Transforming Federal Grants Management: Evolving from Oversight to Insight Generation and Performance Improvement

Introduction

Grants are among the most important tools the federal government uses to advance its vast array of objectives in policy fields as diverse as neighborhood, transportation, and water safety; thriving children; good jobs; safe work environments; healthy people; a healthy environment; mobility; emergency response and recovery; and recreational and cultural opportunities. At over $650 billion, grants to other levels of government and non-profit organizations comprise over 15 percent of annual federal outlays, about forty percent more than federal contract spending.

Unfortunately, most federal grant programs are managed more to assure compliance with mandated activities and to minimize improper payments than to motivate and support continuous learning and on-the-ground improvement.  With some notable exceptions, federal grant programs direct little attention to helping grantees learn from their own and others’ experience to improve outcomes and increase returns on government spending and to assure the timeliness, courtesy, understandability, and fairness of government action.

Justice Louis D. Brandeis’s penned an oft-quoted court opinion referring to states as “laboratories of democracy.” Unfortunately, when those awarding grants fail to study lessons from states and other grantees, these laboratories generate little knowledge and yield limited real-world improvements.  Simultaneously, grantees waste money repeating practices that previously did not work particularly well in other locations.  Exacerbating the situation is the tendency of federal programs to lose focus on the problems to be tackled, the opportunities to be advanced, and the people to be served.  When grant managers follow the natural tendency to manage one program at a time rather than coordinate across the programs that seek to advance the same or similar purposes, activities on the ground become fragmented and grantees trying to make discernible progress get frustrated.

Federal grant managers need to assume a stronger learning leadership role, encouraging better data collection, analysis, well-designed trials, and lesson dissemination focused on improving outcomes and raising the return on government spending while strengthening networks bringing frontline workers together with others in the delivery system, high-quality researchers, and policy makers to learn from experience and discover new paths to improvement.  

Principles of Effective Grants Management

Effective grants management embraces the following principles:

1. Focuses on people and places, clearly articulating program objectives and relentlessly focusing on solving problems, pursuing opportunities, and increasing the return on taxpayer dollars in fair, understandable ways.
2. Learns from experience and shares those lessons in ways that help the front-line apply them.
3. Clearly lays out and explains strategies, informed by the best available evidence.
4. Continually searches for and discovers new ways to accomplish better outcomes and higher returns on taxpayer dollars in fair, understandable, and courteous ways.
5. Communicates goals, strategies, progress, and problems broadly and effectively to strengthen accountability, support learning, enlist and engage ideas and assistance, and inform individual decision-making.
6. Enlists and engages the front-line, those affected by grants, and others in delivery decision-making.
7. Returns data to data suppliers with value added through analysis and visualization.
8. Enables and encourages cross-program, cross-agency, and cross-government planning, reporting, learning, and implementation.
9. Encourages innovation by embracing partnership and trust.

Discussion

Focus on people and places, clearly articulating program objectives and relentlessly focusing on solving problems, pursuing opportunities, and increasing the return on taxpayer dollars in fair, understandable ways.  

Grant managers never lose sight of the people or places their grants seek to support, enabling grantees to make better decisions and take smarter actions affecting people and places.  The effective, efficient, and fair management of every federal grant begins with a clear statement of purpose laying out the problems to be solved and opportunities to be pursued, complemented by an explanation of why the problem or opportunity is important. Grantors design grant conditions and reporting requirements in ways that encourage grantees to stay focused on impact and user experience, enabling grantees to learn from each others’ practices, borrowing those that are more successful and avoiding those that are less.

Learn from experience and share those lessons in ways that help the front-line apply them.

Effective, efficient, and fair grant management identifies what is known about effective ways to make progress, less successful practices, and causal factors, and shares that knowledge broadly, accessibly, and understandably with field staff, grantees, those intended to benefit from or are otherwise affected by grants, and others. This knowledge may be used to inform both organizational and individual decisions. Federal grant managers also learn from their own and others’ experience how to use goals, measurement, incentives, and transparency to motivate continual improvement and, where relevant, inform individual choices.

Clearly lay out and explain strategies, informed by the best available evidence.

Effective grants managers publicly lay out planned strategies and tactics and explain why they were chosen. They communicate this information to encourage adoption, strengthen accountability, invite feedback and suggestions, and enlist goal allies.  They also adjust strategies and tactics as needed, explaining why those adjustments were made.

Continually search for and discover new ways to accomplish better outcomes and higher returns on taxpayer dollars in fair, understandable, and courteous ways.

Well-managed grant programs regularly collect multiple dimensions of information (e.g., outcomes, cost, courtesy, timeliness, understandability, and fairness) on a timely basis.  To detect promising and problem practices as well as opportunities and to achieve economies of scale and leverage opportunities as they arise, they analyze the data to understand problems and opportunities better; to identify causal factors affecting progress; to detect quickly when mid-course corrections are needed; to decide longer term strategies and research needs; and to increase return on taxpayers’ and private sector dollars. Common analyses include a look for positive and negative outliers, variations and similarities across what is being measured, common and anomalous patterns, and relationships. In addition, well-managed grant programs regularly scan for relevant evaluations and other studies, commission well-designed research to fill in knowledge gaps, and routinely integrate research findings into operations and strategy development.

Communicate goals, strategies, progress, and problems broadly and effectively to strengthen accountability, support learning, enlist and engage ideas and assistance, and inform individual decision-making.

Once overall objectives are identified and evidence-informed strategies decided, well-run grant programs lay out a strategy map indicating the theory of change and showing specific targets and milestones to guide implementation of the strategy. They also choose, collect, and share key performance indicators on a timely basis, routinely using them to gauge progress on objectives, get early warning of issues needing attention, decide actions, and determine additional research needs.

Enlist and engage those on the front-line, those affected by grants, and others in delivery decision-making. 

Grant decision-makers engage people on the front line, including delivery partners, in frequent, recurring meetings to review data, evaluations, and other studies to find what seems to be working well, what seems problematic, and next steps to validate progress and problems and decide next steps.  They encourage continuous learning and improvement communities to accelerate the spread of successful practices, prevent adoption of less successful ones, and discover new ways to improve. 

Return data to data suppliers with value added through analysis and visualization. 

Enable and encourage cross-program, cross-agency, and cross-government planning, reporting, learning, and implementation.

Grants are well-managed by program, across programs, and across levels of government with shared or similar objectives in ways that support progress on shared goals, identification of causal factors affecting problems and opportunities, discovery of increasingly effective and cost-effective actions, and public understanding and trust.

Encourage innovation by embracing partnership and trust. 

The vast majority of non-profit organizations, governments, universities and other entities that receive Federal grants are genuinely dedicated to helping their communities learn and prosper.  Yet, the majority of grant programs include detailed and prescriptive requirements for performance, accountability and reporting that limit innovation and foster inefficiency.  This is partially because compliance requirements have been established in response to bad actors and layered over the years.  It is time to rethink this strategy using 21^st century tools and technologies.  Partnership and trust embodies an approach that provides opportunities for shared learning and innovation through flexibility.  Balanced with effective program integrity measures, this approach can vastly improve the effectiveness of Federal grant programs.

Next Steps

To further improve federal grants management, Federal agencies need to:

1. Tap the potential of the digital transformation, and resultant reductions in analytic and communication costs, to modernize federal grants management – moving from primarily conducting oversight to generating and sharing insights that help grantees improve.
2. Establish clear lines of accountability within agencies to manage across programs for better outcomes, higher return on taxpayer spending, fairness, understanding, and trust.
3. Create and implement a strategic plan to transform federal grants management.
4. Create a knowledge center to improve federal grants management and create and support a federal grants management community of practice.

Discussion

Tap the potential of the digital transformation, and resultant reductions in analytic and communication costs, to modernize federal grants management – moving from primarily conducting oversight to generating and sharing insights that help grantees improve.

• Many federal grants programs focus on compliance rather than helping people across the delivery system get good information they can use to make better decisions and take smarter actions that improve performance. Insufficient attention is given to data system design, data use, and data users.
• Assume a Learning Leadership role. Federal grant managers need to assume a much stronger learning leadership role, including user-centered data collection, analysis, and dissemination. Grantees report reams of data to the granting federal agency, but often do not learn from the data they submit. Federal grant programs will return data to data reporters and others with value added through analyses to help them learn from their own and others’ experience.
• Strengthen continuous learning and improvement communities. Data–informed decision-making requires not just stronger digital systems, but also a delivery network that values and trusts, instead of fearing, the data they submit and resultant analyses and evaluations. Federal grant managers need to encourage the creation and support of continuous-learning-and-improvement communities that bring frontline workers and others in the delivery system together with each other and highly qualified researchers and analysts to learn from experience and discover new paths for improvement.
• Skill Strengthening. Federal grant programs need to strengthen their own and grantees’ skills and capacity to learn from experience: how to improve on multiple dimensions and how to collaborate in measured trials to discover better ways to advance objectives. Federal grant programs also need to find fair ways to weed out weak grantees that persistently fail to get stronger despite capacity-strengthening assistance.
• Easier, more useful reporting mechanisms.  Federal grant programs need to adopt the best private and public sectors lessons for user-centered data collection, analysis, and dissemination. One promising example is the work being done by the Annie E. Casey with the state of Indiana on its foster care system. Caseworkers had historically written their case notes in notebooks that went with a worker when he or she moved to another job. This not only left the successor social worker without important details about a child’s case history but also made it impossible for the state to look across cases to detect common problems needing attention. Working with frontline workers and the state, the Foundation launched Case Commons to design, test and refine an electronic notebook and data system is more useful both to caseworkers and to supervisors, program managers and, eventually it is hoped, researchers and policy makers.
• Digital platforms that communicate goals, strategies, progress, and problems to support coordination on shared goals, accelerate learning across government, motivate continual improvement, and boost accountability to the public. Performance.gov should be updated to show each grant program, its strategies, and trends in the context of social indicators and agency goals and objectives, other grant programs with complementary goals and objectives, and similar processes. The Administration should also identify other government online platforms, such as HealthyPeople.gov, that can be adapted or serve as a model to manage and motivate continual improvement on social indicators and cross-agency goals.  HealthyPeople.gov shows goals contributing to the healthy people objective, knowledge about causal factors, research about treatment effects, and noteworthy community-based goals and projects.
• Accountability measures that emphasize outcomes improvement, not outputs.  Federal grant programs need to shift to Outcomes-Based Accountability (OBA), moving from accountability for reporting immaterial operating statistics to accountability for better outcomes. For example, in early education programs, shouldn’t grant programs be more interested in whether children entering third grade are at or above reading level and how their reading levels improve over the year instead of the number of hours teachers spend teaching English as a second language? Focusing on hours tells us that the teachers are in the classroom when we expect them to be, not whether, in what areas, and at what pace their students are making progress. Don’t we first want to know if students are making progress at a good pace before trying to figure out the lowest cost ways of doing that? Furthermore, some compliance requirements—such as the need to allocate costs across different federal and state funding streams or to report on spending for specific activities —create perverse incentives that reinforce silos, create inefficiencies, and result in duplicative, overlapping, and sometimes conflicting services.

Establish clear lines of accountability within agencies to manage across programs for better outcomes, higher return on taxpayer spending, fairness, understanding, and trust.

• Clear goals and goal leaders, aligning grant management with goal management. Every grant program needs to identify the strategic goals and objectives, the biennial priority goals, and the annual performance goals to which it contributes. In addition, every agency needs to identify the person responsible for managing the goals that each grant supports, as well as the lead person responsible for managing across the agency to improve grant outcomes.
• Grant management aligned with goal management. Every grant manager needs to work with the agency chief operating officer, the performance improvement officer, and others in their reporting chain to determine who will run and who will participate (e.g., evaluation, contract, HR, IT, and customer service/user experience leaders) in quarterly or more frequent PerformanceStat meetings to decide and revise the path to progress for each grant’s goals. In addition or as an alternative, grant managers need to participate in COO run data-rich reviews to decide whether to stay the course, accelerate, or change when early warnings suggest problems for the goals to which a grant contributes.
• Granting organizations need to make people who are the ultimate beneficiaries of a grant program the center of their attention.  Not all grant programs focus on improving the lives of people, but many do. When that is the case, grant programs need to adopt a strong emphasis on user impact and experience, designating a Chief Experience Officer, as needed.

Establish clear lines of accountability to manage for better outcomes, higher return on taxpayer spending, fairness, understanding, and trust across agencies.

• Goals advanced by the grants of multiple agencies need to be identified, and goal leaders designated to drive progress on the goals across agencies. An initial set of mission-focused cross-agency priority goals influenced by federal grants should be identified within the next Administration’s first 100 days (e.g., for thriving children, thriving veterans, increased opportunities for Americans with disabilities, effective job training, renewable and efficient energy), along with the lead person responsible for coordinating progress on each goal and members of cross-agency support teams.
• These goals should be managed as cross-agency priority goals, and updated, revised, or expanded when agency priority goals are set.
• Where needed, the next Administration should propose and encourage the adoption of legislation, such as the Performance Partnership legislation previously passed by Congress, to encourage innovation and learning that accelerates improvement without compromising accountability.

Create and implement a strategic plan to transform federal grants management.

• Within 100 days of taking office, the next Administration should release a draft plan to modernize federal grants management, soliciting comments from grantors, grantees, Congress, non-governmental funders, the digital industry, private sector service providers, and the public. It should convene a summit on modernizing federal grants management, and release a final plan for improving federal grants management no later than January 2018, implementing elements of the plan earlier as feasible. The plan should include a research agenda laying out common research questions and needs across federal grant programs. It should also identify areas where changes in the underlying law and/or additional resources are needed to support implementation.  Progress on and updates to the plan should be reported annually.
• The next Administration should name a leader responsible for driving outcomes improvement across federal grant programs to work with the grant programs and the White House Policy Councils, OMB’s offices of Performance and Personnel Management, Federal Financial Management, e-government, Economic Policy, and relevant Resource Management Offices; and the PIC, CHCO, IT, and Office of Evaluation Sciences within GSA.

Create a knowledge center to improve federal grants management and create and support a federal grants management community of practice.

• Federal grant managers can learn from the experience of their own and other grant programs and experiment to improve the way grant programs use goals, measurement, incentives, transparency, and visualization to motivate continual improvement, inform individual choice, and prevent performance below minimum standards.  A government-wide knowledge center should be established to facilitate access to knowledge about practices relevant to effective grants management.  In addition, the knowledge center should identify research questions common to many grant programs, encourage that research, and disseminate the findings.
• The federal government should support a community of practice to help grants managers learn from experience and relevant research, and to encourage collaboration and co-investing to tackle common knowledge acquisition and diffusion needs. Surprisingly, unlike federal acquisition managers, information technology, and human resource officers, no federal grants management group exists that focuses on how best to use grants to improve outcomes, return on federal spending, fairness, courtesy, and trust.  A sub-group of the Chief Financial Officers Council exists (Council on Financial Assistance Reform, or COFAR), but it focuses primarily on financial accounting compliance, not outcomes improvement.  The Performance Improvement Council should reach out to the COFAR, the Chief Information Officers Council, the Chief Learning Officers, Chief Technology Officers, the U.S. Digital Service, and the Behavioral Science team to build a community of practice of Federal grant managers to help them work in more purpose-focused, problem-solving, and continually improving ways.