We run a non-profit that accepts donations/grants that are often restricted by program.

So here is how I do it (you will need QBO projects module)

1) Customer: Create New Customer - "Grant 1"

2) Projects: Create 3 Projects - Client 1, Client 2, Client 3
Make sure you select "Grant 1" customer for these three projects

3) Product/Service: Setup New "Restricted Funds 1"

4) Create New Invoices (Assume total funding of 10,000)
Invoice 1001

Customer: Client 1

Product/Service: Restricted Funds 1

Amount: 2,000 (20% of 10,000)

Invoice 1002

Customer: Client 2

Product/Service: Restricted Funds 1

Amount: 4,000 (40% of 10,000)

Invoice 1003

Customer: Client 3

Product/Service: Restricted Funds 1

Amount: 4,000 (40% of 10,000)

5) Grant Payment Received:

Receive Payment for $10,000

Select invoice 1001, 1002 and 1003

At this point you will have all restricted funds allocated to project based on their proportion

Now you want to make sure you allocate all the expense to the respective project when costs are incurred

6) Incurred/Paid 500 against Client 2 funds

Create Bill/Expense

Under customer column select "Client 2"

You can browse through Project module to understand grant amount vs spent 
Under reports section you can view Profit & Loss by Customer for details as well.

You can also see a consolidated view for "Restricted Funds 1" by running Profit & Loss and filter or display column by Product/Service

Hi, 

You may consider setting the grant up as a parent customer GRANT and then each grant would be a subcustomer : Grant 1, Grant 2 to track all your grants and be able to  run a report by customer Grant 1, Grant 2.. Profit & Loss by Customer then filter for GRANT or Grant 1, Grant 2 customer... then

Code all income and expenses with the GRANT as the customer/job so you are able to run a Profit & Loss by customer and filter as stated above.