Receiving grant funds as a nonprofit organization is often vital to continuing and advancing your mission. However, an award of a grant is often accompanied by grant reporting requirements. Grantors typically want detailed reports on how their granted funds were utilized by the organization. This requires nonprofits to carefully track all incoming grant funds and related expenses.
The dynamic accounting platform of QuickBooks Online can be configured to track receipt and expenditure of grant funds through the use of the “Statement of Activity by Donor” report. (Also called “Profit & Loss by Customer” – see note below.) This financial report allows you to quickly see what grant funds have been received and how the funds were spent. If your nonprofit would like to start using the Statement of Activity by Donor report to track granted funds, these instructions will get you headed down the right path.
Note: If your QuickBooks Online account is not configured for nonprofit use, you may see different terminology, such as “Customer” instead of “Donor” and “Profit & Loss” instead of “Statement of Activity.”
How to Track Grants by Donor in QuickBooks Online
Step #1: Turn on the option to track expenses by donor.
Log into QBO and click on the gear icon in the upper right-hand corner of your screen.
Under “Your Company,” click on “Account and Settings.”
Click on “Expenses” in the left-hand menu bar.
Next to the option “Track expenses and items by donor,” slide the radio button to “On.”
Step #2: Add the grantor to your list of donors in QuickBooks Online.
Navigate to Sales > Donors.
Click on the “New Donor” button in upper right-hand corner.
Complete the Donor information card and click Save.
Step #3: When entering transactions, associate each transaction with a specific grantor/donor.
Deposits: Enter the donor name in the “Received From” field.
Expenses and Bills: Enter the donor name in the “Donor” field.
Journal Entries: Enter the donor name in the “Name” field for each line associated with the grant.
Step #4: Run a “Statement of Activity by Donor” report.
Navigate to your Reports page and search for “Statement of Activity by Donor.”
Run the report, then click on the “Customize” button in the upper right-hand corner.
Click on “Filter” and check the box next to “Donor.”
Select a donor and then click “Run Report.”
The resulting report will show all the funds received/spent in association with that particular donor for the given period. This will assist your organization in preparing grant reports and documenting the utilization of funds.
If your organization needs additional assistance, reach out to our CFO Solutions team. Our accountants help nonprofit organization track millions of dollars in granted funds and can offer unique solutions for your grant tracking needs.
