Your money comes with strings attached.
Nonprofits, foundations, and associations. Most of what arrives can only be spent on certain things, and you have to be able to prove it — to a board, a funder, or an auditor.
You will recognise this if…
- You cannot say quickly how much restricted money is left, or for what
- Grant reporting means rebuilding numbers by hand every time
- Functional expense allocation is a year-end exercise, not a monthly one
- The board sees a P&L that does not answer the question they asked
- An audit means weeks of reconstructing records
Why the close is hard here
These are the four things that most often make the monthly close wrong here — and what has to be true for it to be right.
Restricted and unrestricted are not the same money
Funds carrying donor or grantor conditions have to be tracked separately from the day they arrive, and released as the conditions are met. A single cash balance cannot answer what you are allowed to spend.
Grants have their own calendars
Award periods rarely match your fiscal year, and each has its own budget, allowable costs, and reporting dates. Each is effectively its own small set of books.
Functional expense allocation has to be defensible
Splitting costs across program, management, and fundraising is required, visible on the 990, and read by funders. Done once a year from memory, it is a guess.
Everything has to survive being examined
Auditors, funders, and boards all check the same records. The work is either audit-ready every month or it becomes a project every year.
What we do about it
- Fund accounting with restricted and unrestricted tracked separately
- Grant-level budget-to-actual with release of restriction recorded as conditions are met
- Monthly functional expense allocation on a documented, consistent basis
- Board-ready reporting that answers what was asked
- Records maintained in audit-ready condition year-round
Covered here: Nonprofit finance guides → · All industries →
Questions we get asked
Do you prepare the Form 990?
No. We keep the records and the functional expense allocation in the condition your CPA needs to prepare it. Filing stays with them.
Can you track multiple grants at once?
Yes. Each award is tracked against its own budget, period, and allowable-cost rules, with budget-to-actual available at any point.
What does audit-ready actually mean?
Reconciliations complete, support attached, allocations documented, and restrictions traceable from receipt to release — maintained monthly rather than assembled afterwards.
Do you work with our auditors?
We provide the schedules and support they request. We are not your auditor and do not perform the audit.
Not sure this is you?
Most owners sit across two of these. A short conversation sorts out which parts actually apply.
Talk to a finance pro →