Tracking restricted grants

When Free Geek receives a grant it will often have restrictions placed on it. For example, in 2008 we received a grant for $24,950 to purchase a truck with a lift gate. The grant covered several associated expenses as well. Because the grant was in support of certain types of purchases and not others, we need to account for where the money went. This page describes how to do that in our books.

When a grant comes in, we need to maintain a file of all documents related to the grant. This can be useful in determining whether a transaction meets or does not meet the restrictions put in place by the grant.

The grant must be recorded in an income as of the date we know (a) the amount of the grant, and (b) that there is an agreement that we will get the grant. A typical income account that this might appear in is numbered something like 423X-ZZZ, where 423X indicates the natural account (Foundation/trust grants) and ZZZ indicates the program the grant is associated with. If a grant is recorded on the day we receive the check, the transaction will look something like this:

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3/18/2008

1041 Assets:Cash and equivalents:Petty cash & tills:Safe $24,950 Debit

• 4231-230 Income:Non-government grants:Foundation/trust grants:Truck Grant $24,950 Credit

G-001: grant for truck, lift gate, etc.

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Each grant should be assigned a G-code. In the above example the G-code is G-001. This code will need to be recorded in the memo field of each transaction related to the grant (for reporting purposes).

Current grant codes (for bookkeeping purposes):

• G-001: The truck grant (3/18/2008)
• G-002: The classroom grant (5/20/2011)

At the end of the accounting period, when making adjusting entries, we need to print a report showing all the relevant transactions. This can be done by searching for transactions containing the proper code in the memo and then generating an account report for the results. It is often useful to cut and paste the results into a spreadsheet for analysis. We can use the details in this report to see how much of the grant has been properly spent. (By turning the initial grant amount into the spreadsheet to a negative number and then creating a running total it can be easy to see what is left over at the end of a period.)

We must then make an adjusting entry releasing the funds from a restricted income account to an unrestricted income account. This will then appear on the balance sheet properly. Here is an example from the end of the year 2008:

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12/31/2008

6911-230 Income:Net assets released from restriction:Released recycling pick-up program (TR) $20,014.34 Debit

• 6910-230 Income:Net assets released from restriction:Released recycling pick-up program (UR) $20,014.34 Credit

G-001: partial satisfaction of grant

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We also need to figure out how much of the grant remains to be spent and record a transfer to a restricted net assets account. STILL TO DO