Financial Oversight Lessons - Knight Foundation

As a private foundation that achieves its mission using tax-exempt funds, the Knight Foundation must ensure that grantees appropriately spend funds to produce public benefit. This financial oversight responsibility led Knight to develop and launch the Grant Expenditure Monitoring (GEM) program in 2006 in partnership with accounting firm KPMG.

The GEM program plays a crucial role in maintaining compliance and accountability by supporting a series of financial reviews with Knight grantees. While the overwhelming majority of financial reviews conducted with grantees have indicated that projects were proceeding as planned and found no financial irregularities, a handful of reviews have turned up significant financial issues that prompted us to take corrective actions. Though the GEM was originally conceived as purely a financial review, the process has also provided opportunities for Knight staff and grantees to collaborate more closely. The program has been a key resource for program staff by bringing KPMG?s high level of business expertise to the complex operational issues that grantees face. Meanwhile, reviews have helped grantees identify ways to strengthen their capacities and operations. To examine the impact of the GEM and improve its ongoing effectiveness, we commissioned a pair of assessments in 2011 which analyzed the design of the program from an accounting perspective and gathered feedback from grantees and staff. The assessments affirmed the value of the GEM program but also led us to make some key adjustments to the program.

This report outlines the lessons we have learned about financial oversight from managing the GEM program, and it provides guidance and helpful tools to support others interested in the program. The report contains our latest thinking, and discusses some of the ongoing adjustments we are making to the program based on key findings. We hope that other funders?especially trustees and staff in finance and governance positions?will find this guide useful as they monitor and advance the work of their own grant partners.

Juan J. Martinez
Vice President/Chief Financial Officer

Source: http://www.knightfoundation.org/publications/financial-oversight

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