Congrats! That grant application you submitted a few months ago has been successful!
Now you can start spending! Did you know the grant is subject to fund accounting?
What is Fund Accounting: It is a method of accounting for donations, used by non-profit organisations. It focuses on being able to account for income and related expenses of a specific donation.
U.K. charities are legally obliged to spend donations for the purpose for which it is given.
Most charities obtain donations from various sources. Given the requirement to only spend for the purpose which funds have been given, it is therefore important that each donation and its related expenditure (that conform to the terms of the funding) is recorded separately.
Very few accounting software possess the functionality to record each donation and related expenditure separately and those that do, come at a premium!
Workaround the premium priced software is using alternative fields in the more affordable software, to help with fund accounting e.g. using a tracking category (in Xero), classes (in QuickBooks) and Jobs (in Nomisma) to record each donation and its corresponding expenditure.
Fund accounting is different to regular (or general) accounting, so it is important to work with a bookkeeper or accountant who has the necessary expertise to deal with this, especially as there is often the need to find work arounds that will enable compliance.
BAnC Services has extensive experience working with non-profit organisations and fund accounting and are happy to help with questions. Book a call via our website to have a no-obligation chat.