One day a check arrives from a foundation with a letter that says, “We have approved your request for funding and enclosed is a check for $60,000.” Is that money really your organization’s to spend as it wishes? How can you, the accountant, record this transaction correctly?

To record the receipt of the check properly, you’ll need to know quite a lot about the terms of the grant, so locate the application and any budgets that were submitted with it and copy them for your own files, if you haven’t already. Using a “grant summary form” can be very helpful because you can use it to document all the information you’ll need to locate repeatedly over the life of the grant, making the task of looking up this information an easy one to accomplish. You’ll want to note the following:  the term of the grant, the date the grant was awarded, how and when the money will be paid to your organization, reporting requirements, including the due dates of the reports, and the number the grantor has assigned to this grant.

Once you have answered these questions for yourself, you’ll need to understand your accounting system, especially how and whether it handles more than one fund (QuickBooks cannot, by the way) as well as how to record the spend-down of the grant.

A new article posted at www.NFPAccountingHelp.org in the free resources section tells you a lot more about how to navigate accounting for restricted cash. It’ll be there for a week or so; after that, email me for a copy.

Nancy@NFPAccountingHelp.org

This entry was posted on Monday, November 17th, 2008 at 7:23 am and is filed under nonprofit accounting. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.