Accountants love it when they get a clean set of books. The ultimate prize is when the Net Assets with Donor Restrictions account is up to date. A critical step in getting there is a good grant balance tracking system maintained throughout the year. Here are three ways we track restricted grant balances using QuickBooks Online:
Use classes to track grants – Set up a ‘parent’ class for restricted grants and another for unrestricted grants.
- Create unique sub-classes for each grant under the correct parent to record all grant income awarded and expenses related to the grants.
- Select the grant in the Class field in every transaction related to the grant.
- To generate a report that includes income and expenditures over more than one fiscal year for a particular grant, run a Statement of Activity (Profit and Loss), all dates, filtered for that grant sub-class. The total in this report signifies the grant dollars that have not been expended.
Use donors/sub-donors – This technique frees up your classes for tracking programs and allows for more than one grant to fund a particular program.
- Create a donor (change ‘customers’ to ‘donors’ in Account and Settings) for the grantor.
- Create a sub-donor under the grantor name for each unique grant made by that grantor. In the grant name, use a designator, such as “R” for restricted and “U” for unrestricted, so you can easily identify the sub-donors that represent restricted grants.
- In Account and Settings, select ‘track expenses by donor’.
- Select the grant in the donor field in every transaction related to the grant. Run a Statement of Activity, all dates, filtered for that sub-donor. The total in this report signifies the grant dollars that have not been expended.
Use projects – Create a unique project for each grant. This technique is like using donors/sub-donors and has the added benefit of tracking time activity within each project. Also, there is an easy-to-understand dashboard of the status of each project/grant in one place.
Each of these methods has advantages and disadvantages that depend on the unique needs of the nonprofit. Let us help you figure out the best QuickBooks Online structure for your organization!