The grant management process can be a challenging and complex journey. Between ensuring compliance with regulations, managing stakeholders, and monitoring the progress of awardees, there are a lot of moving parts that require careful consideration.
However, even with the best of intentions, it’s easy to fall into legal pitfalls that can put your organisation at risk. In this article, we’ll explore some of the most common legal issues that grant funders should watch out for and provide some tips to help you navigate the grant management process without risk.
The Importance of Proper Documentation in Navigating Legal Risks
Failure to keep records of all relevant communications, transactions, and decisions can expose funders to challenges including accusations of bias or discrimination, breach of contract, or mismanagement of funds. Inadequate documentation can also result in difficulties in tracking progress, making it challenging to report on the impact of grants.
Keeping detailed records helps demonstrate transparency and accountability, and one way to do this is to use a grant management system that provides a searchable audit trail. This can help keep track of all the relevant transactions, communications, and other essential information throughout the grant lifecycle – essentially, a complete history of each application that can be accessed easily when required.
Mitigating Conflicts of Interest in Grant Management
Grant funders must be mindful of conflicts of interest to ensure that decisions are only based on merit. Conflicts of interest arise when a funder or reviewer has a personal or financial interest in a grant decision; this compromise impartiality and, in turn, exposes the funder to legal challenges.
It’s important to have policies in place to identify and address potential conflicts of interest – one example is to base approvals on a set of pre-defined rules or scoring criteria. This minimises the changes of decisions being made based on superfluous factors.
Staying Compliant with Regulations
Whether it’s regulations to do with tax, data protection, or anti-discrimination laws, non-compliance can result in legal penalties and reputational damage. It’s essential to stay up to date with current regulation and ensure your grant management processes comply.
Establishing timely reporting is another essential measure to ensure compliance. Your grant management system should be able to generate comprehensive reports based on real-time data. This will also allow you to make up-to-date decisions and take quick corrective action if needed.
Protecting Sensitive Information
Having a data management strategy is essential for protecting sensitive information, which is not only important for compliance, but also for maintaining the trust of grant applicants and other stakeholders.
These days, it can be challenging to protect your data but it’s essential to have a robust policy in place in this regard. It’s vital to use software that complies with data protection regulations, such as the General Data Protection Regulation (GDPR) and the Data Protection Act, as well as international information security standards.
Using a Customer Relationship Management (CRM) system also helps. It ensures that sensitive information provided by applicants is stored safely and can be accessed only by authorised personnel, thanks to the use of access controls.
Data Residency, Sovereignty, and Localisation
Some countries require organisations, governmental bodies and businesses to follow certain practises regarding data storage. These practises relate to the following terms:
- Data residency: The location in which your data is stored.
- Data sovereignty: This principle states that data must be subject to the laws of the country in which it’s located.
- Data localisation: The requirement to keep one’s data stored within a given country.
The more restrictive practises are not likely to be an issue when operating within the UK or the EU, depending on the nature of the data involved. The GDPR allows EU-based organisations to store data outside the EU and this is explained in Articles 44 to 50 of the regulation. These sections stipulate the conditions under which it can be stored externally; for example, that data must receive the same level of protection that it would have if stored in the EU.
If an organisation does not meet the requirements for the region/s in which they operate, they will not be in compliance, so it’s important to confirm where software providers will be storing your data before you sign any contracts.
Managing Grant Funds Effectively
Failing to manage funds correctly can expose funders to significant legal risks such as investigations into fraud, and non-compliance, as well as potential reputation damage.
Funders must have a well-defined budget that is appropriate for the scope of the grant and should ensure that funds are spent in a manner that is consistent with the programme’s objectives. Additionally, they must adhere to any financial regulations relevant to each programme.
A proper system needs to be in place for financial management and tracking – one that allow for easy budget management and expense tracking, and detailed reporting.
Conclusion
Legal risks in grant management can be easily avoided – it’s just a case of being aware of the common pitfalls and having the tools and processes in place to navigate and avoid the risks.
It’s important to have proper documentation, mitigate conflicts of interest, stay compliant with regulations, protect sensitive data, and manage grant funds effectively.
Flexigrant improves your processes in ways that help mitigate legal risks and reputational damage.
To learn more and discover how we can help you, contact us today to book a demo.
