover most of it.

1. Cards or limits for each award. Give each grant its own card or spending limit so purchases stay with one fund. When the award period ends, turn the card off.

2. Merchant category restrictions. Block merchant categories your award doesn't allow, like bars and entertainment venues, so those transactions decline at the point of sale.

3. Fund coding at purchase. Require a fund, class, or grant code and a memo when the cardholder submits the receipt. The person who made the purchase codes it while they still remember what it was for.

4. Receipts and approvals. Make the receipt and approver part of every transaction, so a charge without documentation gets flagged right away. Route purchase requests and bills to the grant manager who knows the fund's terms.

Subrecipient monitoring

If you pass federal money to partner organizations, 2 CFR 200.332 describes pass-through entity responsibilities that may be relevant to you, such as assessing each subrecipient's risk, monitoring their activities, and reviewing their reports. Check your award terms for the specifics.

Many pass-through organizations still manage this with spreadsheets and emailed receipts, which is slow and one of the first places auditors look. Whatever system you use, keep transactions, receipts, and coding for each subrecipient in one place so your monitoring file builds as the grant runs.

Grant software vs. fund accounting vs. spend controls

You don't need to replace your current tools. Each one handles a different part of the grant:

Spend controls should sync into your accounting system so fund and class codes arrive already attached and the ledger stays your single source of truth. Ramp and Aplos, for example, integrate so expenses can be tagged to specific funds or programs.

Questions to ask any vendor

• How many grants do we manage each year, and will that number grow?
• Do we need integrated accounting, or just grant tracking?
• What's our software budget, including setup and training?
• Can I restrict spending by merchant category for each grant?
• Can I require fund or class coding and a receipt on every transaction?
• Does it sync to our accounting system with those codes intact?
• Can I export the audit trail for a single audit or funder review?

Is there free grant management software?

Some vendors offer free tiers or nonprofit discounts. Free plans often limit users, grants, or reporting, so ask what's included and what costs extra before you build your process around one. Ask every vendor about nonprofit discounts.

How much does grant management software cost?

Pricing varies by vendor. It usually depends on how many users and grants you have and what's bundled in, like accounting, a donor CRM, or reporting. Ask each vendor about:

• Setup and implementation fees
• Per-user or per-grant fees
• Add-ons for reporting or integrations
• Contract length and renewal terms

Quick checklist

1. Map each active award to a card or limit
2. List unallowable categories per award and block them
3. Require a fund or class code and receipt at purchase
4. Route out-of-policy spend to an approver in real time
5. Sync coded transactions to your ledger
6. Keep a monitoring file for each subrecipient

For audit prep, see Ramp's nonprofit audit checklist.

Ramp for grant spend

Ramp is the spend management platform that sits next to whichever grant software and fund accounting system you pick, and it handles the spending itself. Ramp for Nonprofits includes:

• Program cards: Give a program or project its own virtual card with a set limit.*
• Grants Hub and Grant Budgets: Grants Hub (Ramp Free) tracks spend by grant. Grant Budgets (Ramp Plus) show actuals against each grant's budget in real time. Budgets reflect spend that runs through Ramp, not payroll or off-platform payments.
• Grant Manager Approval Routing: Route purchase requests and bills to the grant manager who knows the fund's terms. Available on Ramp Free.
• Grant Policy Agent: Reads the award letter you upload and flags out-of-policy expenses as spend happens (Ramp Plus). If a grant covers program supplies but excludes travel, a hotel bill against that grant gets flagged for the reviewer.
• Sales Tax Reclamation: Flags potential sales tax on receipts and builds a claim packet your team files with the merchant or state. Early customers saved 3% of their year-to-date card spend. Available on Ramp Free.
• Accounting sync: Transactions, receipts, and fund codes sync to your accounting system, including QuickBooks, Aplos, Sage Intacct, and Blackbaud Financial Edge NXT