The category you choose will depend on what the grant money was used for, and will end up being grouped with other revenue (i.e. However, in the Performance Report, grant income must now be allocated to one or more of the four minimum (compulsory) categories used to report all revenue. Your charity may have previously recorded grant revenue (income) as a standalone item in its financial records. If the grant money was used and is recorded as revenue (income) in your accounts, you will need to know what the grant money was used for to determine where to record it in the Statement of Financial Performance of the Tier 3 performance report. Grant money recorded as revenue (income) in your accounts Rather, you would record in the notes to the performance report the details of the grant and the amount unspent. In this case you would not recognise a liability for the unspent amount of $500.
Imagine that the grant received by ABC as described above instead simply had a restriction stating that the grant was to be used for office equipment but had no requirement to return the money if unspent. If the grant has a restriction or condition which is not a “use or return” condition but has not been fulfilled at year end, you must disclose this. If the grant money is recorded as a liability on your balance date (as explained in the previous section), then that amount will need to be entered in “Unused donations and grants with conditions” under “Current Liabilities” in the Statement of Financial Position of the performance report. Grant money recorded as a liability in your accounts
Where you record grant money in your performance report will depend on where your money is recorded in your accounts at the end of your charity’s financial year (balance date).
#Grant monies how to
How to record grant income in the performance report Their treasurer moved $4,500 from “liabilities” to “revenue”, and left the balance of $500 in “liabilities” until it was returned to the grant funder. They then purchased the equipment with the grant money, but only spent $4,500 of the $5,000 given to them. Because of the condition attached to the grant, ABC charity recorded the $5,000 as a liability when the money was received. Example:ĪBC charity received a $5,000 grant with a “use or return” condition to purchase new office equipment: two laptops, two monitors and one printer. If there is no “use or return” condition, then the grant money should be directly recorded as revenue (income) in your accounts. It’s a good idea to keep track of the spending of grants throughout the year so that you know how much remains unspent at the end of the financial year. Most restrictions and conditions will not change how you record grants received in your financial accounts but “use or return” conditions are different as they do cause it to change.įollow the flow chart below to find out where the grant money needs to be recorded. If there is any grant money left over after the money is used for the specified purpose, then any remaining amount must also be returned to the funder. What this means is that if a grant is given to your charity for a specific purpose, it must be used for that purpose and if not, the grant money needs to be returned to the funder. Most grants come with restrictions or conditions attached and this is often a “ use or return” condition.
It’s important for grant money to be recorded correctly in your charity’s financial accounts so that when you come to put your charity’s Performance Report together, you can easily record it in the correct format. The grant funders then decide which charities or projects they want to fund and if successful, the charity receives grant money.Ī grant can be received, for example, to help cover the day-to-day running costs of a charity, to purchase goods or equipment, or to help a charity carry out a specific project, activity or service. Grant funders may be charitable trusts, foundations, philanthropic organisations, or central or local government departments.Ĭharities apply to grant funders for a grant. What is a grant?Ī grant is money given to a charity by a grant funder for a specific purpose. Learn about grants and how to record them in your accounts and in the Tier 3 performance report. How to record grant income in your accounts and in the Tier 3 Performance Report
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