Nonprofit Accounting Basics

Budget for Government Grants

When you receive a grant from a governmental agency, it will typically include a program budget. This budget is likely the maximum that can be claimed for reimbursement from the governmental agency. In the event that the expenditures exceed the program budget you have two options - (1) request additional funding from the government; or (2) obtain funding from other sources for the excess. In many instances, the organizations unrestricted funds will have to be used for these excess expenditures. This budget may also provide detailed, line-item budget that identifies how the grant is to be spent - such as personnel, travel, meetings, professional costs... Often there are stipulations in the grant agreement that require you to request permission from the granting agency prior to reallocating any costs from one budget line to another. The grant budget may contain other stipulations, such matching requirements or limits on indirect costs, that are requirements of the grant. It is crucial that before you accept any grant you thoroughly review the budget and any related stipulations or conditions. These seemingly minor items can have a significant impact of the ultimate collectability of reimbursement for costs incurred.


This article contributed by Calibre CPA Group (