Moving restricted fund tracking out of a spreadsheet and into the ledger
Restricted grant funds have to be tracked as a property of each transaction in the ledger rather than in a parallel spreadsheet, because a spreadsheet cannot demonstrate that a specific dollar was spent on a specific restricted purpose. This is an illustrative example of how Salt approaches non-profit fund accounting, using a US organisation holding several restricted grants as the profile.
Scenario — an illustrative example of how Salt approaches this problem. Not a description of a specific client engagement.
The business shape it describes: US non-profit, multiple restricted grants.
- Scenario covers
- Fund accounting setup, bookkeeping and grant reporting
- Jurisdiction
- United States
- Sector
- Professional services
- Take a US non-profit holding several restricted grants, each with its own permitted uses, reporting requirements and end date.
- Restriction tracking lives in a spreadsheet maintained by one person alongside the ledger, and the two have never been reconciled to each other.
- Restricted and unrestricted funds commingled in the ledger, with the split existing only in the spreadsheet, so the accounting records cannot support the restriction on their own.
- Grant expenditure not traceable to a specific restricted fund without manual work, which makes a funder query a multi-week exercise.
- No release-from-restriction entries, so satisfied restrictions never move to unrestricted and the fund balances drift from reality.
- Grant reporting deadlines tracked informally, with each grant carrying different requirements and a different end date.
- Implement fund-level tracking in the ledger so restriction attaches to the transaction rather than being a note held elsewhere.
- Map historical expenditure to the correct restricted funds, which is the slow part and the part that decides whether the result holds.
- Introduce release-from-restriction entries so a satisfied restriction is recorded when it is met, and net assets with and without donor restrictions are separately reportable.
- Build a grant reporting calendar tied to each grant's own requirements and end date rather than to the organisation's financial year.
- Reconcile fund balances monthly, so the restriction position is current rather than reconstructed at reporting time.
- Fund accounting is a different ledger structure, not an extra report laid over an ordinary one. Restriction has to attach to the transaction before any fund balance can be relied on.
- Mapping already-spent money back to the fund it should have come from, across grants with different requirements and end dates, is the part that decides whether the result survives a funder's questions.
- Fund balances and expenditure would be traceable within the ledger, so a funder query is answered from the accounting records rather than reconstructed.
- Net assets with and without donor restrictions would be reportable directly, which is what the financial statements require.
- Grant reporting would be produced on each grant's own calendar rather than assembled under deadline pressure.
What we'd flag
Mapping historical expenditure to restricted funds sometimes shows that restricted money was spent on unrestricted purposes. That has to be disclosed and corrected with the funder, and no amount of ledger design makes that conversation optional.
Moving restricted fund tracking out of a spreadsheet and into the ledger
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