Granting with Confidence: Northern Michigan Nonprofits’ Legal Guide to Grant Agreements

For many Northern Michigan nonprofits, grant funding is a lifeline—supporting everything from wildlife conservation to workforce development. These funds can launch new programs, scale existing services, and meet pressing community needs. But behind every grant is a legal agreement, and overlooking its terms can jeopardize the very mission the money was meant to support.

Grant agreements are legal contracts, not donations. They come with performance expectations, compliance requirements, and consequences for missteps. Whether your nonprofit is applying to a state agency, private foundation, or community fund, understanding the structure, risks, and negotiation points in these agreements is critical.

This guide will walk through the most important legal aspects of grant agreements—what to look for, what to avoid, and how to protect your organization from liability or unmanageable obligations while maximizing impact in Northern Michigan.

What Is a Grant Agreement and Why It Matters

A grant agreement is a formal contract that outlines how a grantor (the funder) and a grantee (your nonprofit) will work together. While the grantor supplies funding, your organization is responsible for delivering agreed-upon outcomes, using the funds according to approved budgets, and reporting progress throughout the grant period.

These agreements can be straightforward or complex. For example, state agencies like Michigan EGLE issue grant contracts with detailed scopes of work, performance benchmarks, and termination provisions. Even local funders, such as the Grand Traverse Regional Community Foundation or Rotary Charities, use legally binding terms to ensure responsible stewardship of funds.

The consequences of breaching a grant agreement—whether through missed deadlines, improper spending, or incomplete reporting—can include repayment of funds, loss of eligibility for future grants, and reputational damage. Legal counsel can help identify risks and opportunities early, well before a signature is placed on the page.

Core Legal Terms to Understand

Provision	Why It Matters
Scope of Work	Sets expectations for project deliverables. If not clear, funders may claim breach even when results seem acceptable.
Budget Terms	Many grants limit how money can be spent. Violating these terms—even unintentionally—can trigger repayment or audit findings.
Matching Requirements	Grants often require a cash or in-kind match. Failing to meet this match can invalidate the agreement or reduce the award.
Reporting & Deadlines	Frequent or unclear reporting can become a burden. Deadlines missed without approval can trigger penalties or termination.
Recordkeeping & Audit	Some grants include rights for the funder to inspect financials or require full audits under federal Uniform Guidance.
Termination Clauses	Specifies how either party may exit the agreement and what happens to unspent funds.
Intellectual Property	Determines who owns materials created with grant funds, including curricula, photos, and research.
Compliance Requirements	May include adherence to civil rights laws, anti-lobbying clauses, or employment law certifications.

Understanding each clause ensures that your organization accepts only the obligations it can realistically fulfill—and can defend itself if disputes arise.

Spotting Hidden Risks in Agreements

Most grant agreements are written to protect the funder. That’s why it’s essential to read between the lines. Some risks are easy to miss on a first read:

A clause requiring “significant progress” may sound benign but can be a problem without defined metrics. Similarly, a provision allowing the funder to demand repayment for “noncompliance” might not specify what that includes—creating a gray area if interpretations differ.

Grantors may include automatic termination clauses triggered by seemingly minor reporting delays. Others may require pre-approval for even slight budget changes, delaying your ability to respond to evolving needs. These terms aren’t always negotiable—but often, they are.

Unfunded mandates are another concern. A grant may require regular program evaluations by third parties, data collection software, or additional staffing—without covering these costs. Unless your organization can shoulder those expenses internally, this creates financial risk.

Even if you’re working with a well-known community foundation or regional government partner, it’s important to raise concerns early. Many local funders, particularly those embedded in Northern Michigan, are willing to clarify or amend language to reflect shared goals and realistic expectations.

Local Lessons from the Grant Landscape

Across Northern Michigan, nonprofits manage a wide range of grants—each with its own terms, timelines, and requirements. Reviewing recent examples provides a useful window into what to expect.

The Grand Traverse Regional Community Foundation, which distributes over $900,000 in annual endowment funding, typically requires grantees to accept funds through signed grant agreements. These agreements often include language around program scope, financial documentation, and stewardship of donor intent.

Impact100 Traverse City, known for issuing six-figure grants to nonprofits across Leelanau, Benzie, and Grand Traverse counties, ties award disbursement to performance milestones. Its grant agreements include deadlines for submitting mid-year and final impact reports and may require grantees to return unused funds.

Local health-related grants—like those funded by alcohol tax dollars in counties like Benzie and Manistee—often include quarterly reporting, budget reviews, and an obligation to report outcomes to community oversight boards. These agreements are issued through designated fiscal agents or managed by NMRE, with strict compliance oversight.

In each case, the nonprofit is expected to carefully read the terms, deliver on its obligations, and maintain transparency with the funder. Having legal review before signing can prevent disputes months or years later.

Negotiating for Clarity and Capacity

Negotiating grant terms is not only acceptable—it’s advisable. Many funders appreciate when grantees seek clarity or propose adjustments that improve the chance of successful implementation. The key is to enter negotiations respectfully, collaboratively, and with specific requests.

Begin by reviewing the agreement with your leadership team. Identify any terms that are ambiguous, overly burdensome, or misaligned with your operating realities. Then propose edits with justification—for example, asking for more flexible reporting timelines because of part-time staffing, or requesting more precise deliverables to reflect existing evaluation tools.

If a grant includes intellectual property terms that give the funder broad rights to materials you develop, ask for shared or retained ownership. If the agreement includes steep penalties for underperformance, suggest a tiered consequence approach. And if the budget template doesn’t reflect your nonprofit’s real cost structure, propose a revision early.

Funders are more likely to accept changes that are well-justified, mission-aligned, and submitted before the agreement is finalized. In Northern Michigan, where community funders often prioritize trust and collaboration, these conversations are common and constructive.

One-Paragraph Legal Checklist

Before signing any grant agreement, ensure that your team has reviewed the scope of work for clarity, confirmed the feasibility of budget and match requirements, understood all compliance obligations, and sought clarification or amendments on any ambiguous, unrealistic, or risky clauses—including ownership of deliverables and termination triggers.

Staying Compliant After the Award

Signing the agreement is only the beginning. Grant compliance requires systems and discipline throughout the grant cycle. Assign one point person to manage the relationship. That individual should maintain a copy of the agreement, track key deadlines, and monitor progress against deliverables. A central grant calendar—shared with leadership and program teams—can help prevent surprises.

Your finance staff should align budget tracking systems with grant reporting requirements. Ideally, grant-funded expenses should be segregated in your accounting software for easy reconciliation. If in-kind match is part of the grant, track volunteer hours, donated space, or materials systematically to document your contribution.

Some grants—especially those involving public funds—may require pre-approval for budget changes. Others limit carry-forward of unspent funds. If anything shifts mid-stream, communicate proactively with the grantor. In most cases, funders appreciate early notice and will offer guidance on next steps.

Maintain detailed records of communications with the grantor, especially regarding modifications or deliverables. During audits or grant renewals, these notes can be invaluable. Transparency and thorough documentation are your strongest defense against disputes or funding disruptions.

How True North Legal Group Can Help

At True North Legal Group, we help Northern Michigan nonprofits enter and manage grant agreements with confidence. Our legal services include:

• Reviewing draft or final grant agreements to identify legal risks and opportunities
• Negotiating terms and drafting addenda or clarifications with grantors
• Advising on budget structures, cost allocations, and match documentation
• Developing internal grant policies and compliance procedures
• Supporting nonprofits during audits, performance disputes, or grant closeouts

We combine legal clarity with local knowledge, helping nonprofits turn grant opportunities into long-term success without unnecessary legal exposure.

Conclusion

Grants are essential tools for driving mission-based work across Northern Michigan. But the paperwork that comes with them carries real consequences—positive and negative. By treating grant agreements as legal contracts, asking the right questions, negotiating clearly, and maintaining strong compliance practices, your nonprofit can transform funding into meaningful, measurable outcomes.

If your team needs help reviewing or managing a grant agreement—or creating internal systems to comply with one—reach out to True North Legal Group. We provide grounded, practical legal support tailored to your nonprofit’s capacity, culture, and community.