[Solved] Understanding How to Account for Grants in Clubtreasurer

Dealing with grants can be complex, and we always recommend getting advice from your accountant or auditor to ensure everything is handled correctly.

The following will show you how to account for different types of grants in Clubtreasurer:

 

Operating Grants

If the grant is intended to cover everyday costs that you would normally put in your profit and loss account (these are known as 'operating' grants), then you should also record the grant income in your P&L.

How to record it: Simply record the grant as a receipt transaction directly into your bank account (and the grant fund if you've created one - see below). You'll then record any expenditures related to the grant in the usual way.

Managing Grant Funds

For all types of grants, we highly recommend creating a separate "Grant Fund" (Funds > Fund Balances > New Fund). This helps you track both the income and expenditure related to the grant and easily see its running balance, especially if the money is held in your main bank account(s).

 

Grants Not for Immediate Use (Deferred Income)

If you receive a grant but don't plan to spend it right away, you'll need to hold it on your balance sheet without showing it as income yet. This is known as deferred income.

How to record it:

1. Record the grant money coming into your bank account.

2. Show this amount on your balance sheet as deferred income. You'll do this using an Account Transfer.

3. When you're ready to use part or all of the grant funds, you'll then record the income as a receipt transaction from your deferred grant account. This will show the income in your P&L and reduce the deferred grant balance.

4. Record any spending from the grant as a payment from your bank account.

As above, we also suggest creating a new Grant Fund to record the grant income and expenditure.

These are the steps to follow:

1) 1st Jan - Record Grant income into your Bank Account(s) as an Account Transfer

• Create new Account to represent the liability = “Deferred Grant A/c” > Type = “Creditor” 
• Create a new Fund = "Grant Fund"

Create an Account Transfer:

• Date: 1st Jan
• Amount: £10000
• From: “Deferred Grant A/c”
• To: “Bank Account”
• Check “Show Funds” box and select “Grant Fund” for both entries

  This adds the grant monies into your bank account. The Account Transfer a) does not create an income line in your P&L, and b) The Deferred Grant liability offsets the Account balance on the Balance Sheet. 

Financial Reporting as at 31st Jan:

• Balance Sheet = £0 ( Bank A/c £10000 less Deferred Grant liability <-£10000>)
• Profit and Loss = £0 Surplus (£0 income less £0 expenditure)

 

2) 1st July - When grant funds are ready to be used, create Income and Expenditure transactions to record these in your P&L. We're assuming £5000 is initially released, and £3000 spent, in this example.

Part release the deferred grant funds by creating a Receipt transaction:

• Date: 1st July
• Amount: £5000
• Account = Deferred Grant A/c
• Fund = “Grant Fund”

  This creates an income in your P&L and reduces the Deferred Grant liability balance by £5000

Create Payment transaction(s) to record when the actual grant funds are used/spent - note this is from your “Bank Account" as this is where the funds are held:

• Date: 21st July
• Amount: £3000
• Account = “Bank Account”
• Fund = “Grant Fund”

  This creates an expenditure in your P&L and reduces the Bank Account balance by £5000

 

Financial Reporting as at 30th July:

• Balance Sheet = £2000 (Bank A/c £7000 less Deferred Grant liability <-£5000>)
• Profit and Loss = £2000 Surplus  (£5000 income less £3000 expenditure)