“This week’s Ask Manny question comes from Samantha.”

Question:

My non-profit organization has several programs that we are running right now, all of which are grant funded. The grantors need us to track all the expenses that we are incurring against the grant. And I also want to make sure we don’t overspend on any of the grants. How can I do this? 

Answer:

This is a common need for a non-profit organization.  You receive grant funding and then need to track what you are spending against those funds. The grantors want to know how you are using their funds, and rightfully so. But it can present a bit of a challenge from an administrative standpoint.  

Luckily we have tools available to us that make this process much easier. If you use QuickBooks Online (and I hope you do!), there are two modules built into the program that will help:  Project Tracking and Class Tracking. 

Project Tracking will help you determine how much money you are spending… and likewise how much money is still left to spend… from an individual grantor. 

For example, let’s say that The Citi Foundation provided you with a $500k grant to provide financial education to single parents.  We would set this up as a project in QuickBooks.  When the $500k funds are received (whether in one lump sum or in chunks over time), we would record this revenue against the grantor’s project.  Then, as we start to spend money for this program (like purchasing equipment, hiring consultants, using internal staff, etc) we would record these expenditures against the grantor’s project.  

By doing this, we can then pull a P&L by Project to see exactly how much funding we’ve received, how much we’ve spent, and the bottom line how much is left.  You would want to look at this report periodically to ensure that the project’s budget is on track.  

Project Tracking works when there is just one funder for a program. But what if you have multiple funders for a program?  That’s where Class Tracking comes in. 

Taking the example above, let’s say that, instead of Citi being the only finder of the education program, you also have PNC and Wells providing grants to this program. You would still set up each grantor as its own project so you can track the specific dollars spent against each grantor’s funds. But you would also want to see the overall status of the program in its entirety. Is this program receiving enough combined funding from all the grantors to cover all its expenses, for example? 

To easily see this information, you would establish the program as a class in QuickBooks.  

And now, for every dollar spent, you would assign both a grantor/project to it, AND you would assign a class to it. Yes, that’s right… you would specify these two key pieces of information for every transaction.  This will allow you to pull up a P&L by Project to see the status of each grantor’s budget, and a P&L by Class to see the overall budget for the program as a whole.  

We have a free video on our website that walks you through Project Tracking and Class Tracking in more detail, including how to set up the tracking in QuickBooks and assign transactions to them. Go to the Free Resources tab on our website and check out the Tracking Expenditures & Vendors video.  

And of course, if you need more assistance, we are happy to help. We have a variety of bookkeeping service packages that match any budget level. Connect with us at info@cfoservicesgroup.com and let’s chat.  

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