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bob11x
October 30, 2020
Question

Non-Profit Grant Accounting

  • October 30, 2020
  • 1 reply
  • 0 views

I am volunteering with a Non Profit to get their books in order.  They are on QB Online Advanced.

I am using "Classes" to track the programs.  Everything seems to be going well except that I cannot understand the mechanics of using Projects to track a grant.  I come from the for profit world as a small business owner for over 30 years.

From all I read and watched regarding non-profits I do not see how to use the grant for program fees in Projects.

So- ABC gives us 10,000 to use on researching the effectiveness of our programs.  I record it as a Foundation grant Income under the Project "Research" under the ABC donor.

Donor: ABC / Project "Research"

I use the money to pay for rent, phone, office supplies for 3,000.  I look at the Project and it shows 10,000 - 3000 = 7000 balance.  All good.

For Joe Average it is a $100 Program Fee to take their course- which is revenue for them.  I need to pay for 25 people to take the program.   So 25 x $100= 2,500.

How do I show in the Project the $2,500 that is "spent" as revenue to me?  If I do an "Invoice" it adds to the amount of the Project balance.  QBO won't allow a negative invoice.  A credit memo does show in the Donor balance but not in the Projects window where it should.  I was under the impression that Projects would show all "payments" out?

 

In my old for profit business if a customer gave me $10000 for a project I would record it as a credit to his A/R account.  Then I would invoice off the bits and pieces to deplete it. 

In a non profit the grant is revenue.  How do I use it to pay for their revenue generatingMaybe I am seeing this wrong in the non-profit side?

Any help is greatly appreciated.

 

1 reply

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SarahannC
October 30, 2020

Hello there, bob11x.

 

We can create a liability account that will serve as an income account of the item (service or non-inventory). To guide you further, please follow these steps:
 

  1. Go to Accounting on the left panel.
  2. Within the Chart of Accounts, click the New button at the upper-right corner.
  3. Select Liability in the Account Type. 
  4. Enter the account name. Then, Save.

 

Create or edit the existing item. Then, use the liability account you've created in the Income account field. Once done, you can now then create an invoice for these items by following these steps:

 

 

  1. Go to the Project tab and select which specific project/customer you're working on.
  2. Click the Add to Project drop-down. Then, choose the Invoice.
  3. Choose the item you've created. Enter all necessary information.
  4. Select Save and close.

 

Lastly, receive the payment from the Add to project drop-down, choose Receive payment, and select the invoice you've created.

 

For further guidance, it's best to consult your account to make sure everything is accurate and properly set up. Here are some articles for additional reference:

 

 

Let me know if you have other questions. Take care and stay safe!

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bob11xAuthor
October 30, 2020

Thank you for the quick reply.  This is how it works in for profit.  I just am not sure in non-profit though.  I am trying to get the accountant to understand my question better so he can tell me for sure.  I think the grant is considered restricted funds revenue according to the non profit structure but it needs to be a liability for quickbooks to record properly.

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