Government Grant Systems Need Performance Metrics
In FY2022, the federal government disbursed $1.26 trillion in grants to state and local governments. While financial systems track transactions, they often fail to measure grant effectiveness.
The federal government disbursed $1.26 trillion to state and local governments in FY2022, primarily through grants. States distributed $662 billion to local governments, while nonprofits received $294 billion in government grants that year. These funds are crucial for implementing public policy at the local level.
However, current grant management systems are mature in handling financial transactions like applications, awards, and procurements. They often fall short in answering a critical question: Is the money being used effectively? The data needed to assess grant performance is scattered across spreadsheets and reports, hindering a clear understanding of impact.
Grantee support is often ad hoc, with information and guidance dispersed, leading to delays and uneven support for recipients. Smaller organizations, in particular, struggle to navigate the system due to limited bandwidth and a fear of appearing uninformed, which can impact future funding.
To improve grant efficacy, the report suggests adding metrics focused on performance and capacity. These include agency throughput (time from appropriation to funds in use), grantee capacity growth (ability to run programs with less support over time), and cohort variance (understanding performance differences within groups of grantees), moving beyond simple transaction tracking.