By Jim Snelson September 16, 2026
Reading time: 8 minutes
A grant lands in your bank account and, for a moment, everything feels straightforward. Then the questions start. Is it income this year, or next? Does it belong in the profit and loss account at all, or on the balance sheet? What do you tell the committee when the bank balance looks healthy but most of the money is already spoken for? And how do you show the funder exactly what their money paid for?
Grants are one of the most common areas where club treasurers get stuck, and for good reason — the right treatment depends on what the grant is for and when you are entitled to spend it. This guide walks through the three situations clubs meet most often and shows exactly how to record each one in Clubtreasurer.
One caveat before we start, and it matters: grant accounting can get genuinely complicated, particularly where conditions are attached or the amounts are large. Always check the treatment with your accountant, auditor or independent examiner. What follows shows you the mechanics in Clubtreasurer once that decision has been made.
Start with one question: when does the money become income?
Almost every grant question comes down to this. The cash arriving in your bank account and the grant becoming income are two separate events, and they often happen at different times.
- If you are entitled to the money now and it covers costs you are incurring now, it is income now. This is an operating grant (sometimes called a revenue grant).
- If the money has arrived but you are not yet entitled to spend it — it is for next season, a future project, or conditions are still to be met — it sits on your balance sheet as a liability until you release it. This is deferred income.
- If the grant funds a building, vehicle or piece of equipment, it is usually a capital grant, and it is normally released to income gradually over the life of the asset it paid for.
Get that classification right and the bookkeeping follows easily. Get it wrong and your surplus for the year can be out by the entire value of the grant — which is exactly the kind of surprise you do not want at an AGM.
Before anything else: create a Grant Fund
Whatever type of grant you have received, start here. In Clubtreasurer, go to Funds > Fund Balances > New Fund and create a fund named after the grant — “Sport England Facilities Grant”, “Lottery Award 2026”, or whatever identifies it clearly.
This single step solves the problem that causes most grant headaches. Grant money almost always sits in your ordinary current account, mixed in with subs, bar takings and everything else. The bank balance alone can no longer tell you how much of the grant is left. A fund can.
By tagging every grant receipt and every grant payment with the same fund, you get:
- A running balance showing exactly how much of the grant remains unspent
- A ready-made report of income and expenditure for that grant alone — which is usually precisely what the funder asks for
- Confidence that restricted money has not quietly been used for something else
If funds are new to you, our guide to funds, events and cost codes explains how the three work together.
Type 1: Operating grants — money you can spend now
This is the simple case. The grant covers everyday running costs that would normally appear in your profit and loss account — coaching, affiliation fees, a junior programme, venue hire — and you are entitled to it now.
How to record it. Enter the grant as a straightforward receipt transaction into the bank account that received it, choosing an appropriate income cost code (many clubs set up a dedicated “Grant Income” code) and select your Grant Fund.
Then record the spending as normal. Every payment made from the grant goes in as an ordinary payment transaction from your bank account, coded to whatever expenditure cost code fits — and tagged to the same Grant Fund.
That is all there is to it. The income appears in your P&L, the expenditure appears in your P&L, and the fund balance shows you what is left.
Type 2: Deferred income — money now, spending later
This is the case that trips people up. The cash has arrived, but you are not yet entitled to treat it as income — perhaps it is for next season, or it is released in stages as project milestones are met.
If you simply record it as a receipt, your P&L will show a large surplus this year and a matching deficit next year when you spend it. Neither figure reflects reality. Instead, the grant needs to sit on your balance sheet as a liability — money you hold but have not yet earned — and be released into income as you become entitled to it.
Clubtreasurer handles this with two things you already have: a creditor account, and an account transfer.
Why an account transfer rather than a receipt
This is the key idea, and it is worth pausing on. An account transfer moves money between two accounts without creating any entry in your profit and loss account. A receipt, by contrast, always creates income.
So if you transfer the grant from a creditor account to your bank account, two things happen at once: your bank balance goes up by the full amount, and a matching liability appears on your balance sheet. The two cancel out, your P&L is untouched, and the money is sitting in the bank ready to spend. That is deferred income, done in a single transaction.
A worked example
Your club is awarded £10,000 on 1st January. You will not start spending it until the summer. Here is the whole sequence.
Step 1 — Set up the two things you need.
- Create a new account to hold the liability: name it “Deferred Grant A/c” and set Type = Creditor. (See bank and cash accounts for how to add one.)
- Create a new fund: “Grant Fund”.
Step 2 — Bring the money into the bank (1st January). Create an account transfer:
- Date: 1st January
- Amount: £10,000
- From: Deferred Grant A/c
- To: Bank Account
- Tick Show Funds and select Grant Fund for both sides of the transfer
Your bank account is now £10,000 higher and the Deferred Grant account carries a £10,000 liability. Nothing has touched the P&L.
What the reports show at 31st January:
| Balance Sheet | £0 — Bank Account £10,000 less Deferred Grant liability (£10,000) |
| Profit and Loss | £0 surplus — £0 income less £0 expenditure |
Exactly right. You are holding £10,000 of someone else’s money, and you have earned none of it yet.
Step 3 — Release the income when you become entitled to it (1st July). Let’s say £5,000 is released this month. Create a receipt transaction:
- Date: 1st July
- Amount: £5,000
- Account: Deferred Grant A/c
- Cost Code: Grant Income
- Fund: Grant Fund
Note the account: the receipt goes against the deferred grant account, not the bank. The cash is already in the bank — it arrived in January. What this entry does is recognise £5,000 as income in your P&L and reduce the deferred grant liability by the same £5,000.
Step 4 — Record the actual spending (21st July). Say you spend £3,000. Create a payment transaction:
- Date: 21st July
- Amount: £3,000
- Account: Bank Account — this is where the cash actually sits
- Cost Code: <select code that represents the expenditure type>
- Fund: Grant Fund
This creates the expenditure in your P&L and reduces the bank balance by £3,000.
What the reports show at 31st July:
| Balance Sheet | £2,000 — Bank Account £7,000 less Deferred Grant liability (£5,000) |
| Profit and Loss | £2,000 surplus — £5,000 income less £3,000 expenditure |
And your Grant Fund balance shows £2,000 of released money still unspent, with a further £5,000 still deferred and waiting to be released. Three different numbers, each answering a different question, and all of them correct.
Type 3: Capital grants — money for an asset
If a grant paid for something you are capitalising — a new clubhouse roof, a mower, a minibus — the grant is usually deferred and then released to income over the same period that the asset is depreciated. The logic is matching: the grant income appears in your P&L at the same rate as the depreciation charge it is funding, so the two broadly offset and the asset costs your club nothing in the years it is being written down.
Mechanically, this is the deferred income process above, just with a longer release schedule. You bring the cash in with an account transfer from the Deferred Grant account, capitalise the asset in the fixed asset register, and then post a release receipt each year for the portion matching that year’s depreciation.
Capital grants are also the type most likely to carry clawback conditions — an obligation to repay if you sell the asset or stop using it for its intended purpose within a set period. This is firmly an “ask your accountant” area, both for the release profile and for whether any disclosure is needed in your accounts.
Common mistakes to avoid
Recording a deferred grant as a straight receipt. The single most common error. It inflates this year’s surplus and depresses next year’s, and if the committee sets subscription levels off the back of those figures, the damage is real.
Forgetting to tag the fund on both sides of the transfer. If you only tag one side, the fund balance will not reconcile. Tick Show Funds and set the fund on both entries.
Posting the release receipt against the bank account. The cash already arrived. Posting the release to the bank records the money twice — once in the transfer and once in the receipt. The release always goes against the Deferred Grant account.
Releasing the whole grant at once out of habit. Release what you are entitled to, when you are entitled to it. If the grant is staged against milestones, the releases should be staged too.
Using one Grant Fund for several grants. One fund per grant. The moment a funder asks for a statement of how their money was spent, you will be glad you separated them.
Treating a fund as if it were a bank account. A fund tells you how much of the money is earmarked; it does not hold cash. The cash is still in your bank account, and your bank reconciliation works exactly as it always did.
Reporting back to your funder
Most grant agreements require some form of report on how the money was used, and this is where the fund you set up at the start earns its keep. Because every grant receipt and payment carries the Grant Fund tag, Clubtreasurer can produce income and expenditure for that grant alone — no filtering through a year of bank transactions, no spreadsheet reconstruction, no hoping you remembered to keep a separate list.
If your grant funds a specific project or one-off activity rather than an ongoing programme, consider pairing the fund with an event as well. Funds track the money; events track the activity. Together they let you answer both “how much of the grant is left?” and “what did the tournament actually cost?” from the same set of records.
A quick checklist
- Confirm with your accountant which type of grant you have received
- Create a dedicated Grant Fund, named after the grant
- Operating grant: record as a receipt to the bank, tagged to the fund
- Deferred grant: create a Creditor account, bring the cash in by account transfer, tag the fund on both sides
- Release income by receipt against the Deferred Grant account, only as you become entitled to it
- Record all spending as payments from the bank account, tagged to the fund
- Check the balance sheet and P&L after the first entries to confirm they say what you expect
- Keep the grant award letter and any conditions with your records — attach them to the transaction
In summary
Grant accounting feels difficult because two things that look like one event — the cash arriving and the income being earned — are actually separate. Once you separate them in your records, everything else falls into place: the account transfer handles the cash, the release receipt handles the income, and the fund tells you where you stand at any point in between.
Clubtreasurer is a UK-based accounting platform built specifically for clubs, societies and not-for-profits, with funds, creditor accounts, account transfers and fund reporting designed around how clubs actually operate. If you would like to see how it works, you can start a free trial or read our guide to funds in the user guide.
And whatever the grant, the rule that will keep you out of trouble is the same one your auditor will apply: recognise the income when you have earned it, not when it lands in the bank.