[{"data":1,"prerenderedAt":6988},["ShallowReactive",2],{"sYC-a1Gu_hgo6kVKwcmkouZgdhbq2MLJqi4IKfwcAsQ":3,"_apollo:default":6987},{"allBlogPosts":4},[5,659,1145,1718,2440,2901,3238,3405,3678,4223,4380,4572,4793,5055,5272,5624,5926,6371],{"__typename":6,"id":7,"title":8,"slug":9,"excerpt":10,"_firstPublishedAt":11,"_updatedAt":12,"_status":13,"image":14,"content":18,"_seoMetaTags":617},"BlogPostRecord","OiNmXeuGQHO7OyIbvo_oSg","State Grant Money Has Its Own Audit Rules","state-grant-money-has-its-own-audit-rules","Under $1 million in federal awards does not mean you are clear. North Carolina sets its own reporting level, and State money counts toward it.","2026-10-28T09:15:53-04:00","2026-10-28T09:15:51-04:00","published",{"__typename":15,"url":16,"alt":17},"FileField","https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793193341-audit-rules.jpeg",null,{"__typename":19,"value":20,"blocks":616},"BlogPostModelContentField",{"schema":21,"document":22},"dast",{"type":23,"children":24},"root",[25,32,37,41,45,64,68,75,79,83,87,91,95,129,133,137,157,161,166,170,174,203,207,211,215,219,223,227,231,240,261,265,269,273,277,281,285,289,293,297,301,305,309,313,338,347,351,355,359,363,367,371,375,379,388,392,396,400,404,408,412,416,424,428,432,436,440,487,491,514,538,542,612],{"type":26,"level":27,"children":28},"heading",2,[29],{"type":30,"value":31},"span","What 09 NCAC 03M Means for North Carolina Nonprofits",{"type":33,"children":34},"paragraph",[35],{"type":30,"value":36},"If your organization took Helene recovery money through a North Carolina State agency, two separate audit rules are counting your spending, and only one of them is federal. The federal one gets written about constantly. The State one almost never does, and it can require an audit in a year when the federal rule does not.",{"type":33,"children":38},[39],{"type":30,"value":40},"This post is about the second rule, which almost nothing published for nonprofits covers.",{"type":26,"level":27,"children":42},[43],{"type":30,"value":44},"What counts as State funds",{"type":33,"children":46},[47,49,62],{"type":30,"value":48},"North Carolina has its own grant reporting rules, in ",{"url":50,"meta":51,"type":58,"children":59},"http:\u002F\u002Freports.oah.state.nc.us\u002Fncac\u002Ftitle%2009%20-%20governor%20and%20lt.%20governor\u002Fchapter%2003%20-%20state%20budget%20and%20management\u002Fsubchapter%20m\u002Fsubchapter%20m%20rules.html",[52,55],{"id":53,"value":54},"rel","noopener noreferrer nofollow",{"id":56,"value":57},"target","_blank","link",[60],{"type":30,"value":61},"09 NCAC 03M",{"type":30,"value":63},", adopted under G.S. 143C-6-22 and 143C-6-23. They apply to any non-State entity that receives, holds, uses, or expends grant funds disbursed through the State.",{"type":33,"children":65},[66],{"type":30,"value":67},"One definition, at .0102(16), carries most of it:",{"type":69,"children":70},"blockquote",[71],{"type":33,"children":72},[73],{"type":30,"value":74},"\"State Funds\" means any funds appropriated by the North Carolina General Assembly or collected by the State of North Carolina. State funds include federal financial assistance received by the State and transferred or disbursed to non-State entities. Both Federal and State funds maintain their identity as they are disbursed as financial assistance to other organizations.",{"type":33,"children":76},[77],{"type":30,"value":78},"Federal money that arrives through a North Carolina State agency is State funds for the purposes of this Subchapter, and it stays federal money for the purposes of the Uniform Guidance. It is counted under both rules, in the same year, on two separate determinations.",{"type":33,"children":80},[81],{"type":30,"value":82},"A Helene subaward routed through NC Commerce, NC Emergency Management, or NC DHHS therefore shows up twice. It goes on your Schedule of Expenditures of Federal Awards, and it goes into your State reporting level.",{"type":33,"children":84},[85],{"type":30,"value":86},"A few organizations are outside the Subchapter entirely. Under .0101, it does not apply to entities subject to the audit and reporting requirements of the Local Government Commission, to tuition assistance, to public assistance payments from federal entitlement programs, or to State funds paid to a contractor rather than a grantee. Most nonprofits are none of those, which means most nonprofits are in scope.",{"type":26,"level":27,"children":88},[89],{"type":30,"value":90},"Two levels, and the number that sets them",{"type":33,"children":92},[93],{"type":30,"value":94},"Rule .0205(a) establishes two reporting levels, based on the allocated funds from all grants disbursed through the State of North Carolina in your fiscal year.",{"type":96,"style":97,"children":98},"list","bulleted",[99,120],{"type":100,"children":101},"listItem",[102],{"type":33,"children":103},[104,108,110,118],{"type":30,"marks":105,"value":107},[106],"strong","Level I",{"type":30,"value":109}," is less than the dollar amount requiring audit in ",{"url":111,"meta":112,"type":58,"children":115},"https:\u002F\u002Fwww.ecfr.gov\u002Fcurrent\u002Ftitle-2\u002Fpart-200\u002Fsection-200.501",[113,114],{"id":53,"value":54},{"id":56,"value":57},[116],{"type":30,"value":117},"2 CFR 200.501(a)",{"type":30,"value":119},".",{"type":100,"children":121},[122],{"type":33,"children":123},[124,127],{"type":30,"marks":125,"value":126},[106],"Level II",{"type":30,"value":128}," is equal to or greater than that amount.",{"type":33,"children":130},[131],{"type":30,"value":132},"Notice how the rule sets that amount. The figure arrives by reference to the federal one, including subsequent amendments. When OMB moved the federal threshold, the State threshold moved with it, automatically, without North Carolina amending anything.",{"type":33,"children":134},[135],{"type":30,"value":136},"So the State number today is $1,000,000, the same as the federal one. It has not always been:",{"type":96,"style":97,"children":138},[139,145,151],{"type":100,"children":140},[141],{"type":33,"children":142},[143],{"type":30,"value":144},"Fiscal years ending on or before June 30, 2024: $500,000",{"type":100,"children":146},[147],{"type":33,"children":148},[149],{"type":30,"value":150},"Fiscal years ending July through September 2024: $750,000",{"type":100,"children":152},[153],{"type":33,"children":154},[155],{"type":30,"value":156},"Fiscal years ending October 2024 or later: $1,000,000",{"type":33,"children":158},[159],{"type":30,"value":160},"If you are closing a prior year, or an auditor is asking about one, check which figure governed it. A good deal of published guidance still quotes $750,000 or $500,000 as though they were current.",{"type":26,"level":162,"children":163},3,[164],{"type":30,"value":165},"The scenario that catches people",{"type":33,"children":167},[168],{"type":30,"value":169},"The two tests count different pools, and this is where it bites.",{"type":33,"children":171},[172],{"type":30,"value":173},"Take an Asheville nonprofit with a June 30 fiscal year end. Since the storm it has picked up three things:",{"type":96,"style":97,"children":175},[176,185,194],{"type":100,"children":177},[178],{"type":33,"children":179},[180,183],{"type":30,"marks":181,"value":182},[106],"A $300,000 recovery appropriation through a State agency.",{"type":30,"value":184}," State money, so it counts toward the State test only.",{"type":100,"children":186},[187],{"type":33,"children":188},[189,192],{"type":30,"marks":190,"value":191},[106],"A $450,000 CDBG-DR award through NC Commerce.",{"type":30,"value":193}," Federal money passed through a State agency, so it counts toward both.",{"type":100,"children":195},[196],{"type":33,"children":197},[198,201],{"type":30,"marks":199,"value":200},[106],"A $200,000 State directed grant.",{"type":30,"value":202}," State money again, so the State test only.",{"type":33,"children":204},[205],{"type":30,"value":206},"Federal awards expended: $450,000. Comfortably under $1,000,000, so no Single Audit.",{"type":33,"children":208},[209],{"type":30,"value":210},"Grants disbursed through the State: $950,000. Under $1,000,000, so Level I.",{"type":33,"children":212},[213],{"type":30,"value":214},"Now add one more State award of $100,000, which is an ordinary thing to happen in a recovery year. State total goes to $1,050,000. The organization is Level II and owes a single or program-specific audit under State law, performed in accordance with Generally Accepted Government Auditing Standards.",{"type":33,"children":216},[217],{"type":30,"value":218},"Its federal expenditures never moved. They are still $450,000. There is no federal Single Audit, and there is no federal report to lean on.",{"type":33,"children":220},[221],{"type":30,"value":222},"Almost nobody plans for that case: a Yellow Book audit required by North Carolina, triggered mostly by State money, in a year with no federal audit at all.",{"type":26,"level":27,"children":224},[225],{"type":30,"value":226},"Level I is not \"exempt\"",{"type":33,"children":228},[229],{"type":30,"value":230},"This is the most common misreading of the rule.",{"type":33,"children":232},[233,235,238],{"type":30,"value":234},"Level I organizations owe everything the rule requires except the audit. Rule .0205(b) lists four requirements, and the first three apply to ",{"type":30,"marks":236,"value":237},[106],"all",{"type":30,"value":239}," recipients and subrecipients at either level:",{"type":96,"style":241,"children":242},"numbered",[243,249,255],{"type":100,"children":244},[245],{"type":33,"children":246},[247],{"type":30,"value":248},"A certification to the distributing agency that grants received or held were used for the purposes for which they were awarded.",{"type":100,"children":250},[251],{"type":33,"children":252},[253],{"type":30,"value":254},"An accounting to the distributing agency of all grants received, held, used, or expended.",{"type":100,"children":256},[257],{"type":33,"children":258},[259],{"type":30,"value":260},"A report on activities and accomplishments undertaken, including any performance measures established in the contract.",{"type":33,"children":262},[263],{"type":30,"value":264},"The fourth is the Level II audit.",{"type":33,"children":266},[267],{"type":30,"value":268},"So a small organization that took one $40,000 State grant is Level I, owes no audit, and still owes an annual certification, an accounting, and a performance report. Organizations miss this constantly, because the word that circulates is \"threshold\" and the inference people draw is \"under it, nothing happens.\"",{"type":26,"level":162,"children":270},[271],{"type":30,"value":272},"Two deadlines",{"type":33,"children":274},[275],{"type":30,"value":276},"Rule .0205(c) sets both, and they fall at different times.",{"type":33,"children":278},[279],{"type":30,"value":280},"The reports required by .0205(b)(1) through (3) are due no later than three months after the end of your fiscal year. The Level II audit is due no later than nine months after the end of your fiscal year.",{"type":33,"children":282},[283],{"type":30,"value":284},"For a June 30 year end, that is September 30 for the reports and March 31 for the audit.",{"type":33,"children":286},[287],{"type":30,"value":288},"The three-month deadline is the one that surprises people, because it is much tighter than any federal date they are used to and it arrives while the books are often still being closed. Reports are filed with the disbursing agency, in the format and method that agency specifies, unless the same information is already coming through more frequent reporting.",{"type":33,"children":290},[291],{"type":30,"value":292},"Check that last clause. If your agency already collects quarterly performance reports, some of this may already be satisfied. Ask them which.",{"type":26,"level":27,"children":294},[295],{"type":30,"value":296},"You may not need two audits",{"type":33,"children":298},[299],{"type":30,"value":300},"Two determinations do not always mean two audits, and this is where the rule gives something back.",{"type":33,"children":302},[303],{"type":30,"value":304},"Rule .0205(f) says that a recipient may satisfy the Level II audit requirement by submitting a copy of the report required under federal law with respect to the same funds.",{"type":33,"children":306},[307],{"type":30,"value":308},"So if your Level II position is driven by federal money passed through a State agency, and that same money has put you over the federal threshold, your federal Single Audit report can be submitted to discharge the State audit requirement. One audit, filed in two places.",{"type":33,"children":310},[311],{"type":30,"value":312},"Three limits:",{"type":96,"style":97,"children":314},[315,326,332],{"type":100,"children":316},[317],{"type":33,"children":318},[319,321,324],{"type":30,"value":320},"It applies ",{"type":30,"marks":322,"value":323},[106],"with respect to the same funds",{"type":30,"value":325},". If your State total is driven largely by State appropriations, as in the example above, there is no federal report covering them and nothing to substitute.",{"type":100,"children":327},[328],{"type":33,"children":329},[330],{"type":30,"value":331},"It covers the audit requirement at .0205(b)(4) only. The certification, the accounting, and the activities report at (b)(1) through (3) are still yours to file, on the three-month clock.",{"type":100,"children":333},[334],{"type":33,"children":335},[336],{"type":30,"value":337},"The deadlines are not the same. The federal reporting package is due the earlier of 30 days after you receive the auditor's report or nine months after year end. The State wants the audit within nine months. Plan to the earlier date.",{"type":33,"children":339},[340,342,345],{"type":30,"value":341},"There is a second cost relief in the rule, at .0205(e). Unless prohibited by law, the cost of an audit performed in accordance with this Subchapter is an allowable charge to State and Federal awards, as either a direct cost or an allocated indirect cost under 2 CFR Part 200 cost principles. There is a limit on that: the cost of any audit ",{"type":30,"marks":343,"value":344},[106],"not",{"type":30,"value":346}," conducted in accordance with the Subchapter cannot be charged to State awards.",{"type":26,"level":27,"children":348},[349],{"type":30,"value":350},"What the contract adds",{"type":33,"children":352},[353],{"type":30,"value":354},"A common assumption is that the grant agreement is the final word. It is not, and the rule says so in both directions.",{"type":33,"children":356},[357],{"type":30,"value":358},"Rule .0702 states that no contract agreement shall act to eliminate or diminish the requirements contained in the Subchapter. A contract cannot give you a pass on the certification, the accounting, the performance report, or the audit if you are Level II.",{"type":33,"children":360},[361],{"type":30,"value":362},"It can go the other way. Rule .0205(d) requires agency reporting requirements to be specified in each recipient's contract, and .0703 lists what every grant contract must contain, including required reports and reporting deadlines, identification of the funding source with its CFDA number and the percentage from each source, and a five-year records agreement.",{"type":33,"children":364},[365],{"type":30,"value":366},"So the contract can impose more than the Subchapter does, including an audit at a dollar figure well below Level II, and plenty of agreements do. Read the reporting section of each award. The threshold alone will not tell you.",{"type":33,"children":368},[369],{"type":30,"value":370},"One practical note on .0703(2). The contract is supposed to identify the source of funds and the CFDA number where applicable. That field tells you whether a State-agency award is carrying federal money, which is exactly what you need in order to run the federal test. If it is blank, ask for it in writing, and keep the answer with the award file.",{"type":26,"level":27,"children":372},[373],{"type":30,"value":374},"What happens if you miss it",{"type":33,"children":376},[377],{"type":30,"value":378},"The Subchapter has teeth. They are administrative, and easy to underestimate.",{"type":33,"children":380},[381,383,386],{"type":30,"value":382},"There is a ",{"type":30,"marks":384,"value":385},[106],"Suspension of Funding List",{"type":30,"value":387},", defined at .0102(18) and operated under .0801. It is a database maintained by the Office of State Budget and Management, in consultation with State agencies, naming grantees in a state of noncompliance. An agency shall not disburse grant funds to an entity on that list.",{"type":33,"children":389},[390],{"type":30,"value":391},"The penalty is every State agency declining to pay you until you are back in compliance, including on awards that have nothing to do with the report you missed. For an organization running several State-funded programs, a missed certification on one of them can hold up cash across all of them.",{"type":33,"children":393},[394],{"type":30,"value":395},"The sequence under .0801 is: the agency communicates the requirement in writing within 30 business days, directs a written response, and suspends payments until compliance. For noncompliance that is not indicative of management deficiencies or criminal activity, .0801(d) gives 60 days written notice to take corrective action before the agency escalates.",{"type":33,"children":397},[398],{"type":30,"value":399},"Rule .0802 covers recovery of funds, where an organization cannot fulfill the agreement, cannot accomplish the purpose, is noncompliant with reporting, or used funds for purposes outside the contract. The disbursing agency takes administrative action to recover, with the Attorney General involved if legal action is required.",{"type":33,"children":401},[402],{"type":30,"value":403},"If you believe you were suspended in error, .0202(3) gives you the right to request removal in writing to OSBM.",{"type":26,"level":27,"children":405},[406],{"type":30,"value":407},"Records: five years, and the clock may be longer",{"type":33,"children":409},[410],{"type":30,"value":411},"Two provisions set it, and you comply with the longer one.",{"type":33,"children":413},[414],{"type":30,"value":415},"Rule .0202(1) requires recipients and subrecipients to maintain reports and accounting records supporting the allowable expenditure of State funds for five years from the end of the grant agreement, and to make them available for inspection by the awarding agency, OSBM, and the Office of the State Auditor.",{"type":33,"children":417},[418,420,423],{"type":30,"value":419},"Rule .0703(4) requires every grant contract to contain an agreement to maintain all pertinent records for five years ",{"type":30,"marks":421,"value":422},[106],"or until all audit exceptions have been resolved, whichever is longer",{"type":30,"value":119},{"type":33,"children":425},[426],{"type":30,"value":427},"An open audit exception extends your retention obligation past the five years. So resolve findings. Waiting them out extends the clock.",{"type":33,"children":429},[430],{"type":30,"value":431},"On access: .0703(14) requires every contract to provide for audit oversight by the Office of the State Auditor, access to accounting records by both the funding agency and the State Auditor, and availability of the audit work papers held by any auditor of any recipient of State funding. Signing a State grant agreement means agreeing to that access.",{"type":26,"level":27,"children":433},[434],{"type":30,"value":435},"What to do before your year closes",{"type":33,"children":437},[438],{"type":30,"value":439},"Five things, in order.",{"type":96,"style":241,"children":441},[442,451,460,469,478],{"type":100,"children":443},[444],{"type":33,"children":445},[446,449],{"type":30,"marks":447,"value":448},[106],"Total your State-disbursed grants separately from your federal awards expended.",{"type":30,"value":450}," Keep two running numbers. Every award that came through a North Carolina State agency goes in the State total, whether the money originated in Raleigh or Washington. Only the federal-origin portion goes in the federal total.",{"type":100,"children":452},[453],{"type":33,"children":454},[455,458],{"type":30,"marks":456,"value":457},[106],"Pull the funding source off every award document.",{"type":30,"value":459}," Rule .0703(2) says the contract should identify the source and the CFDA number where applicable. That one field decides which totals an award lands in. Where it is missing, ask the agency in writing.",{"type":100,"children":461},[462],{"type":33,"children":463},[464,467],{"type":30,"marks":465,"value":466},[106],"Find the three-month date and put it on the calendar.",{"type":30,"value":468}," The certification, the accounting, and the activities report are due within three months of your fiscal year end regardless of level. For a June 30 year end that is September 30, and it comes around faster than the audit does.",{"type":100,"children":470},[471],{"type":33,"children":472},[473,476],{"type":30,"marks":474,"value":475},[106],"Check each contract's reporting section against the Subchapter.",{"type":30,"value":477}," A contract can add requirements, and .0702 stops it from removing any. If it names an audit at a figure below Level II, that figure governs you.",{"type":100,"children":479},[480],{"type":33,"children":481},[482,485],{"type":30,"marks":483,"value":484},[106],"If you expect to be Level II, ask whether .0205(f) applies to you.",{"type":30,"value":486}," If the same funds are driving a federal Single Audit, one report may satisfy both. If your State total is mostly State money, it will not, and you need to budget for an audit that no federal rule required.",{"type":33,"children":488},[489],{"type":30,"value":490},"In QuickBooks Online, the practical version of the first two items is a tracking dimension per award, with the funding source recorded as an attribute of the award when you set it up. A State agency is not a reliable proxy for State money. The definition at .0102(16) is the reason.",{"type":33,"children":492},[493,495,503,505,513],{"type":30,"value":494},"The federal half of this is covered in our post on ",{"url":496,"meta":497,"type":58,"children":500},"https:\u002F\u002F501cbookkeeping.com\u002Fblog\u002Fthe-single-audit-threshold-what-the-dollar1-million-rule-means-for-your-nonprofit",[498,499],{"id":53,"value":54},{"id":56,"value":57},[501],{"type":30,"value":502},"the Single Audit threshold",{"type":30,"value":504},", and what the federal schedule has to carry is in ",{"url":506,"meta":507,"type":58,"children":510},"https:\u002F\u002F501cbookkeeping.com\u002Fblog\u002Fwhat-a-sefa-is-and-what-it-takes-to-build-one",[508,509],{"id":53,"value":54},{"id":56,"value":57},[511],{"type":30,"value":512},"what a SEFA is",{"type":30,"value":119},{"type":33,"children":515},[516,518,526,528,536],{"type":30,"value":517},"If you are not sure which level you are in, that is a reasonable place to be. The answer comes out of your books. The ",{"url":519,"meta":520,"type":58,"children":523},"https:\u002F\u002F501cbookkeeping.com\u002Fgrant-readiness-review",[521,522],{"id":53,"value":54},{"id":56,"value":57},[524],{"type":30,"value":525},"Grant Readiness Review",{"type":30,"value":527}," is a fixed-fee, two-week assessment starting at $1,500 that works out where you stand under both rules and what your books would need to produce. More on how we handle grant tracking and restricted funds is on the ",{"url":529,"meta":530,"type":58,"children":533},"https:\u002F\u002F501cbookkeeping.com\u002Fgrant-compliance",[531,532],{"id":53,"value":54},{"id":56,"value":57},[534],{"type":30,"value":535},"grant compliance",{"type":30,"value":537}," page.",{"type":26,"level":27,"children":539},[540],{"type":30,"value":541},"Sources",{"type":96,"style":97,"children":543},[544,557,570,584,598],{"type":100,"children":545},[546],{"type":33,"children":547},[548,555],{"url":50,"meta":549,"type":58,"children":552},[550,551],{"id":53,"value":54},{"id":56,"value":57},[553],{"type":30,"value":554},"09 NCAC 03M, Uniform Administration of State Awards of Grants",{"type":30,"value":556},", full subchapter text, NC Office of Administrative Hearings. Rules cited: .0101 scope, .0102 definitions, .0201 cost principles, .0202 recipient responsibilities, .0205 reporting levels and requirements, .0702 subordination of other contracts, .0703 required contract provisions, .0801 noncompliance, .0802 recovery of funds",{"type":100,"children":558},[559],{"type":33,"children":560},[561,568],{"url":111,"meta":562,"type":58,"children":565},[563,564],{"id":53,"value":54},{"id":56,"value":57},[566],{"type":30,"value":567},"2 CFR 200.501, Audit requirements",{"type":30,"value":569},", the federal figure the State rule incorporates by reference",{"type":100,"children":571},[572],{"type":33,"children":573},[574,582],{"url":575,"meta":576,"type":58,"children":579},"https:\u002F\u002Fwww.osbm.nc.gov\u002Fstewardship-services\u002Fgrants-management\u002Ffaq-state-agencies",[577,578],{"id":53,"value":54},{"id":56,"value":57},[580],{"type":30,"value":581},"OSBM, FAQ for State Agencies",{"type":30,"value":583},", for the July 1, 2024 change tying the State threshold to 2 CFR 200.501(a)",{"type":100,"children":585},[586],{"type":33,"children":587},[588,596],{"url":589,"meta":590,"type":58,"children":593},"https:\u002F\u002Fwww.osbm.nc.gov\u002Fdirected-grants-reporting-training-slides\u002Fdownload",[591,592],{"id":53,"value":54},{"id":56,"value":57},[594],{"type":30,"value":595},"OSBM, directed grants reporting training",{"type":30,"value":597},", for the threshold by fiscal year end",{"type":100,"children":599},[600],{"type":33,"children":601},[602,610],{"url":603,"meta":604,"type":58,"children":607},"https:\u002F\u002Fwww.ncdps.gov\u002Four-organization\u002Femergency-management\u002Femergency-management-grants\u002Fgrants-management-compliance",[605,606],{"id":53,"value":54},{"id":56,"value":57},[608],{"type":30,"value":609},"NCDPS, Grants Management and Compliance",{"type":30,"value":611},", for how G.S. 143C-6-23 and 09 NCAC 03M reach State and federal pass-through funds",{"type":33,"children":613},[614],{"type":30,"value":615},"Figures in the worked example are invented for illustration and are not drawn from any client's books. This post describes the rules as published on the dates above; confirm the current rule text and your own award terms before relying on it.",[],[618,621,625,628,632,636,640,643,647,651,655],{"__typename":619,"attributes":17,"content":8,"tag":620},"Tag","title",{"__typename":619,"attributes":622,"content":17,"tag":624},{"property":623,"content":8},"og:title","meta",{"__typename":619,"attributes":626,"content":17,"tag":624},{"name":627,"content":8},"twitter:title",{"__typename":619,"attributes":629,"content":17,"tag":624},{"property":630,"content":631},"og:image","https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793193341-audit-rules.jpeg?auto=format&fit=max&w=1200",{"__typename":619,"attributes":633,"content":17,"tag":624},{"property":634,"content":635},"og:image:width","1024",{"__typename":619,"attributes":637,"content":17,"tag":624},{"property":638,"content":639},"og:image:height","434",{"__typename":619,"attributes":641,"content":17,"tag":624},{"name":642,"content":631},"twitter:image",{"__typename":619,"attributes":644,"content":17,"tag":624},{"property":645,"content":646},"og:locale","en",{"__typename":619,"attributes":648,"content":17,"tag":624},{"property":649,"content":650},"og:type","article",{"__typename":619,"attributes":652,"content":17,"tag":624},{"property":653,"content":654},"article:modified_time","2026-10-28T13:15:51Z",{"__typename":619,"attributes":656,"content":17,"tag":624},{"name":657,"content":658},"twitter:card","summary",{"__typename":6,"id":660,"title":661,"slug":662,"excerpt":663,"_firstPublishedAt":664,"_updatedAt":665,"_status":13,"image":666,"content":668,"_seoMetaTags":1119},"C7wrodWJTQ-YUyTvnntWxw","Three Things an Auditor Finds in Your Restricted Funds","three-things-an-auditor-finds-in-your-restricted-funds","Three real findings from grant readiness reviews: an endowment transfer, a misposted gift, and two functional expense structures running at once.","2026-10-27T14:50:37-04:00","2026-10-27T14:47:16-04:00",{"__typename":15,"url":667,"alt":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793126827-auditor.jpeg",{"__typename":19,"value":669,"blocks":1118},{"schema":21,"document":670},{"type":23,"children":671},[672,676,680,684,688,692,696,700,704,708,715,729,733,740,744,757,761,765,772,779,783,787,794,798,802,808,822,826,832,836,849,853,860,864,868,872,876,882,886,892,896,900,906,910,914,920,924,930,934,941,945,974,978,1010,1014,1018,1022,1026,1030,1034,1038,1057,1060,1114],{"type":33,"children":673},[674],{"type":30,"value":675},"Every one of the three below was invisible on the face of the financial statements. The balance sheet balanced. The reports tied. The board had no reason to ask a question, and nobody was doing anything careless.",{"type":33,"children":677},[678],{"type":30,"value":679},"Each one surfaced only when somebody tied the restricted funds back to the documents behind them. That is the uncomfortable part, and it is the reason this post is worth your twenty minutes.",{"type":26,"level":27,"children":681},[682],{"type":30,"value":683},"First, who makes these errors",{"type":33,"children":685},[686],{"type":30,"value":687},"Competent people do.",{"type":33,"children":689},[690],{"type":30,"value":691},"Every pattern below was made by a bookkeeper who understood double entry, kept the bank reconciled, closed the month on time, and produced reports the board found useful. None of them involved sloppiness and none of them involved anything close to bad faith.",{"type":33,"children":693},[694],{"type":30,"value":695},"What they involved was nonprofit accounting, which is a specialty. A bookkeeper trained on small business books has no particular reason to know how a transfer to a community foundation is treated, or why a contribution cannot be credited straight to a net asset account, or what goes wrong when a chart of accounts and a Class structure both try to carry functional expense. You pick these up by being taught them, and most people in these seats never were.",{"type":33,"children":697},[698],{"type":30,"value":699},"So read what follows as a description of three traps. The figures below are invented round numbers. The mechanics are real.",{"type":33,"children":701},[702],{"type":30,"value":703},"One terminology note. Current GAAP uses two net asset classes, net assets with donor restrictions and net assets without donor restrictions. You will still hear the older three-class language of unrestricted, temporarily restricted and permanently restricted, and plenty of internal tracking is still built on it. That is fine for internal purposes. The financial statements use the two-class presentation.",{"type":26,"level":27,"children":705},[706],{"type":30,"value":707},"The endowment transfer that made $500,000 disappear",{"type":33,"children":709},[710,713],{"type":30,"marks":711,"value":712},[106],"What it looks like in the books.",{"type":30,"value":714}," The organization moves $500,000 to a community foundation, which will hold and invest it and send back an annual distribution. The bookkeeper records:",{"type":96,"style":97,"children":716},[717,723],{"type":100,"children":718},[719],{"type":33,"children":720},[721],{"type":30,"value":722},"Debit net assets with donor restrictions, $500,000",{"type":100,"children":724},[725],{"type":33,"children":726},[727],{"type":30,"value":728},"Credit cash, $500,000",{"type":33,"children":730},[731],{"type":30,"value":732},"Cash goes down. Net assets go down. The entry balances, the bank reconciles, and the fund agreement goes in a drawer.",{"type":33,"children":734},[735,738],{"type":30,"marks":736,"value":737},[106],"Why it is wrong.",{"type":30,"value":739}," The money is not gone. The organization transferred its own assets to a recipient organization and named itself as the beneficiary. Under the guidance at ASC 958-20, originally FASB Statement 136, that is a reciprocal transfer, not a contribution. The organization gives up custody and gains a beneficial interest in the assets the foundation now holds. A beneficial interest is an asset.",{"type":33,"children":741},[742],{"type":30,"value":743},"The entry should have been:",{"type":96,"style":97,"children":745},[746,752],{"type":100,"children":747},[748],{"type":33,"children":749},[750],{"type":30,"value":751},"Debit beneficial interest in assets held by community foundation, $500,000",{"type":100,"children":753},[754],{"type":33,"children":755},[756],{"type":30,"value":728},{"type":33,"children":758},[759],{"type":30,"value":760},"No net asset reduction at all. The composition of assets changed. Their total did not.",{"type":33,"children":762},[763],{"type":30,"value":764},"If the transferred funds came from net assets without donor restrictions, there is a second step: the funds are reclassified to net assets with donor restrictions, because the fund agreement limits access to the principal. That reclassification happens between net asset classes. It does not reduce net assets either.",{"type":33,"children":766},[767,770],{"type":30,"marks":768,"value":769},[106],"On variance power.",{"type":30,"value":771}," Nearly every community foundation agreement grants the foundation variance power, meaning it can redirect the funds under defined circumstances. People sometimes read that clause and conclude the organization no longer has an asset. The guidance that nonprofits and community foundations both apply treats the naming of yourself as beneficiary as the fact that drives recognition, and treats variance power as a disclosure matter: you disclose that it was granted and on what terms. Community foundations themselves carry these agency funds as a liability for exactly this reason. If your agreement has unusual terms, that is a conversation with your auditor, but the default treatment is an asset.",{"type":33,"children":773},[774,777],{"type":30,"marks":775,"value":776},[106],"What the auditor does when they find it.",{"type":30,"value":778}," They pull the fund agreement, see that the organization is the named beneficiary, and ask why there is no asset on the balance sheet. Then they ask how long it has been that way, and the answer is usually several years, because nobody transfers to an endowment once.",{"type":33,"children":780},[781],{"type":30,"value":782},"That makes it a prior period error. Correcting it means restating the earliest period presented and every year since, with the cumulative effect carried to opening net assets. On a comparative statement that is two restated columns, a note disclosing the correction and its effect, and a conversation with the board about why last year's audited numbers moved.",{"type":33,"children":784},[785],{"type":30,"value":786},"There is a second casualty. The net asset roll-forward stops tying, because releases and reclassifications were computed against a balance that was understated the whole time. Every year after the first one compounds the problem.",{"type":33,"children":788},[789,792],{"type":30,"marks":790,"value":791},[106],"How to fix it.",{"type":30,"value":793}," Reconstruct from the fund statements, which the foundation can produce for every year. Establish the beneficial interest asset at fair value as of the earliest period being restated. Work forward year by year: contributions in, investment return, distributions out, administrative fees charged by the foundation. Then rebuild the net asset roll-forward on the corrected balances.",{"type":33,"children":795},[796],{"type":30,"value":797},"Going forward, the fund statement is a document you book from every year, the same way you book from a bank statement. The asset moves with the market, and investment return and fees belong on the statement of activities.",{"type":26,"level":27,"children":799},[800],{"type":30,"value":801},"The gift that never touched the income statement",{"type":33,"children":803},[804,806],{"type":30,"marks":805,"value":712},[106],{"type":30,"value":807}," A $200,000 restricted gift arrives. The bookkeeper knows it is restricted, so it goes where the restricted money lives:",{"type":96,"style":97,"children":809},[810,816],{"type":100,"children":811},[812],{"type":33,"children":813},[814],{"type":30,"value":815},"Debit cash, $200,000",{"type":100,"children":817},[818],{"type":33,"children":819},[820],{"type":30,"value":821},"Credit net assets with donor restrictions, $200,000",{"type":33,"children":823},[824],{"type":30,"value":825},"The logic is easy to follow and it is almost right. The money is restricted, the restricted net asset account is where restricted things belong, and the entry balances. Cash is correct. The balance sheet is correct. Total net assets are correct.",{"type":33,"children":827},[828,830],{"type":30,"marks":829,"value":737},[106],{"type":30,"value":831}," A contribution is revenue. It belongs on the statement of activities, in contributions with donor restrictions, and it reaches net assets the way all revenue reaches net assets: by flowing through the change in net assets at the end of the period.",{"type":33,"children":833},[834],{"type":30,"value":835},"The correct entry is:",{"type":96,"style":97,"children":837},[838,843],{"type":100,"children":839},[840],{"type":33,"children":841},[842],{"type":30,"value":815},{"type":100,"children":844},[845],{"type":33,"children":846},[847],{"type":30,"value":848},"Credit contributions with donor restrictions, a revenue account, $200,000",{"type":33,"children":850},[851],{"type":30,"value":852},"The difference never shows up on the balance sheet. It shows up on the statement of activities, where $200,000 of revenue is simply missing.",{"type":33,"children":854},[855,858],{"type":30,"marks":856,"value":857},[106],"Why this one is dangerous beyond the financial statements.",{"type":30,"value":859}," The first two consequences are bad enough. Your statement of activities understates revenue, so every ratio built on it is wrong, and anyone comparing your reported revenue to your reported program spending sees a nonprofit that spent more than it raised.",{"type":33,"children":861},[862],{"type":30,"value":863},"The third consequence is the serious one.",{"type":33,"children":865},[866],{"type":30,"value":867},"Contribution revenue drives the public support test. A 509(a)(1) or 509(a)(2) organization has to demonstrate a sufficient proportion of public support, computed over a five-year period, to keep its public charity classification. The test runs off contributions reported on the Form 990, and the 990 is prepared from the accounting records. A gift that never hit revenue never hit the 990.",{"type":33,"children":869},[870],{"type":30,"value":871},"The error travels out of the accounting records, into a federal information return, and from there into a calculation that determines tax status. Repeated across several years and several gifts, an organization can report a support percentage materially below its real one. The remedy for failing the test is to be reclassified as a private foundation, which brings excise taxes, distribution requirements, and a set of restrictions most public charities are not built to operate under.",{"type":33,"children":873},[874],{"type":30,"value":875},"To be clear about the scale: one misposted gift will not put a charity's status at risk. What matters is that this error class reaches that far at all, which is why auditors treat it more seriously than its balance sheet effect would suggest.",{"type":33,"children":877},[878,880],{"type":30,"marks":879,"value":776},[106],{"type":30,"value":881}," Contribution revenue testing is standard, and the procedure is to select gifts and trace them from the donor document into the accounting records. A gift that lands in equity rather than revenue fails that trace immediately.",{"type":33,"children":883},[884],{"type":30,"value":885},"From there they scope the problem. One gift is an adjustment. A pattern is a material weakness in internal control over financial reporting, because it means nothing in the close process catches a contribution that bypassed revenue. The follow-on question is whether Forms 990 for the affected years need to be amended.",{"type":33,"children":887},[888,890],{"type":30,"marks":889,"value":791},[106],{"type":30,"value":891}," Identify every gift posted this way, by period. Reclassify each from the net asset account to the correct revenue line, preserving the restriction. Then rebuild the release of restrictions for those periods, because releases were computed against balances built partly from entries that should never have been there. Recompute the public support test on corrected figures, and talk to your 990 preparer about whether amendment is warranted.",{"type":33,"children":893},[894],{"type":30,"value":895},"The prevention is a rule that admits no exceptions: no revenue transaction is ever posted directly to a net asset account. Restriction gets tracked on the revenue line and in the net asset class. It is never a reason to skip the income statement.",{"type":26,"level":27,"children":897},[898],{"type":30,"value":899},"Two functional expense structures, both half finished",{"type":33,"children":901},[902,904],{"type":30,"marks":903,"value":712},[106],{"type":30,"value":905}," The chart of accounts encodes function in the account numbering. Expense accounts run 6000 for program, 7000 for management and general, 8000 for fundraising. At some point somebody set up QuickBooks Classes to do the same job: Program, Admin, Fundraising.",{"type":33,"children":907},[908],{"type":30,"value":909},"Both are still in use. Neither is complete. Roughly two thirds of transactions carry a Class. The rest rely on the account number. A meaningful number carry both, and sometimes the two disagree: an expense in a 6000-level program account tagged to the Admin class.",{"type":33,"children":911},[912],{"type":30,"value":913},"The tell is simple and worth trying on your own books today. Run the statement of functional expenses by account grouping. Run it again by Class. The two reports do not agree, and neither is obviously wrong.",{"type":33,"children":915},[916,918],{"type":30,"marks":917,"value":737},[106],{"type":30,"value":919}," Both structures are legitimate on their own. The problem is that the organization has two, so there is no single answer to what it spent on program, and the statement of functional expenses is a required statement that has to come from somewhere.",{"type":33,"children":921},[922],{"type":30,"value":923},"In practice the number that gets reported is whichever report the preparer happened to run. Which means the program expense ratio in the audited financials, on the Form 990, and in the grant application may be three different numbers, all defensible, none reconciling.",{"type":33,"children":925},[926,928],{"type":30,"marks":927,"value":776},[106],{"type":30,"value":929}," They recalculate the functional allocation independently and get a third number. Then they ask which structure is authoritative, and there is no good answer, because the honest one is that it depends on the report.",{"type":33,"children":931},[932],{"type":30,"value":933},"This usually lands as a deficiency in internal control over financial reporting rather than a misstatement, assuming total expenses are right, which they typically are. What is wrong is the allocation. But it is also the kind of finding that makes an auditor expand testing elsewhere, because an organization that cannot say how it allocates functional expense invites questions about how it allocates anything, including costs charged to federal awards. On a Single Audit that is not a small question.",{"type":33,"children":935},[936,939],{"type":30,"marks":937,"value":938},[106],"How to fix it, and which one to keep.",{"type":30,"value":940}," Keep the dimension and retire the account numbering. In QuickBooks Online that means Classes survive.",{"type":33,"children":942},[943],{"type":30,"value":944},"Three reasons:",{"type":96,"style":97,"children":946},[947,956,965],{"type":100,"children":948},[949],{"type":33,"children":950},[951,954],{"type":30,"marks":952,"value":953},[106],"Function and natural expense are different attributes of the same transaction.",{"type":30,"value":955}," A statement of functional expenses is a matrix: natural categories down the side, functions across the top. Encoding function in the account number collapses two dimensions into one, which means you need parallel accounts for every expense type in every function. Salaries appears three times. So does rent, insurance, and software.",{"type":100,"children":957},[958],{"type":33,"children":959},[960,963],{"type":30,"marks":961,"value":962},[106],"Allocation needs splitting, and dimensions split.",{"type":30,"value":964}," An executive director's time genuinely spans all three functions. With a dimension, one payroll entry splits across Classes in the right proportions. With account-encoded function, you need three separate postings to three separate salary accounts, and somebody has to remember to do it every pay period.",{"type":100,"children":966},[967],{"type":33,"children":968},[969,972],{"type":30,"marks":970,"value":971},[106],"It keeps the chart of accounts readable.",{"type":30,"value":973}," Collapsing from three functional variants of each account to one cuts the chart by roughly two thirds, which makes everything else easier, coding included.",{"type":33,"children":975},[976],{"type":30,"value":977},"The migration is mechanical:",{"type":96,"style":241,"children":979},[980,986,992,998,1004],{"type":100,"children":981},[982],{"type":33,"children":983},[984],{"type":30,"value":985},"Confirm the Class list matches the three functions exactly, with no extras. If Classes are also being used for programs or locations, that is a separate job and it needs its own dimension. In QuickBooks Online, Locations or Projects.",{"type":100,"children":987},[988],{"type":33,"children":989},[990],{"type":30,"value":991},"Map each function-specific account to its consolidated equivalent. The three salary accounts become one, and so on.",{"type":100,"children":993},[994],{"type":33,"children":995},[996],{"type":30,"value":997},"Work backward through the current fiscal year and apply a Class to every transaction that lacks one. Where account and Class disagree, decide which is right from the underlying document, not from the account number.",{"type":100,"children":999},[1000],{"type":33,"children":1001},[1002],{"type":30,"value":1003},"Merge the redundant accounts once every transaction in them carries a Class. Merging preserves history and keeps prior periods intact, which deleting does not.",{"type":100,"children":1005},[1006],{"type":33,"children":1007},[1008],{"type":30,"value":1009},"Make Class a required field going forward, and reconcile the two reports once more before closing the year.",{"type":33,"children":1011},[1012],{"type":30,"value":1013},"Do this mid-year rather than at year end, and run the full year on one structure. Switching in month eleven means a statement of functional expenses assembled from two methods, which is the problem you started with.",{"type":26,"level":27,"children":1015},[1016],{"type":30,"value":1017},"What the three have in common",{"type":33,"children":1019},[1020],{"type":30,"value":1021},"None of them made the balance sheet fail to balance.",{"type":33,"children":1023},[1024],{"type":30,"value":1025},"The endowment transfer balanced. The misposted gift balanced, and left cash and total net assets exactly right. The duplicate functional structures produced total expenses that were correct to the dollar. Every one of these organizations could close the month, reconcile the bank, and hand the board a report that looked fine, because it was fine, as far as it went.",{"type":33,"children":1027},[1028],{"type":30,"value":1029},"That is the pattern. Restricted fund errors do not announce themselves through the controls most organizations run. A trial balance that balances only confirms that debits equal credits. It cannot detect a mischaracterized transfer to a community foundation, a contribution that skipped the revenue line, or two allocation structures quietly disagreeing with each other.",{"type":33,"children":1031},[1032],{"type":30,"value":1033},"All three surfaced the same way: somebody took the restricted funds and traced them back to the documents underneath. The fund agreement. The donor letter. The grant award. Then asked whether what the books say matches what the document says.",{"type":33,"children":1035},[1036],{"type":30,"value":1037},"A monthly close does not do that. It is a separate exercise, and most organizations only get to it when an auditor does it for them, which is the most expensive possible time to find out.",{"type":33,"children":1039},[1040,1042,1048,1050,1056],{"type":30,"value":1041},"That exercise is the ",{"url":519,"meta":1043,"type":58,"children":1046},[1044,1045],{"id":53,"value":54},{"id":56,"value":57},[1047],{"type":30,"value":525},{"type":30,"value":1049},". It is a fixed-fee, two-week assessment starting at $1,500 that tells you what an auditor or a funder would find in your books before they find it. If you want more on how we handle restricted funds and grant tracking generally, that is on the ",{"url":529,"meta":1051,"type":58,"children":1054},[1052,1053],{"id":53,"value":54},{"id":56,"value":57},[1055],{"type":30,"value":535},{"type":30,"value":537},{"type":26,"level":27,"children":1058},[1059],{"type":30,"value":541},{"type":96,"style":97,"children":1061},[1062,1068,1080,1092,1098],{"type":100,"children":1063},[1064],{"type":33,"children":1065},[1066],{"type":30,"value":1067},"FASB ASC 958-20, Transfers of Assets to a Not-for-Profit Entity or Charitable Trust That Raises or Holds Contributions for Others, originally FASB Statement No. 136. The Codification itself sits behind FASB's login, so the two practitioner guides below are what is linked here.",{"type":100,"children":1069},[1070],{"type":33,"children":1071},[1072],{"url":1073,"meta":1074,"type":58,"children":1077},"https:\u002F\u002Fcentralkansascf.org\u002Fwp-content\u002Fuploads\u002F2019\u002F05\u002FACCOUNTING-FOR-AGENCY-ENDOWMENT-FUNDS-HELD-AT-COMMUNITY-FOUNDATIONS.pdf",[1075,1076],{"id":53,"value":54},{"id":56,"value":57},[1078],{"type":30,"value":1079},"Council on Foundations, Accounting for Agency Endowment Funds Held at Community Foundations",{"type":100,"children":1081},[1082],{"type":33,"children":1083},[1084],{"url":1085,"meta":1086,"type":58,"children":1089},"https:\u002F\u002Fcffound.org\u002F2020\u002Fwp-content\u002Fuploads\u002F2023\u002F07\u002FFAQ-Accounting-for-Nonprofit-Endowments-Revised.pdf",[1087,1088],{"id":53,"value":54},{"id":56,"value":57},[1090],{"type":30,"value":1091},"Central Florida Foundation, Accounting for Nonprofit Endowments FAQ",{"type":100,"children":1093},[1094],{"type":33,"children":1095},[1096],{"type":30,"value":1097},"FASB ASC 958-205, Presentation of Financial Statements, for the two net asset classes introduced by ASU 2016-14, and ASC 958-720 for the statement of functional expenses.",{"type":100,"children":1099},[1100],{"type":33,"children":1101},[1102,1104,1112],{"type":30,"value":1103},"Public support test: ",{"url":1105,"meta":1106,"type":58,"children":1109},"https:\u002F\u002Fwww.law.cornell.edu\u002Fuscode\u002Ftext\u002F26\u002F509",[1107,1108],{"id":53,"value":54},{"id":56,"value":57},[1110],{"type":30,"value":1111},"IRC 509(a)",{"type":30,"value":1113}," and the Schedule A instructions to Form 990.",{"type":33,"children":1115},[1116],{"type":30,"value":1117},"All figures in this post are invented round numbers chosen to illustrate the mechanics. They do not correspond to any organization's actual balances, and no identifying details of any client appear here.",[],[1120,1121,1123,1125,1128,1131,1134,1136,1138,1140,1143],{"__typename":619,"attributes":17,"content":661,"tag":620},{"__typename":619,"attributes":1122,"content":17,"tag":624},{"property":623,"content":661},{"__typename":619,"attributes":1124,"content":17,"tag":624},{"name":627,"content":661},{"__typename":619,"attributes":1126,"content":17,"tag":624},{"property":630,"content":1127},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793126827-auditor.jpeg?auto=format&fit=max&w=1200",{"__typename":619,"attributes":1129,"content":17,"tag":624},{"property":634,"content":1130},"1200",{"__typename":619,"attributes":1132,"content":17,"tag":624},{"property":638,"content":1133},"509",{"__typename":619,"attributes":1135,"content":17,"tag":624},{"name":642,"content":1127},{"__typename":619,"attributes":1137,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":1139,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":1141,"content":17,"tag":624},{"property":653,"content":1142},"2026-10-27T18:47:16Z",{"__typename":619,"attributes":1144,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":1146,"title":1147,"slug":1148,"excerpt":1149,"_firstPublishedAt":1150,"_updatedAt":1151,"_status":13,"image":1152,"content":1154,"_seoMetaTags":1694},"Sth0BF7xSdGg5JL_vEHxuQ","What a SEFA Is, and What It Takes to Build One","what-a-sefa-is-and-what-it-takes-to-build-one","The Schedule of Expenditures of Federal Awards is the document your Single Audit is built on. Most organizations try to assemble it in March.","2026-10-27T14:50:30-04:00","2026-10-28T09:34:48-04:00",{"__typename":15,"url":1153,"alt":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793126966-sefa.jpeg",{"__typename":19,"value":1155,"blocks":1693},{"schema":21,"document":1156},{"type":23,"children":1157},[1158,1162,1166,1170,1174,1178,1182,1186,1190,1194,1208,1221,1225,1242,1249,1253,1257,1331,1335,1339,1343,1347,1354,1371,1375,1379,1383,1387,1401,1405,1409,1413,1417,1421,1425,1429,1467,1471,1475,1479,1483,1487,1494,1501,1508,1515,1519,1523,1527,1531,1587,1591,1601,1605,1609,1628,1631],{"type":33,"children":1159},[1160],{"type":30,"value":1161},"The Schedule of Expenditures of Federal Awards is the document your Single Audit gets built on. Your auditor reads it before deciding which of your programs to test, which means an inaccurate schedule does not just cause a correction. It changes the scope of your audit, and the fee that comes with it.",{"type":33,"children":1163},[1164],{"type":30,"value":1165},"Most organizations try to assemble the schedule in March, a few weeks before fieldwork. That is the hard way, and this post is mostly about why.",{"type":26,"level":27,"children":1167},[1168],{"type":30,"value":1169},"Where the schedule actually comes from",{"type":33,"children":1171},[1172],{"type":30,"value":1173},"Here is the whole argument of this post, up front.",{"type":33,"children":1175},[1176],{"type":30,"value":1177},"Your general ledger either tags federal spending by award as the money goes out, or it does not. When it does, the schedule is a report you run in an afternoon. When it does not, somebody has to rebuild a year of spending from source documents, and that work costs more than most organizations expect.",{"type":33,"children":1179},[1180],{"type":30,"value":1181},"Picture the reconstruction version. Somebody opens last year's bank statements and a folder of award letters and starts asking which invoice belonged to which grant. Payroll gets allocated from memory and a spreadsheet nobody has opened since the person who built it left. A subaward turns up that was coded to general program expense. The auditor's first request list arrives and the answer to most of it is \"give us two weeks.\"",{"type":33,"children":1183},[1184],{"type":30,"value":1185},"Call that a bookkeeping failure if you like, but the books in that scenario are usually clean. They reconcile. They produce a board report nobody has complained about. They simply cannot answer the one question the schedule asks: how much federal money, from which federal program, did this organization spend this year.",{"type":33,"children":1187},[1188],{"type":30,"value":1189},"That question has to be answerable transaction by transaction, as the transactions happen. Adding it back afterward is slow, and parts of it come down to guesswork.",{"type":26,"level":27,"children":1191},[1192],{"type":30,"value":1193},"What the schedule is, who prepares it, and where it goes",{"type":33,"children":1195},[1196,1198,1206],{"type":30,"value":1197},"The Schedule of Expenditures of Federal Awards lists every federal award your organization expended during the year, grouped by federal agency, with totals. It covers the same period as your financial statements. The amounts are federal awards expended as ",{"url":1199,"meta":1200,"type":58,"children":1203},"https:\u002F\u002Fwww.law.cornell.edu\u002Fcfr\u002Ftext\u002F2\u002F200.502",[1201,1202],{"id":53,"value":54},{"id":56,"value":57},[1204],{"type":30,"value":1205},"2 CFR 200.502",{"type":30,"value":1207}," defines them, which is not always the same as cash out the door.",{"type":33,"children":1209},[1210,1212,1219],{"type":30,"value":1211},"You need one if you expended $1,000,000 or more in federal awards during the fiscal year. That threshold, and the counting rules behind it, are covered in ",{"url":496,"meta":1213,"type":58,"children":1216},[1214,1215],{"id":53,"value":54},{"id":56,"value":57},[1217],{"type":30,"value":1218},"our post on the Single Audit threshold",{"type":30,"value":1220},". This post assumes you already know you are over it.",{"type":33,"children":1222},[1223],{"type":30,"value":1224},"Two things about the schedule surprise people.",{"type":33,"children":1226},[1227,1230,1232,1240],{"type":30,"marks":1228,"value":1229},[106],"The auditee prepares it.",{"type":30,"value":1231}," ",{"url":1233,"meta":1234,"type":58,"children":1237},"https:\u002F\u002Fwww.law.cornell.edu\u002Fcfr\u002Ftext\u002F2\u002F200.510",[1235,1236],{"id":53,"value":54},{"id":56,"value":57},[1238],{"type":30,"value":1239},"2 CFR 200.510(b)",{"type":30,"value":1241}," puts the schedule on the auditee. Your auditor audits it. They will help you understand the format, and a good one will tell you early what they need, but the document is yours and the numbers in it are your representation. An auditor who builds your schedule from scratch is doing work that raises independence questions, and they will charge you for it besides.",{"type":33,"children":1243},[1244,1247],{"type":30,"marks":1245,"value":1246},[106],"It goes to the federal government too.",{"type":30,"value":1248}," The schedule is part of the reporting package submitted to the Federal Audit Clearinghouse, which is a public database. Funders look there. So do prospective funders, and so do journalists.",{"type":26,"level":27,"children":1250},[1251],{"type":30,"value":1252},"What the schedule has to carry",{"type":33,"children":1254},[1255],{"type":30,"value":1256},"2 CFR 200.510(b) sets out what the schedule must include. Formats vary, and your auditor will have a layout they prefer, so treat the list below as the content requirement rather than a template.",{"type":96,"style":97,"children":1258},[1259,1268,1277,1286,1295,1304,1313,1322],{"type":100,"children":1260},[1261],{"type":33,"children":1262},[1263,1266],{"type":30,"marks":1264,"value":1265},[106],"Federal agency and program name.",{"type":30,"value":1267}," Programs are grouped by the federal agency that awarded them, and each program is identified by name.",{"type":100,"children":1269},[1270],{"type":33,"children":1271},[1272,1275],{"type":30,"marks":1273,"value":1274},[106],"Assistance Listing number.",{"type":30,"value":1276}," The identifier for the federal program, formerly called the CFDA number. If a program has no Assistance Listing number, you use another identifier that describes the award, and you explain it.",{"type":100,"children":1278},[1279],{"type":33,"children":1280},[1281,1284],{"type":30,"marks":1282,"value":1283},[106],"Pass-through entity name.",{"type":30,"value":1285}," For any award you received as a subrecipient rather than directly from a federal agency, you name the organization the money came through.",{"type":100,"children":1287},[1288],{"type":33,"children":1289},[1290,1293],{"type":30,"marks":1291,"value":1292},[106],"The pass-through entity's identifying number.",{"type":30,"value":1294}," Their number for your subaward, not yours. This is the single most common gap in a first-year schedule, because the number lives on the subaward agreement and nobody captured it when the agreement was signed.",{"type":100,"children":1296},[1297],{"type":33,"children":1298},[1299,1302],{"type":30,"marks":1300,"value":1301},[106],"Total federal awards expended for each program.",{"type":30,"value":1303}," The dollars, by program, for the year.",{"type":100,"children":1305},[1306],{"type":33,"children":1307},[1308,1311],{"type":30,"marks":1309,"value":1310},[106],"Cluster totals.",{"type":30,"value":1312}," Where programs form a cluster, the schedule shows the cluster name, the programs in it, and a total for the cluster.",{"type":100,"children":1314},[1315],{"type":33,"children":1316},[1317,1320],{"type":30,"marks":1318,"value":1319},[106],"Amounts passed through to subrecipients.",{"type":30,"value":1321}," If you subaward federal money to anyone else, the total you provided to subrecipients from each federal program is shown separately.",{"type":100,"children":1323},[1324],{"type":33,"children":1325},[1326,1329],{"type":30,"marks":1327,"value":1328},[106],"Loan and loan guarantee balances.",{"type":30,"value":1330}," For the programs described at 2 CFR 200.502(b), the notes disclose balances outstanding at the end of the audit period. These programs still appear on the schedule with total expenditures.",{"type":33,"children":1332},[1333],{"type":30,"value":1334},"Research and development awards get a small concession. They may be totaled per award, or by federal agency and major subdivision within the agency, rather than broken out program by program.",{"type":26,"level":27,"children":1336},[1337],{"type":30,"value":1338},"The notes, which almost everyone forgets",{"type":33,"children":1340},[1341],{"type":30,"value":1342},"The schedule has required notes, and they are short enough that people skip them and then get a finding for something that would have taken four sentences to write.",{"type":33,"children":1344},[1345],{"type":30,"value":1346},"2 CFR 200.510(b)(6) requires two things.",{"type":33,"children":1348},[1349,1352],{"type":30,"marks":1350,"value":1351},[106],"The significant accounting policies used in preparing the schedule.",{"type":30,"value":1353}," In practice this is mostly your basis of accounting. Most organizations prepare the schedule on the same basis as the financial statements, which for a nonprofit on GAAP means accrual. Say which basis you used and say it plainly. If any part of the schedule is prepared differently, the note is where that gets disclosed.",{"type":33,"children":1355},[1356,1359,1361,1369],{"type":30,"marks":1357,"value":1358},[106],"Whether you elected to use the de minimis indirect cost rate of up to 15 percent",{"type":30,"value":1360}," under ",{"url":1362,"meta":1363,"type":58,"children":1366},"https:\u002F\u002Fwww.law.cornell.edu\u002Fcfr\u002Ftext\u002F2\u002F200.414",[1364,1365],{"id":53,"value":54},{"id":56,"value":57},[1367],{"type":30,"value":1368},"2 CFR 200.414",{"type":30,"value":1370},". A yes or a no. If yes, say so.",{"type":33,"children":1372},[1373],{"type":30,"value":1374},"That second one deserves a warning, because it generates a persistent myth.",{"type":33,"children":1376},[1377],{"type":30,"value":1378},"There is no de minimis election form. There is no filing, no registration, no letter to an agency, no box to check in a federal portal. The election is made by using the rate and disclosing it in the notes to this schedule. If you read somewhere that you must file an election, that source is wrong, and you can check it against the regulation yourself in about a minute.",{"type":33,"children":1380},[1381],{"type":30,"value":1382},"If you are below the Single Audit threshold, you have no SEFA and therefore no note. You still elect the rate the same way: by charging it and applying it consistently. The disclosure requirement attaches to the schedule, not to the election.",{"type":26,"level":27,"children":1384},[1385],{"type":30,"value":1386},"Clusters count as one program",{"type":33,"children":1388},[1389,1391,1399],{"type":30,"value":1390},"Some federal programs are grouped into clusters, and a cluster is treated as a single program when your auditor works out which programs to test. ",{"url":1392,"meta":1393,"type":58,"children":1396},"https:\u002F\u002Fwww.law.cornell.edu\u002Fcfr\u002Ftext\u002F2\u002F200.518",[1394,1395],{"id":53,"value":54},{"id":56,"value":57},[1397],{"type":30,"value":1398},"2 CFR 200.518(b)(3)",{"type":30,"value":1400}," says so directly.",{"type":33,"children":1402},[1403],{"type":30,"value":1404},"This matters more than it sounds like it should. Three programs at $400,000 each look like three modest programs when you list them separately. If they belong to the same cluster, they are one $1.2 million program, and that number is on the wrong side of a line we will get to in a moment.",{"type":33,"children":1406},[1407],{"type":30,"value":1408},"The practical consequence is that you cannot work out your own audit scope by eyeballing program sizes. You have to know which of your programs cluster, and that is determined by the Compliance Supplement for the year, not by what looks related to you. Programs can share a funder and a purpose and not be a cluster. Programs can look unrelated and be one.",{"type":33,"children":1410},[1411],{"type":30,"value":1412},"On the schedule itself, a cluster is shown by name, with its member programs listed under it and a total for the cluster as a whole. If your schedule lists cluster members as standalone programs with no cluster identified, your auditor will catch it, and fixing it can change which programs get tested.",{"type":26,"level":27,"children":1414},[1415],{"type":30,"value":1416},"It has to tie to the general ledger",{"type":33,"children":1418},[1419],{"type":30,"value":1420},"The schedule has to reconcile to the accounting records it came from, and your auditor will test exactly that.",{"type":33,"children":1422},[1423],{"type":30,"value":1424},"The reconciliation runs in both directions. Total federal expenditures on the schedule should agree to what the general ledger says you spent on those awards. The revenue side should make sense against the grant revenue recognized in the statement of activities, with the differences explained rather than shrugged at.",{"type":33,"children":1426},[1427],{"type":30,"value":1428},"Those differences are normal and most of them have ordinary causes:",{"type":96,"style":97,"children":1430},[1431,1440,1449,1458],{"type":100,"children":1432},[1433],{"type":33,"children":1434},[1435,1438],{"type":30,"marks":1436,"value":1437},[106],"Timing.",{"type":30,"value":1439}," Expenditure under the Uniform Guidance is not the same event as revenue recognition under GAAP, and a conditional contribution can sit unrecognized while the related cost has been incurred.",{"type":100,"children":1441},[1442],{"type":33,"children":1443},[1444,1447],{"type":30,"marks":1445,"value":1446},[106],"Non-cash and loan items.",{"type":30,"value":1448}," Donated property, food commodities, and loan programs can put amounts on the schedule that no cash transaction matches.",{"type":100,"children":1450},[1451],{"type":33,"children":1452},[1453,1456],{"type":30,"marks":1454,"value":1455},[106],"Cost share.",{"type":30,"value":1457}," Matching funds you spent are your own money. They do not belong in federal awards expended, and they are a frequent source of an overstated schedule.",{"type":100,"children":1459},[1460],{"type":33,"children":1461},[1462,1465],{"type":30,"marks":1463,"value":1464},[106],"Indirect cost recovery.",{"type":30,"value":1466}," How you charge indirect costs affects what lands in each program's total.",{"type":33,"children":1468},[1469],{"type":30,"value":1470},"Explain a difference in a sentence and nobody minds. Discover one during fieldwork that you cannot explain and the consequences escalate quickly: more testing at best, and at worst a finding about internal control over federal reporting, which goes in the reporting package and is visible to every funder who looks.",{"type":33,"children":1472},[1473],{"type":30,"value":1474},"The fix is unglamorous. Reconcile the schedule to the ledger monthly or quarterly, while you still remember what the transactions were.",{"type":26,"level":27,"children":1476},[1477],{"type":30,"value":1478},"Your auditor picks major programs off this schedule",{"type":33,"children":1480},[1481],{"type":30,"value":1482},"This is the part that turns a paperwork error into a bill.",{"type":33,"children":1484},[1485],{"type":30,"value":1486},"A Single Audit does not test every federal program you run. It tests the ones selected as major programs, and 2 CFR 200.518 lays out how that selection works. Your schedule is the input.",{"type":33,"children":1488},[1489,1492],{"type":30,"marks":1490,"value":1491},[106],"Step one sorts your programs by size.",{"type":30,"value":1493}," Programs above a threshold are Type A, everything else is Type B. For an organization expending $34 million or less in total federal awards, the Type A threshold is $1,000,000. Clusters are sized as one program.",{"type":33,"children":1495},[1496,1499],{"type":30,"marks":1497,"value":1498},[106],"Step two asks which Type A programs are low risk.",{"type":30,"value":1500}," A Type A program qualifies as low risk only if it was audited as a major program in at least one of the two most recent audit periods, and in the most recent one had no material weaknesses in internal control over the program, no modified opinion, and no known or likely questioned costs above five percent of the program's total awards.",{"type":33,"children":1502},[1503,1506],{"type":30,"marks":1504,"value":1505},[106],"Step three looks for high-risk Type B programs.",{"type":30,"value":1507}," The auditor uses judgment against the criteria in 2 CFR 200.519. The number identified is capped at one-fourth of the low-risk Type A programs, and only Type B programs above 25 percent of the Type A threshold require a risk assessment at all.",{"type":33,"children":1509},[1510,1513],{"type":30,"marks":1511,"value":1512},[106],"Step four sets the floor.",{"type":30,"value":1514}," The auditor must test all Type A programs that are not low risk, all Type B programs identified as high risk, and then enough additional programs to meet the coverage rule: at least 20 percent of total federal awards expended if you qualify as a low-risk auditee, and at least 40 percent if you do not.",{"type":33,"children":1516},[1517],{"type":30,"value":1518},"Now put the error back in. A program understated on the schedule can fall below the Type A line and escape selection. A program overstated can pull a program into scope that did not belong there. A cluster you failed to identify can sit under the threshold in pieces when it belongs above it whole. Each of those changes the testing your auditor performs, and testing is the expensive part of a Single Audit.",{"type":33,"children":1520},[1521],{"type":30,"value":1522},"If the error surfaces after scoping, the work gets redone. That conversation happens in fieldwork, at fieldwork rates, usually in the same week your Form 990 preparer is also asking you for things.",{"type":26,"level":27,"children":1524},[1525],{"type":30,"value":1526},"What to set up now so next year's schedule is a report",{"type":33,"children":1528},[1529],{"type":30,"value":1530},"None of this requires expensive software. It requires that the information exist in the ledger at the moment money moves, rather than being inferred later.",{"type":96,"style":97,"children":1532},[1533,1542,1551,1560,1569,1578],{"type":100,"children":1534},[1535],{"type":33,"children":1536},[1537,1540],{"type":30,"marks":1538,"value":1539},[106],"One tracking dimension for each individual award.",{"type":30,"value":1541}," In QuickBooks Online that usually means a Project for each individual award. Two awards from the same agency for different programs are two Projects. An award that renews is a new Project each award year, because the schedule reports by award year and commingling them destroys the breakdown.",{"type":100,"children":1543},[1544],{"type":33,"children":1545},[1546,1549],{"type":30,"marks":1547,"value":1548},[106],"Capture the identifiers when the agreement is signed.",{"type":30,"value":1550}," Assistance Listing number, federal awarding agency, pass-through entity name, the pass-through entity's identifying number, award period, and total award amount. Put them somewhere structured and attached to the award, not in the body of an email. Chasing a pass-through identifying number eighteen months later means emailing a program officer who has since changed jobs.",{"type":100,"children":1552},[1553],{"type":33,"children":1554},[1555,1558],{"type":30,"marks":1556,"value":1557},[106],"Decide whether a cost is federal when you enter it.",{"type":30,"value":1559}," Every transaction that touches a federal award gets coded to that award when it is entered. Payroll included, which means a time and effort process that actually runs, because payroll is usually the largest number on the schedule and the one auditors test hardest.",{"type":100,"children":1561},[1562],{"type":33,"children":1563},[1564,1567],{"type":30,"marks":1565,"value":1566},[106],"Track subrecipient payments separately.",{"type":30,"value":1568}," Amounts you pass through to subrecipients are reported on their own line. If subawards are coded to the same expense account as direct program costs, you cannot pull that number without going transaction by transaction.",{"type":100,"children":1570},[1571],{"type":33,"children":1572},[1573,1576],{"type":30,"marks":1574,"value":1575},[106],"Keep cost share out of federal expenditures.",{"type":30,"value":1577}," Matching funds need their own tracking so they stay off the schedule. Overstating federal expenditures can pull you over the threshold, or move a program into Type A, for no reason.",{"type":100,"children":1579},[1580],{"type":33,"children":1581},[1582,1585],{"type":30,"marks":1583,"value":1584},[106],"Run a draft schedule quarterly.",{"type":30,"value":1586}," Not for anyone else. Run it, look at it, and fix whatever looks wrong while the transactions are still recent. The organizations that find the audit painless are the ones that have seen the number four times before the auditor asks.",{"type":33,"children":1588},[1589],{"type":30,"value":1590},"If your books cannot do this today, the fix is usually a setup project measured in days. It rarely requires changing systems.",{"type":33,"children":1592},[1593,1595,1600],{"type":30,"value":1594},"One North Carolina note. Where the pass-through entity is a State agency, the same subaward is also counted under State law. G.S. 143C-6-23 and 09 NCAC 03M set a reporting level based on State grant funds, and federal money passed through a State agency counts toward it. The schedule you build for the Single Audit does not discharge that obligation, and the ",{"url":1596,"type":58,"children":1597},"\u002Fblog\u002Fstate-grant-money-has-its-own-audit-rules",[1598],{"type":30,"value":1599},"determination is made on its own",{"type":30,"value":119},{"type":26,"level":27,"children":1602},[1603],{"type":30,"value":1604},"Where to start if you are not sure",{"type":33,"children":1606},[1607],{"type":30,"value":1608},"Most people start by asking how to format the schedule. The more useful question is whether your current books could produce one at all.",{"type":33,"children":1610},[1611,1613,1619,1621,1627],{"type":30,"value":1612},"That is what the ",{"url":519,"meta":1614,"type":58,"children":1617},[1615,1616],{"id":53,"value":54},{"id":56,"value":57},[1618],{"type":30,"value":525},{"type":30,"value":1620}," is for. It is a fixed-fee, two-week assessment starting at $1,500 that tells you what an auditor or a funder would find in your books, including whether your federal awards are tracked well enough to produce the schedule without a scramble. If you want a broader look at how we handle restricted funds and grant tracking, that is on the ",{"url":529,"meta":1622,"type":58,"children":1625},[1623,1624],{"id":53,"value":54},{"id":56,"value":57},[1626],{"type":30,"value":535},{"type":30,"value":537},{"type":26,"level":27,"children":1629},[1630],{"type":30,"value":541},{"type":96,"style":97,"children":1632},[1633,1646,1657,1670,1683],{"type":100,"children":1634},[1635],{"type":33,"children":1636},[1637,1644],{"url":1233,"meta":1638,"type":58,"children":1641},[1639,1640],{"id":53,"value":54},{"id":56,"value":57},[1642],{"type":30,"value":1643},"2 CFR 200.510, Financial statements",{"type":30,"value":1645},", which sets out the contents of the schedule and the required notes",{"type":100,"children":1647},[1648],{"type":33,"children":1649},[1650],{"url":1199,"meta":1651,"type":58,"children":1654},[1652,1653],{"id":53,"value":54},{"id":56,"value":57},[1655],{"type":30,"value":1656},"2 CFR 200.502, Basis for determining Federal awards expended",{"type":100,"children":1658},[1659],{"type":33,"children":1660},[1661,1668],{"url":1392,"meta":1662,"type":58,"children":1665},[1663,1664],{"id":53,"value":54},{"id":56,"value":57},[1666],{"type":30,"value":1667},"2 CFR 200.518, Major program determination",{"type":30,"value":1669},", including the Type A threshold table and the percentage of coverage rule",{"type":100,"children":1671},[1672],{"type":33,"children":1673},[1674,1681],{"url":1362,"meta":1675,"type":58,"children":1678},[1676,1677],{"id":53,"value":54},{"id":56,"value":57},[1679],{"type":30,"value":1680},"2 CFR 200.414, Indirect costs",{"type":30,"value":1682},", paragraph (f) for the de minimis rate",{"type":100,"children":1684},[1685],{"type":33,"children":1686},[1687],{"url":111,"meta":1688,"type":58,"children":1691},[1689,1690],{"id":53,"value":54},{"id":56,"value":57},[1692],{"type":30,"value":567},[],[1695,1696,1698,1700,1703,1705,1707,1709,1711,1713,1716],{"__typename":619,"attributes":17,"content":1147,"tag":620},{"__typename":619,"attributes":1697,"content":17,"tag":624},{"property":623,"content":1147},{"__typename":619,"attributes":1699,"content":17,"tag":624},{"name":627,"content":1147},{"__typename":619,"attributes":1701,"content":17,"tag":624},{"property":630,"content":1702},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793126966-sefa.jpeg?auto=format&fit=max&w=1200",{"__typename":619,"attributes":1704,"content":17,"tag":624},{"property":634,"content":635},{"__typename":619,"attributes":1706,"content":17,"tag":624},{"property":638,"content":639},{"__typename":619,"attributes":1708,"content":17,"tag":624},{"name":642,"content":1702},{"__typename":619,"attributes":1710,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":1712,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":1714,"content":17,"tag":624},{"property":653,"content":1715},"2026-10-28T13:34:48Z",{"__typename":619,"attributes":1717,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":1719,"title":1720,"slug":1721,"excerpt":1722,"_firstPublishedAt":1723,"_updatedAt":1724,"_status":13,"image":1725,"content":1727,"_seoMetaTags":2416},"cx5vxxPwTReei_MB1-rBRg","The Indirect Cost Rate Went to 15%, and What That Is Actually Worth","the-indirect-cost-rate-went-to-15percent-and-what-that-is-actually-worth","If you have no federally negotiated rate, you can now charge up to 15 percent. Here is what that is worth on a $600,000 program.","2026-10-27T14:41:19-04:00","2026-10-28T08:40:39-04:00",{"__typename":15,"url":1726,"alt":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793126467-indirect-cost-rate.jpeg",{"__typename":19,"value":1728,"blocks":2415},{"schema":21,"document":1729},{"type":23,"children":1730},[1731,1735,1739,1743,1747,1795,1799,1803,1807,1811,1815,1819,1823,1827,1831,1835,1879,1883,1909,1913,1921,1925,1929,1933,1937,1941,1945,1952,1959,1966,1970,1974,1978,1989,1999,2003,2007,2027,2031,2035,2039,2043,2050,2057,2064,2071,2078,2082,2086,2090,2094,2098,2102,2106,2161,2164,2167,2170,2191,2194,2197,2201,2205,2209,2213,2217,2221,2225,2229,2233,2280,2284,2288,2292,2296,2300,2304,2310,2320,2324,2328,2332,2336,2355,2358,2411],{"type":33,"children":1732},[1733],{"type":30,"value":1734},"If your organization does not have a federally negotiated indirect cost rate, the 2024 revisions to the Uniform Guidance raised what you can charge from 10 percent to up to 15 percent. That sounds like a 50 percent increase in your overhead recovery.",{"type":33,"children":1736},[1737],{"type":30,"value":1738},"That is roughly right about the rate and wrong about almost everything else. This post works a realistic budget all the way through so you can see where the money actually lands.",{"type":26,"level":27,"children":1740},[1741],{"type":30,"value":1742},"Three changes, not one",{"type":33,"children":1744},[1745],{"type":30,"value":1746},"The headline is the rate. Two other changes in the same 2024 revision move real money, and they get almost no attention.",{"type":96,"style":97,"children":1748},[1749,1767,1786],{"type":100,"children":1750},[1751],{"type":33,"children":1752},[1753,1756,1758,1765],{"type":30,"marks":1754,"value":1755},[106],"The de minimis rate went from 10 percent to up to 15 percent",{"type":30,"value":1757}," of modified total direct costs, at ",{"url":1362,"meta":1759,"type":58,"children":1762},[1760,1761],{"id":53,"value":54},{"id":56,"value":57},[1763],{"type":30,"value":1764},"2 CFR 200.414(f)",{"type":30,"value":1766},". It is available to any recipient or subrecipient without a current federally negotiated rate.",{"type":100,"children":1768},[1769],{"type":33,"children":1770},[1771,1774,1776,1784],{"type":30,"marks":1772,"value":1773},[106],"The subaward amount included in the base went from the first $25,000 of each subaward to the first $50,000",{"type":30,"value":1775},", defined at ",{"url":1777,"meta":1778,"type":58,"children":1781},"https:\u002F\u002Fwww.law.cornell.edu\u002Fcfr\u002Ftext\u002F2\u002F200.1",[1779,1780],{"id":53,"value":54},{"id":56,"value":57},[1782],{"type":30,"value":1783},"2 CFR 200.1",{"type":30,"value":1785},". That doubling matters to anyone who subawards, and it applies regardless of the period of performance of the subaward.",{"type":100,"children":1787},[1788],{"type":33,"children":1789},[1790,1793],{"type":30,"marks":1791,"value":1792},[106],"The equipment capitalization benchmark went from $5,000 to $10,000",{"type":30,"value":1794},", also at 2 CFR 200.1. Equipment is excluded from the base, so a higher benchmark means fewer purchases get pulled out of it.",{"type":33,"children":1796},[1797],{"type":30,"value":1798},"That third one has a catch worth stating now. The benchmark is $10,000 or a lower capitalization level if your own financial statement policy sets one. If your capitalization policy still says $5,000, that is the number that governs you. Raising it is a real accounting policy decision with consequences beyond indirect recovery, so it is a conversation with your auditor, not a quick edit to a procedure manual.",{"type":26,"level":27,"children":1800},[1801],{"type":30,"value":1802},"The number most people compute",{"type":33,"children":1804},[1805],{"type":30,"value":1806},"You have a $600,000 program budget. The rate is 15 percent. So the indirect recovery is $90,000.",{"type":33,"children":1808},[1809],{"type":30,"value":1810},"That is the calculation almost everyone does, and it produces the wrong answer. The rate applies to modified total direct costs, which is a smaller number than your budget, sometimes much smaller.",{"type":33,"children":1812},[1813],{"type":30,"value":1814},"The gap between those two figures is the entire reason this post exists. An organization that budgets off $90,000 and bills off the correct figure has a hole in its program budget. The hole does not announce itself at proposal time. It shows up eight months in, when somebody runs the numbers and finds that overhead is coming in short and the difference is being covered by unrestricted funds that were committed to something else.",{"type":33,"children":1816},[1817],{"type":30,"value":1818},"So the question worth answering is what your modified total direct cost base actually contains.",{"type":26,"level":27,"children":1820},[1821],{"type":30,"value":1822},"Building the base, line by line",{"type":33,"children":1824},[1825],{"type":30,"value":1826},"Here is a realistic $600,000 program for a small Western North Carolina nonprofit. The figures are invented, but the shape is ordinary: a staffed direct service program with participant stipends, a vehicle, leased space, and two partner organizations receiving subawards.",{"type":33,"children":1828},[1829],{"type":30,"value":1830},"2 CFR 200.1 defines the base as direct salaries and wages, applicable fringe benefits, materials and supplies, services, travel, and up to the first $50,000 of each subaward. It excludes equipment, capital expenditures, charges for patient care, rental costs, tuition remission, scholarships and fellowships, participant support costs, and the portion of each subaward above $50,000.",{"type":33,"children":1832},[1833],{"type":30,"value":1834},"Seven lines of that budget sit inside the base, and they total $480,000:",{"type":96,"style":97,"children":1836},[1837,1843,1849,1855,1861,1867,1873],{"type":100,"children":1838},[1839],{"type":33,"children":1840},[1841],{"type":30,"value":1842},"Salaries and wages, $272,000",{"type":100,"children":1844},[1845],{"type":33,"children":1846},[1847],{"type":30,"value":1848},"Fringe benefits, $68,000",{"type":100,"children":1850},[1851],{"type":33,"children":1852},[1853],{"type":30,"value":1854},"Materials and supplies, $18,000",{"type":100,"children":1856},[1857],{"type":33,"children":1858},[1859],{"type":30,"value":1860},"Contracted services, $22,000",{"type":100,"children":1862},[1863],{"type":33,"children":1864},[1865],{"type":30,"value":1866},"Travel, $10,000",{"type":100,"children":1868},[1869],{"type":33,"children":1870},[1871],{"type":30,"value":1872},"Subaward A to a partner nonprofit, $40,000, included in full because it is under $50,000",{"type":100,"children":1874},[1875],{"type":33,"children":1876},[1877],{"type":30,"value":1878},"Subaward B to a regional partner, the first $50,000 of a $60,000 subaward",{"type":33,"children":1880},[1881],{"type":30,"value":1882},"Four lines sit outside it, and they total $120,000:",{"type":96,"style":97,"children":1884},[1885,1891,1897,1903],{"type":100,"children":1886},[1887],{"type":33,"children":1888},[1889],{"type":30,"value":1890},"Participant stipends, $45,000, excluded as participant support costs",{"type":100,"children":1892},[1893],{"type":33,"children":1894},[1895],{"type":30,"value":1896},"Program vehicle, $35,000, excluded as equipment",{"type":100,"children":1898},[1899],{"type":33,"children":1900},[1901],{"type":30,"value":1902},"Program space lease, $30,000, excluded as rental costs",{"type":100,"children":1904},[1905],{"type":33,"children":1906},[1907],{"type":30,"value":1908},"The $10,000 of Subaward B above the $50,000 line",{"type":33,"children":1910},[1911],{"type":30,"value":1912},"The base comes to $480,000 against a $600,000 budget.",{"type":33,"children":1914},[1915,1917,1920],{"type":30,"value":1916},"Fifteen percent of $480,000 is ",{"type":30,"marks":1918,"value":1919},[106],"$72,000",{"type":30,"value":119},{"type":33,"children":1922},[1923],{"type":30,"value":1924},"The naive calculation said $90,000. The correct one says $72,000. That is an $18,000 difference on a single program, and it is 20 percent of what the organization thought it was recovering.",{"type":33,"children":1926},[1927],{"type":30,"value":1928},"Three exclusions did most of the damage, and they are the three that show up most often in real nonprofit budgets: participant support costs, rent, and equipment. A program that pays stipends and leases space can easily find a quarter of its budget sitting outside the base.",{"type":26,"level":27,"children":1930},[1931],{"type":30,"value":1932},"The subaward rule is the one people get wrong",{"type":33,"children":1934},[1935],{"type":30,"value":1936},"Look again at the two subawards in that budget.",{"type":33,"children":1938},[1939],{"type":30,"value":1940},"Subaward A is $40,000, and all $40,000 is in the base. Subaward B is $60,000, and only $50,000 is in the base. The $10,000 above the line comes out.",{"type":33,"children":1942},[1943],{"type":30,"value":1944},"Three things about that rule trip people up.",{"type":33,"children":1946},[1947,1950],{"type":30,"marks":1948,"value":1949},[106],"It applies to each subaward separately.",{"type":30,"value":1951}," Two $40,000 subawards put $80,000 in the base. One $80,000 subaward puts $50,000 in. Same money out the door, different recovery, purely because of how the partnerships were papered.",{"type":33,"children":1953},[1954,1957],{"type":30,"marks":1955,"value":1956},[106],"It is regardless of the period of performance.",{"type":30,"value":1958}," A $60,000 subaward spread across three years does not get $50,000 counted each year. The definition is explicit on this point. The first $50,000 of that subaward is in the base, full stop.",{"type":33,"children":1960},[1961,1964],{"type":30,"marks":1962,"value":1963},[106],"It changed in 2024, and old templates still say $25,000.",{"type":30,"value":1965}," This is the figure most likely to be stale in a budget template, a cost policy, or a spreadsheet somebody built in 2023 and nobody has touched since. If your proposal template still excludes everything above $25,000 per subaward, you are quietly under-recovering on every proposal you submit.",{"type":33,"children":1967},[1968],{"type":30,"value":1969},"In the example above, that one stale number is worth real money. Under the $25,000 rule, Subaward A would contribute $25,000 instead of $40,000, and Subaward B would contribute $25,000 instead of $50,000. The base drops by $40,000 before anything else is considered.",{"type":26,"level":27,"children":1971},[1972],{"type":30,"value":1973},"What the change is actually worth",{"type":33,"children":1975},[1976],{"type":30,"value":1977},"Now run the same budget under the old rules and the new ones.",{"type":33,"children":1979},[1980,1983,1985,1988],{"type":30,"marks":1981,"value":1982},[106],"Under the old rules",{"type":30,"value":1984},", the base excluded everything above $25,000 per subaward. Subaward A contributed $25,000, Subaward B contributed $25,000, and the other exclusions were unchanged. The base was $440,000. At 10 percent, the recovery was ",{"type":30,"marks":1986,"value":1987},[106],"$44,000",{"type":30,"value":119},{"type":33,"children":1990},[1991,1994,1996,1998],{"type":30,"marks":1992,"value":1993},[106],"Under the current rules",{"type":30,"value":1995},", the base is $480,000 and the rate is up to 15 percent. The recovery is ",{"type":30,"marks":1997,"value":1919},[106],{"type":30,"value":119},{"type":33,"children":2000},[2001],{"type":30,"value":2002},"That is $28,000 more on one $600,000 program, a 64 percent increase rather than the 50 percent the headline suggests, because the rate and the subaward figure moved together.",{"type":33,"children":2004},[2005],{"type":30,"value":2006},"It is also worth seeing what each change contributed on its own:",{"type":96,"style":97,"children":2008},[2009,2015,2021],{"type":100,"children":2010},[2011],{"type":33,"children":2012},[2013],{"type":30,"value":2014},"Rate alone, 10 to 15 percent on the old $440,000 base: $44,000 to $66,000.",{"type":100,"children":2016},[2017],{"type":33,"children":2018},[2019],{"type":30,"value":2020},"Subaward figure alone, at the old 10 percent rate: $44,000 to $48,000.",{"type":100,"children":2022},[2023],{"type":33,"children":2024},[2025],{"type":30,"value":2026},"Both together: $72,000.",{"type":33,"children":2028},[2029],{"type":30,"value":2030},"For an organization running three or four federal programs, this is the difference between an executive director's salary being partly unfunded and being funded. Indirect recovery is how the finance function, the audit, the insurance, and the person who answers the phone get paid. Treating it as a technicality is how organizations end up underwriting federal programs out of their own reserves.",{"type":26,"level":27,"children":2032},[2033],{"type":30,"value":2034},"Whether you can use the rate at all",{"type":33,"children":2036},[2037],{"type":30,"value":2038},"The eligibility test is short. You may elect the de minimis rate if you do not have a current federally negotiated indirect cost rate, including a provisional rate. That covers most small and mid-sized nonprofits, because negotiating a rate is a real project and most organizations never undertake it.",{"type":33,"children":2040},[2041],{"type":30,"value":2042},"A few features of the rule are easy to miss.",{"type":33,"children":2044},[2045,2048],{"type":30,"marks":2046,"value":2047},[106],"It is up to 15 percent, and you set the number.",{"type":30,"value":2049}," The regulation authorizes the recipient to determine the appropriate rate up to that limit. Twelve percent is allowed. So is eight. Fifteen is a ceiling.",{"type":33,"children":2051},[2052,2055],{"type":30,"marks":2053,"value":2054},[106],"You are not required to use it at all.",{"type":30,"value":2056}," The rule says so explicitly.",{"type":33,"children":2058},[2059,2062],{"type":30,"marks":2060,"value":2061},[106],"Once you elect it, you use it consistently.",{"type":30,"value":2063}," The regulation requires that a recipient or subrecipient electing the de minimis rate use it for all federal awards until it chooses to pursue a negotiated rate. You do not get to charge 15 percent to the generous funder and 8 percent to the stingy one because it suits the budget.",{"type":33,"children":2065},[2066,2069],{"type":30,"marks":2067,"value":2068},[106],"No documentation is required to justify it, and it may be used indefinitely.",{"type":30,"value":2070}," There is no cost allocation plan to submit, no approval to obtain, and no expiry. This is the genuine advantage of the de minimis rate over a negotiated one.",{"type":33,"children":2072},[2073,2076],{"type":30,"marks":2074,"value":2075},[106],"It does not apply to FAR cost reimbursement contracts",{"type":30,"value":2077}," issued directly by the federal government. Those are procurement contracts and they run under a different set of rules.",{"type":33,"children":2079},[2080],{"type":30,"value":2081},"One more that causes audit findings: costs must be treated consistently as either direct or indirect, and the same cost cannot be charged both ways. If your bookkeeper charges the accounting software subscription directly to a grant and that cost is also sitting in the indirect pool, that is a double charge, and it is the kind of thing a Single Audit is built to find.",{"type":26,"level":27,"children":2083},[2084],{"type":30,"value":2085},"What a funder can and cannot do about it",{"type":33,"children":2087},[2088],{"type":30,"value":2089},"This is where a lot of subrecipients get pushed around, so it is worth being precise about what the regulation says.",{"type":33,"children":2091},[2092],{"type":30,"value":2093},"2 CFR 200.414(f) states that federal agencies and pass-through entities may not require recipients and subrecipients to use a de minimis rate lower than the negotiated rate or the rate elected, unless required by federal statute or regulation.",{"type":33,"children":2095},[2096],{"type":30,"value":2097},"Read that carefully, because it is slightly narrower than the version that gets repeated in trainings. The protection is real, and it means a state agency or a larger nonprofit passing federal money to you generally cannot tell you that their policy is 10 percent and that is that. But the carve-out for statute and regulation is genuine. Some federal programs have statutory administrative cost caps, and where one applies, it applies.",{"type":33,"children":2099},[2100],{"type":30,"value":2101},"So when a pass-through entity tells you your indirect is capped below your elected rate, the question to ask is which statute or regulation imposes the cap. If they can name one, that is the answer. If the cap is their own policy, the regulation is on your side and it is worth a polite conversation citing the paragraph.",{"type":33,"children":2103},[2104],{"type":30,"value":2105},"Two related points:",{"type":96,"style":97,"children":2107},[2108,2117],{"type":100,"children":2109},[2110],{"type":33,"children":2111},[2112,2115],{"type":30,"marks":2113,"value":2114},[106],"Separately",{"type":30,"value":2116},", 2 CFR 200.414(d) requires pass-through entities to accept a subrecipient's federally negotiated rate where one exists. If you have negotiated a rate, that is the provision to cite rather than the de minimis one.",{"type":100,"children":2118},[2119,2129,2133,2137,2149,2153,2157],{"type":33,"children":2120},[2121,2124,2126],{"type":30,"marks":2122,"value":2123},[106],"Private funders are not covered by any of this.",{"type":30,"value":2125}," A private foundation that caps overhead at 10 percent is entitled to do so. The Uniform Guidance governs federal awards and federal money passed ",{"type":30,"marks":2127,"value":2128},[106],"And if the money is State-funded rather than federal",{"type":33,"children":2130},[2131],{"type":30,"value":2132},"Everything above concerns federal awards and federal money passed through. A grant paid from a North Carolina State appropriation is not a federal award, so 2 CFR 200.414 does not reach it of its own force. What governs is the administering agency's rules, and in North Carolina those diverge enough that the answer has to be looked up agency by agency.",{"type":33,"children":2134},[2135],{"type":30,"value":2136},"Two real examples, at opposite ends:",{"type":33,"children":2138},[2139,2142,2144,2147],{"type":30,"marks":2140,"value":2141},[106],"NC DHHS",{"type":30,"value":2143}," applies the federal cost principles to State-funded grants to nonprofits through the NC Administrative Code. Its grant contracts manual budgets the 15 percent de minimis rate for organizations without a federally approved rate.",{"type":30,"marks":2145,"value":2146},[106],"OSBM directed grants",{"type":30,"value":2148}," run the other way. OSBM's grants FAQ states that directed grant funds generally may not be used for indirect costs, and directs grantees to raise specific costs with their assigned grant administrator.",{"type":33,"children":2150},[2151],{"type":30,"value":2152},"So \"can we charge 15 percent\" has no single answer for State money in North Carolina. Ask the administering agency in writing before you build the budget, and keep the answer with the award file.",{"type":33,"children":2154},[2155],{"type":30,"value":2156},"One trap worth flagging: some State agency pages still publish the retired 10 percent figure. The NC Department of Administration's FVPSA indirect cost page is one, and FVPSA is federal money passed through a State agency, so 15 percent under 2 CFR 200.414(f) is the current figure and the page is simply out of date. Where a page and the regulation disagree on a federal award, the regulation governs. Where the award is State-funded, the award terms do.",{"type":33,"children":2158},[2159],{"type":30,"value":2160},"One provision that runs in your favor: under 09 NCAC 03M .0205, the cost of a required audit can be charged to the State grant.through. It has nothing to say about a family foundation's grant agreement.",{"type":26,"level":27,"children":2162},[2163],{"type":30,"value":2128},{"type":33,"children":2165},[2166],{"type":30,"value":2132},{"type":33,"children":2168},[2169],{"type":30,"value":2136},{"type":96,"style":97,"children":2171},[2172,2179],{"type":100,"children":2173},[2174],{"type":33,"children":2175},[2176,2178],{"type":30,"marks":2177,"value":2141},[106],{"type":30,"value":2143},{"type":100,"children":2180},[2181],{"type":33,"children":2182},[2183,2186,2187,2190],{"type":30,"marks":2184,"value":2185},[106],"OSBM",{"type":30,"value":1231},{"type":30,"marks":2188,"value":2189},[106],"directed grants",{"type":30,"value":2148},{"type":33,"children":2192},[2193],{"type":30,"value":2152},{"type":33,"children":2195},[2196],{"type":30,"value":2156},{"type":33,"children":2198},[2199],{"type":30,"value":2200},"One provision that runs in your favor: under 09 NCAC 03M .0205, the cost of a required audit can be charged to the State grant.",{"type":26,"level":27,"children":2202},[2203],{"type":30,"value":2204},"If the award ceiling includes indirect, the math runs backwards",{"type":33,"children":2206},[2207],{"type":30,"value":2208},"The example above treats $600,000 as direct costs, with indirect recovery on top. Total award: $672,000.",{"type":33,"children":2210},[2211],{"type":30,"value":2212},"Plenty of funding opportunities do not work that way. The notice names a ceiling, say $600,000, and that ceiling covers everything. Direct and indirect together.",{"type":33,"children":2214},[2215],{"type":30,"value":2216},"You cannot just take 15 percent of $600,000 and subtract it. The rate applies to the modified base, and the base is a function of your direct costs, which is what you are solving for. Budget it the other way and your direct costs plus your indirect will exceed the ceiling, which means the proposal gets kicked back or, worse, gets funded and then runs short.",{"type":33,"children":2218},[2219],{"type":30,"value":2220},"The workable approach is to build the direct budget first, compute the base and the indirect from it, add them, and then scale the direct side down until the total lands under the ceiling. It takes two or three passes in a spreadsheet. There is no shortcut formula, which is exactly why people skip the step.",{"type":33,"children":2222},[2223],{"type":30,"value":2224},"Read the funding notice for which structure applies before you build anything. The phrase to look for is whether the ceiling is inclusive of indirect costs. If the notice is ambiguous, ask the program officer in writing and keep the answer.",{"type":26,"level":27,"children":2226},[2227],{"type":30,"value":2228},"If you have been budgeting 10 percent",{"type":33,"children":2230},[2231],{"type":30,"value":2232},"Five things to do, in order.",{"type":96,"style":241,"children":2234},[2235,2244,2253,2262,2271],{"type":100,"children":2236},[2237],{"type":33,"children":2238},[2239,2242],{"type":30,"marks":2240,"value":2241},[106],"Fix the templates.",{"type":30,"value":2243}," Every proposal budget template, every internal cost policy document, and every spreadsheet that computes indirect. Look specifically for a hardcoded 10 percent and for a $25,000 subaward cap. Both are now wrong, and both will keep producing understated budgets until somebody changes them.",{"type":100,"children":2245},[2246],{"type":33,"children":2247},[2248,2251],{"type":30,"marks":2249,"value":2250},[106],"Decide your rate and write it down.",{"type":30,"value":2252}," Fifteen percent, or less if you have a reason. Put the decision somewhere a successor can find it, because the consistency requirement means this is an organizational policy and not a per-proposal choice.",{"type":100,"children":2254},[2255],{"type":33,"children":2256},[2257,2260],{"type":30,"marks":2258,"value":2259},[106],"Check the exclusions against your actual cost structure.",{"type":30,"value":2261}," If you pay participant stipends, lease space, or buy equipment, your base is meaningfully smaller than your budget. Work out roughly how much smaller once, and stop being surprised by it.",{"type":100,"children":2263},[2264],{"type":33,"children":2265},[2266,2269],{"type":30,"marks":2267,"value":2268},[106],"Look at awards currently in hand.",{"type":30,"value":2270}," Some may be amendable. See the next section, because the answer there is less clean than anyone would like.",{"type":100,"children":2272},[2273],{"type":33,"children":2274},[2275,2278],{"type":30,"marks":2276,"value":2277},[106],"Disclose the election in the notes to your SEFA",{"type":30,"value":2279}," if you have a Single Audit. 2 CFR 200.510(b)(6) requires the notes to state whether you elected the de minimis rate of up to 15 percent. That is the whole election mechanism. There is no form, no filing, and no registration anywhere.",{"type":33,"children":2281},[2282],{"type":30,"value":2283},"On that last point, be skeptical of any source telling you to file an indirect cost rate election. For the de minimis rate there is nothing to file. Charging the rate and disclosing it is the election.",{"type":26,"level":27,"children":2285},[2286],{"type":30,"value":2287},"Does this apply to awards you already hold?",{"type":33,"children":2289},[2290],{"type":30,"value":2291},"The honest answer is that it depends on the agency, and you have to ask.",{"type":33,"children":2293},[2294],{"type":30,"value":2295},"The 2024 revisions took effect on 1 October 2024. They were not made retroactive. For awards issued before that date, federal agencies had the option, but not the obligation, to apply the revised guidance, and where an agency elected to do so the effective date could not precede 21 June 2024, when the final rule published.",{"type":33,"children":2297},[2298],{"type":30,"value":2299},"Agencies have handled this differently, and at least one major one does not frame it by award date at all. The Department of Justice's Office of Justice Programs has told recipients that the revisions apply to award actions taken on or after 1 October 2024, and that the date of the action under the award, not the date of the award, is what determines which version governs. In the same guidance it notes that agencies may allow a recipient to apply the 15 percent de minimis rate to an existing award, and that prior approval or a grant award modification is often required to do it.",{"type":33,"children":2301},[2302],{"type":30,"value":2303},"So there is no single rule to state here, and any blog post that gives you one is overstating what the guidance supports. What there is instead is a question to ask, in writing, of each awarding agency or pass-through entity holding an award you signed before October 2024:",{"type":69,"children":2305},[2306],{"type":33,"children":2307},[2308],{"type":30,"value":2309},"Does the 2024 Uniform Guidance apply to this award, and may we apply the 15 percent de minimis indirect cost rate to the remaining period of performance? If so, what modification do you need from us?",{"type":33,"children":2311},[2312,2314,2318],{"type":30,"value":2313},"Keep the answer with the award file. ",{"type":30,"marks":2315,"value":2317},[2316],"highlight","If the ",{"type":30,"value":2319},"answer is yes and a modification is required, the modification is usually a short administrative request, and on a multi-year award the money at stake can be substantial.",{"type":33,"children":2321},[2322],{"type":30,"value":2323},"For awards issued on or after 1 October 2024, none of this uncertainty applies. The current rules govern.",{"type":26,"level":27,"children":2325},[2326],{"type":30,"value":2327},"One more thing worth saying plainly",{"type":33,"children":2329},[2330],{"type":30,"value":2331},"Under-recovered indirect costs do not disappear. They get funded out of unrestricted revenue, which is the hardest money a nonprofit raises and the money that would otherwise go to the mission.",{"type":33,"children":2333},[2334],{"type":30,"value":2335},"If you are charging 10 percent because that is what the template said, the fix costs an afternoon and is worth five figures a year on a modest federal portfolio.",{"type":33,"children":2337},[2338,2340,2346,2348,2354],{"type":30,"value":2339},"If you want someone to check the work, that is part of what the ",{"url":519,"meta":2341,"type":58,"children":2344},[2342,2343],{"id":53,"value":54},{"id":56,"value":57},[2345],{"type":30,"value":525},{"type":30,"value":2347}," covers. It is a fixed-fee, two-week assessment starting at $1,500 that tells you what an auditor or a funder would find in your books, including whether your indirect cost treatment holds up. More on how we handle grant tracking and restricted funds is on the ",{"url":529,"meta":2349,"type":58,"children":2352},[2350,2351],{"id":53,"value":54},{"id":56,"value":57},[2353],{"type":30,"value":535},{"type":30,"value":537},{"type":26,"level":27,"children":2356},[2357],{"type":30,"value":541},{"type":96,"style":97,"children":2359},[2360,2372,2385,2397],{"type":100,"children":2361},[2362],{"type":33,"children":2363},[2364,2370],{"url":1362,"meta":2365,"type":58,"children":2368},[2366,2367],{"id":53,"value":54},{"id":56,"value":57},[2369],{"type":30,"value":1680},{"type":30,"value":2371},", paragraph (f) for the de minimis rate, paragraph (d) for negotiated rates and pass-through entities",{"type":100,"children":2373},[2374],{"type":33,"children":2375},[2376,2383],{"url":1777,"meta":2377,"type":58,"children":2380},[2378,2379],{"id":53,"value":54},{"id":56,"value":57},[2381],{"type":30,"value":2382},"2 CFR 200.1, Definitions",{"type":30,"value":2384},", for Modified Total Direct Cost and for the equipment capitalization benchmark",{"type":100,"children":2386},[2387],{"type":33,"children":2388},[2389,2395],{"url":1233,"meta":2390,"type":58,"children":2393},[2391,2392],{"id":53,"value":54},{"id":56,"value":57},[2394],{"type":30,"value":1643},{"type":30,"value":2396},", paragraph (b)(6) for the de minimis disclosure in the notes to the SEFA",{"type":100,"children":2398},[2399],{"type":33,"children":2400},[2401,2409],{"url":2402,"meta":2403,"type":58,"children":2406},"https:\u002F\u002Fwww.ojp.gov\u002Ffunding\u002Fpart200uniformrequirements\u002F2024-part-200-uniform-guidance-presentation.pdf",[2404,2405],{"id":53,"value":54},{"id":56,"value":57},[2407],{"type":30,"value":2408},"Office of Justice Programs, 2024 Part 200 Uniform Guidance presentation",{"type":30,"value":2410},", for how one federal agency applies the revisions to existing awards",{"type":33,"children":2412},[2413],{"type":30,"value":2414},"All figures in the worked example are invented for illustration. They are not drawn from any client's budget.",[],[2417,2418,2420,2422,2425,2427,2429,2431,2433,2435,2438],{"__typename":619,"attributes":17,"content":1720,"tag":620},{"__typename":619,"attributes":2419,"content":17,"tag":624},{"property":623,"content":1720},{"__typename":619,"attributes":2421,"content":17,"tag":624},{"name":627,"content":1720},{"__typename":619,"attributes":2423,"content":17,"tag":624},{"property":630,"content":2424},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793126467-indirect-cost-rate.jpeg?auto=format&fit=max&w=1200",{"__typename":619,"attributes":2426,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":2428,"content":17,"tag":624},{"property":638,"content":1133},{"__typename":619,"attributes":2430,"content":17,"tag":624},{"name":642,"content":2424},{"__typename":619,"attributes":2432,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":2434,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":2436,"content":17,"tag":624},{"property":653,"content":2437},"2026-10-28T12:40:39Z",{"__typename":619,"attributes":2439,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":2441,"title":2442,"slug":2443,"excerpt":2444,"_firstPublishedAt":2445,"_updatedAt":2446,"_status":13,"image":2447,"content":2449,"_seoMetaTags":2877},"L2Oh6N6qRiCeGly8CE0M8A","The Single Audit Threshold: What the $1 Million Rule Means for Your Nonprofit","the-single-audit-threshold-what-the-dollar1-million-rule-means-for-your-nonprofit","The threshold is $1,000,000 in federal awards expended during your fiscal year. Knowing whether you’re over it is harder than it sounds.","2026-10-27T11:43:04-04:00","2026-10-28T09:34:10-04:00",{"__typename":15,"url":2448,"alt":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793115435-single_audit_threshold.jpeg",{"__typename":19,"value":2450,"blocks":2876},{"schema":21,"document":2451},{"type":23,"children":2452},[2453,2457,2461,2474,2483,2487,2507,2511,2515,2519,2523,2527,2531,2544,2548,2552,2556,2560,2580,2584,2588,2592,2606,2610,2614,2618,2622,2626,2630,2677,2681,2685,2689,2693,2697,2706,2710,2714,2718,2722,2736,2740,2760,2764,2768,2772,2776,2814,2818,2822,2825,2872],{"type":33,"children":2454},[2455],{"type":30,"value":2456},"The Single Audit threshold is $1,000,000 in federal awards expended during your fiscal year. That is the whole rule, and it is the easy part. The hard part is knowing whether you are over it, and the organizations that get caught out are usually not careless. They are counting the wrong thing.",{"type":26,"level":27,"children":2458},[2459],{"type":30,"value":2460},"The number, and the date that decides which number applies to you",{"type":33,"children":2462},[2463,2465,2472],{"type":30,"value":2464},"For 27 years the threshold was $750,000. OMB's 2024 revisions to the Uniform Guidance raised it to $1,000,000, codified at ",{"url":111,"meta":2466,"type":58,"children":2469},[2467,2468],{"id":53,"value":54},{"id":56,"value":57},[2470],{"type":30,"value":2471},"2 CFR 200.501",{"type":30,"value":2473},". It was the first change since 1997, which tells you roughly how often this gets revisited.",{"type":33,"children":2475},[2476,2478,2481],{"type":30,"value":2477},"The effective date is where people trip. The $1 million threshold applies to fiscal years ",{"type":30,"marks":2479,"value":2480},[106],"beginning",{"type":30,"value":2482}," on or after October 1, 2024. Not fiscal years ending after that date. Beginning.",{"type":33,"children":2484},[2485],{"type":30,"value":2486},"So:",{"type":96,"style":97,"children":2488},[2489,2495,2501],{"type":100,"children":2490},[2491],{"type":33,"children":2492},[2493],{"type":30,"value":2494},"Calendar-year organization: your year that started January 1, 2025 was your first $1 million year.",{"type":100,"children":2496},[2497],{"type":33,"children":2498},[2499],{"type":30,"value":2500},"July through June: your year that started July 1, 2025 was your first.",{"type":100,"children":2502},[2503],{"type":33,"children":2504},[2505],{"type":30,"value":2506},"Year ended June 30, 2025: that year began July 1, 2024, which is before the cutoff. Your threshold for that year was still $750,000.",{"type":33,"children":2508},[2509],{"type":30,"value":2510},"If you have a prior year still open, or an auditor asking questions about one, confirm which threshold governed it before you assume you were under.",{"type":26,"level":27,"children":2512},[2513],{"type":30,"value":2514},"\"Expended\" is the word doing the work",{"type":33,"children":2516},[2517],{"type":30,"value":2518},"The regulation says Expended.  It does not say awarded. It does not say received. ",{"type":33,"children":2520},[2521],{"type":30,"value":2522},"This matters more than almost anything else in the rule. A three-year, $3 million federal award does not put you in Single Audit territory the day it is signed. A single year in which you draw down and spend $1.1 million of it does.",{"type":33,"children":2524},[2525],{"type":30,"value":2526},"The reverse happens too, and that is the version that bites. An organization can hold several million dollars in active awards, feel every bit like a major federal grantee, and stay under the threshold for years because the spending is spread thin. Then one year a construction draw lands, or a program ramps up, or two grants overlap, and the total clears $1 million without anyone making a decision to get bigger.",{"type":33,"children":2528},[2529],{"type":30,"value":2530},"Your bank balance is not the measure either. Restricted cash sitting in the account is a liability on your books, not an expenditure.",{"type":33,"children":2532},[2533,2535,2542],{"type":30,"value":2534},"A few categories do not follow the plain-English version of \"expended.\" ",{"url":2536,"meta":2537,"type":58,"children":2540},"https:\u002F\u002Fwww.ecfr.gov\u002Fcurrent\u002Ftitle-2\u002Fpart-200\u002Fsection-200.502",[2538,2539],{"id":53,"value":54},{"id":56,"value":57},[2541],{"type":30,"value":1205},{"type":30,"value":2543}," sets out special rules for federal loan and loan guarantee programs, non-cash assistance such as donated food or equipment, endowment funds, and Medicare and Medicaid payments. If any of those are in your mix, get the calculation confirmed rather than assumed. The loan rules in particular can put a startlingly large number on your schedule.",{"type":26,"level":27,"children":2545},[2546],{"type":30,"value":2547},"Pass-through money is still federal money",{"type":33,"children":2549},[2550],{"type":30,"value":2551},"This is the single most common reason an organization is surprised.",{"type":33,"children":2553},[2554],{"type":30,"value":2555},"Federal money does not have to arrive from a federal agency to count. If it reaches you through a state agency, a county, a city, a university, or another nonprofit, you are a subrecipient, and those expenditures go on your schedule exactly like a direct award. Whose logo is on the agreement changes nothing.",{"type":33,"children":2557},[2558],{"type":30,"value":2559},"How to tell:",{"type":96,"style":97,"children":2561},[2562,2568,2574],{"type":100,"children":2563},[2564],{"type":33,"children":2565},[2566],{"type":30,"value":2567},"Look for an Assistance Listing Number on the award document, a number like 93.600 or 97.036. Older paperwork may still call it a CFDA number.",{"type":100,"children":2569},[2570],{"type":33,"children":2571},[2572],{"type":30,"value":2573},"Check whether the agreement names a federal awarding agency or cites 2 CFR 200. Both are strong signals.",{"type":100,"children":2575},[2576],{"type":33,"children":2577},[2578],{"type":30,"value":2579},"If the terms flow down federal requirements (procurement standards, time and effort documentation, audit language), that money came from somewhere federal.",{"type":33,"children":2581},[2582],{"type":30,"value":2583},"If your award letters are vague, ask the pass-through entity directly. They are required to identify the federal award to you. A one-sentence email now is considerably cheaper than finding out during fieldwork.",{"type":26,"level":27,"children":2585},[2586],{"type":30,"value":2587},"If you are in Western North Carolina, read that twice",{"type":33,"children":2589},[2590],{"type":30,"value":2591},"Helene recovery money is federal money, and a great deal of it is arriving as subawards.",{"type":33,"children":2593},[2594,2596,2604],{"type":30,"value":2595},"NC Emergency Management says this plainly in its own ",{"url":2597,"meta":2598,"type":58,"children":2601},"https:\u002F\u002Fwww.ncdps.gov\u002Four-organization\u002Femergency-management\u002Femergency-management-grants\u002Fgrants-management-compliance-faqs",[2599,2600],{"id":53,"value":54},{"id":56,"value":57},[2602],{"type":30,"value":2603},"grants compliance FAQ",{"type":30,"value":2605},": 2 CFR Part 200 applies to its major grant programs, the audit requirements apply to all recipients and subrecipients of federal funds, and the $1,000,000 threshold specifically includes federal funding passed through state agencies. The state is the recipient of FEMA money. Your organization, if it took a subaward, is the subrecipient.",{"type":33,"children":2607},[2608],{"type":30,"value":2609},"Here is the scenario worth worrying about. An Asheville-area nonprofit ran a $400,000 budget before the storm. Since then it has picked up recovery work: housing assistance, debris and rebuilding support, case management, maybe a facility repair. None of it came from a federal application it filed. All of it came through the state or a county or a larger nonprofit. That organization can clear $1 million in federal expenditures in a single fiscal year and have no idea it happened.",{"type":33,"children":2611},[2612],{"type":30,"value":2613},"It has almost certainly never had a Single Audit. It may never have had an audit at all.",{"type":33,"children":2615},[2616],{"type":30,"value":2617},"If that could be you, the move is not complicated. Pull every recovery-related agreement you have signed since the storm, identify the federal program behind each one, and total what you have actually spent this fiscal year. Do it now, while you can still plan around the answer.",{"type":26,"level":27,"children":2619},[2620],{"type":30,"value":2621},"What actually changes when you cross",{"type":33,"children":2623},[2624],{"type":30,"value":2625},"A Single Audit is not your financial statement audit with a few extra pages. It is a separate compliance audit performed alongside it, under Subpart F of 2 CFR Part 200, government auditing standards, and that year's OMB Compliance Supplement.",{"type":33,"children":2627},[2628],{"type":30,"value":2629},"What you take on:",{"type":96,"style":97,"children":2631},[2632,2641,2650,2659,2668],{"type":100,"children":2633},[2634],{"type":33,"children":2635},[2636,2639],{"type":30,"marks":2637,"value":2638},[106],"A Schedule of Expenditures of Federal Awards.",{"type":30,"value":2640}," The SEFA lists every federal award by program and Assistance Listing Number, direct and pass-through, with totals. It is the document the whole audit is built on.",{"type":100,"children":2642},[2643],{"type":33,"children":2644},[2645,2648],{"type":30,"marks":2646,"value":2647},[106],"Major program determination.",{"type":30,"value":2649}," Your auditor sorts programs into Type A and Type B by size, then risk-assesses them. The Type A threshold also rose to $1 million for organizations expending $34 million or less in total federal awards, up from $25 million.",{"type":100,"children":2651},[2652],{"type":33,"children":2653},[2654,2657],{"type":30,"marks":2655,"value":2656},[106],"Compliance testing",{"type":30,"value":2658}," on the major programs against the specific requirements in the Compliance Supplement: allowable costs, eligibility, reporting, subrecipient monitoring, and the rest.",{"type":100,"children":2660},[2661],{"type":33,"children":2662},[2663,2666],{"type":30,"marks":2664,"value":2665},[106],"A reporting package",{"type":30,"value":2667}," submitted to the Federal Audit Clearinghouse, due the earlier of 30 days after you receive the auditor's report or nine months after your fiscal year end.",{"type":100,"children":2669},[2670],{"type":33,"children":2671},[2672,2675],{"type":30,"marks":2673,"value":2674},[106],"A corrective action plan",{"type":30,"value":2676}," if there are findings, plus a summary schedule of prior findings in subsequent years.",{"type":33,"children":2678},[2679],{"type":30,"value":2680},"One narrower option exists. Under 2 CFR 200.501, an organization that expends federal awards under only one federal program, where that program does not itself require a financial statement audit, may elect a program-specific audit instead. It is a real cost saving when you qualify. Most organizations do not.",{"type":33,"children":2682},[2683],{"type":30,"value":2684},"Budget and calendar both deserve attention here. Auditors who do Single Audit work are a smaller group than general nonprofit auditors, and their spring calendars fill early. Discovering in March that you crossed the line last June is an expensive conversation to have.",{"type":26,"level":27,"children":2686},[2687],{"type":30,"value":2688},"Under the threshold is not off the hook",{"type":33,"children":2690},[2691],{"type":30,"value":2692},"Your award terms may also require an audit on their own, independent of the threshold entirely.",{"type":33,"children":2694},[2695],{"type":30,"value":2696},"North Carolina adds a second test. Under G.S. 143C-6-23 and 09 NCAC 03M, a non-State entity that receives, holds, uses, or expends State grant funds has its own reporting level, and at Level II it owes a single or program-specific audit under State law. Since July 1, 2024 that line points at the same figure as 2 CFR 200.501(a), so today it is also $1,000,000. For fiscal years ending July through September 2024 it was $750,000, and on or before June 30, 2024 it was $500,000.",{"type":33,"children":2698},[2699,2701,2705],{"type":30,"value":2700},"The two tests are not alternatives. 09 NCAC 03M reaches State funds and federal funds passed through a State agency, which means a Helene subaward routed through a North Carolina agency is counted once under the federal rule and again under the State rule, on two separate determinations with ",{"url":1596,"type":58,"children":2702},[2703],{"type":30,"value":2704},"two separate filings",{"type":30,"value":119},{"type":33,"children":2707},[2708],{"type":30,"value":2709},"One related change worth knowing while you are in here. The de minimis indirect cost rate rose from 10% to 15% of modified total direct costs under 2 CFR 200.414(f), in the same 2024 revision that moved the audit threshold. If you do not have a negotiated indirect cost rate and you are still budgeting 10% on proposals, you are leaving money on the table every time.",{"type":26,"level":27,"children":2711},[2712],{"type":30,"value":2713},"The rule rewrite, and why it has not changed anything yet",{"type":33,"children":2715},[2716],{"type":30,"value":2717},"You may have heard the Uniform Guidance is being rewritten. It is. It is also currently stuck, and the distinction matters for what you do this year.",{"type":33,"children":2719},[2720],{"type":30,"value":2721},"On May 29, 2026, OMB published a proposed rule that would comprehensively revise 2 CFR Part 200 and rename it the Uniform Grants Regulation, elevating it from guidance to regulation in its own right. The comment period closed July 13, 2026, drawing close to half a million comments. OMB targeted an effective date of October 1, 2026.",{"type":33,"children":2723},[2724,2726,2734],{"type":30,"value":2725},"That date came and went. Section 157 of the Continuing Appropriations Act, 2027, signed September 2, 2026, bars OMB from issuing or finalizing that rule, or a substantially similar one, through December 11, 2026 (",{"url":2727,"meta":2728,"type":58,"children":2731},"https:\u002F\u002Fwww.congress.gov\u002Fcrs-product\u002FR49353",[2729,2730],{"id":53,"value":54},{"id":56,"value":57},[2732],{"type":30,"value":2733},"CRS overview",{"type":30,"value":2735},").",{"type":33,"children":2737},[2738],{"type":30,"value":2739},"Two things to hold onto:",{"type":96,"style":97,"children":2741},[2742,2751],{"type":100,"children":2743},[2744],{"type":33,"children":2745},[2746,2749],{"type":30,"marks":2747,"value":2748},[106],"The proposal does not move the $1 million threshold or the 15% de minimis rate.",{"type":30,"value":2750}," Both were set in the 2024 revision, and the 2026 proposal leaves them where they are. Whatever happens in December, the number in this post is the number.",{"type":100,"children":2752},[2753],{"type":33,"children":2754},[2755,2758],{"type":30,"marks":2756,"value":2757},[106],"The current Uniform Guidance is your compliance baseline",{"type":30,"value":2759}," until a final rule is issued with its own effective date. Keep following it, your award terms, and the applicable Compliance Supplement.",{"type":33,"children":2761},[2762],{"type":30,"value":2763},"One practical side effect: the 2026 Compliance Supplement is widely expected to run late, because it is entangled with the same rulemaking. If your auditor has not raised that with you yet, they will.",{"type":33,"children":2765},[2766],{"type":30,"value":2767},"This section is accurate as of October 27, 2026. December 11 is close enough that it is worth a fresh check before relying on it.",{"type":26,"level":27,"children":2769},[2770],{"type":30,"value":2771},"What to do before your fiscal year closes",{"type":33,"children":2773},[2774],{"type":30,"value":2775},"Four things, roughly in order of how much trouble each one saves.",{"type":96,"style":241,"children":2777},[2778,2787,2796,2805],{"type":100,"children":2779},[2780],{"type":33,"children":2781},[2782,2785],{"type":30,"marks":2783,"value":2784},[106],"Total your federal expenditures year to date, this week.",{"type":30,"value":2786}," Direct and pass-through together, on the same basis your books use. If the number is anywhere north of $800,000, plan as though you will cross.",{"type":100,"children":2788},[2789],{"type":33,"children":2790},[2791,2794],{"type":30,"marks":2792,"value":2793},[106],"Build the SEFA as you go, not in August.",{"type":30,"value":2795}," Every federal award should be identifiable in your accounting system by program, with its Assistance Listing Number and its pass-through entity recorded. In QuickBooks Online that usually means tracking each award as its own Project, so expenditures by award come straight out of the system instead of out of a spreadsheet somebody reconstructs every spring.",{"type":100,"children":2797},[2798],{"type":33,"children":2799},[2800,2803],{"type":30,"marks":2801,"value":2802},[106],"Confirm the federal source behind every pass-through agreement.",{"type":30,"value":2804}," If you cannot name the federal program behind a state or county subaward, you cannot put it on a schedule, and you do not actually know whether you are over.",{"type":100,"children":2806},[2807],{"type":33,"children":2808},[2809,2812],{"type":30,"marks":2810,"value":2811},[106],"Talk to your auditor early if you expect to cross.",{"type":30,"value":2813}," Scheduling, fee, and readiness all improve with lead time, and none of them improve without it.",{"type":33,"children":2815},[2816],{"type":30,"value":2817},"The threshold is one number, and it has not moved since 2024. Whether you are over it is a bookkeeping question, answered monthly, long before it ever becomes an audit question.",{"type":33,"children":2819},[2820],{"type":30,"value":2821},"If you are not certain where your organization stands, that is a reasonable place to be, and it is a question we work through with nonprofits fairly often. ",{"type":26,"level":27,"children":2823},[2824],{"type":30,"value":541},{"type":96,"style":97,"children":2826},[2827,2839,2850,2861],{"type":100,"children":2828},[2829],{"type":33,"children":2830},[2831,2837],{"url":111,"meta":2832,"type":58,"children":2835},[2833,2834],{"id":53,"value":54},{"id":56,"value":57},[2836],{"type":30,"value":567},{"type":30,"value":2838}," (eCFR, current)",{"type":100,"children":2840},[2841],{"type":33,"children":2842},[2843,2849],{"url":2536,"meta":2844,"type":58,"children":2847},[2845,2846],{"id":53,"value":54},{"id":56,"value":57},[2848],{"type":30,"value":1656},{"type":30,"value":2838},{"type":100,"children":2851},[2852],{"type":33,"children":2853},[2854],{"url":2597,"meta":2855,"type":58,"children":2858},[2856,2857],{"id":53,"value":54},{"id":56,"value":57},[2859],{"type":30,"value":2860},"NC Emergency Management, Grants Management and Compliance FAQs",{"type":100,"children":2862},[2863],{"type":33,"children":2864},[2865],{"url":2727,"meta":2866,"type":58,"children":2869},[2867,2868],{"id":53,"value":54},{"id":56,"value":57},[2870],{"type":30,"value":2871},"CRS, Overview of Continuing Appropriations for FY2027 (P.L. 119-103), Section 157",{"type":33,"children":2873},[2874],{"type":30,"value":2875},"The May 29, 2026 proposed rule is \"Regulation for Federal Financial Assistance,\" Federal Register document 2026-10817, docket OMB-2026-0034.",[],[2878,2879,2881,2883,2886,2888,2890,2892,2894,2896,2899],{"__typename":619,"attributes":17,"content":2442,"tag":620},{"__typename":619,"attributes":2880,"content":17,"tag":624},{"property":623,"content":2442},{"__typename":619,"attributes":2882,"content":17,"tag":624},{"name":627,"content":2442},{"__typename":619,"attributes":2884,"content":17,"tag":624},{"property":630,"content":2885},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1793115435-single_audit_threshold.jpeg?auto=format&fit=max&w=1200",{"__typename":619,"attributes":2887,"content":17,"tag":624},{"property":634,"content":635},{"__typename":619,"attributes":2889,"content":17,"tag":624},{"property":638,"content":639},{"__typename":619,"attributes":2891,"content":17,"tag":624},{"name":642,"content":2885},{"__typename":619,"attributes":2893,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":2895,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":2897,"content":17,"tag":624},{"property":653,"content":2898},"2026-10-28T13:34:10Z",{"__typename":619,"attributes":2900,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":2902,"title":2903,"slug":2904,"excerpt":2905,"_firstPublishedAt":2906,"_updatedAt":2907,"_status":13,"image":2908,"content":2911,"_seoMetaTags":3207},"cp8543bRQByK7h9CM04EUw","Making Sense of Deferred Revenue in Nonprofit Finances","making-sense-of-deferred-revenue-in-nonprofit-finances","Why Deferred Revenue Exists: A Closer Look","2025-07-28T16:05:21-04:00","2026-05-27T10:10:25-04:00",{"__typename":15,"url":2909,"alt":2910},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753733103-hands.webp","Cupped hands releasing banknotes above baskets of harvested produce",{"__typename":19,"value":2912,"blocks":3206},{"schema":21,"document":2913},{"type":23,"children":2914},[2915,2926,2932,2945,2952,2959,2963,2993,3040,3072,3109,3119,3133,3138,3152,3157,3171,3176,3202],{"type":33,"children":2916},[2917,2919,2924],{"type":30,"value":2918},"If you’ve looked at your Balance Sheet lately and noticed an increase in your bank account when a grant was received—only to see a similar bump in a liability account called Deferred Revenue—you might be wondering, 'Why is this listed as a liability when we just received cash?'In nonprofit accounting, especially under the ",{"url":2920,"type":58,"children":2921},"\u002Fblog\u002Funderstanding-cash-vs-accrual-accounting-which-method-is-right",[2922],{"type":30,"value":2923},"accrual method",{"type":30,"value":2925},", deferred revenue helps distinguish between money received and money actually earned. It reflects not just what’s in the bank but what still needs to be delivered, especially for restricted funds.",{"type":33,"children":2927},[2928,2930],{"type":30,"value":2929},"\n",{"type":30,"marks":2931,"value":2905},[106],{"type":33,"children":2933},[2934,2936,2940,2942],{"type":30,"value":2935},"In ",{"url":2920,"type":58,"children":2937},[2938],{"type":30,"value":2939},"accrual accounting",{"type":30,"value":2941},", revenue is recorded when it’s earned, not necessarily when it’s received. If a grant is restricted to a specific purpose, it’s effectively a prepayment to provide a service, not revenue you’ve fully earned. Only as you deliver the service—like offering meals to seniors—does that revenue actually become yours in an accounting sense.\n",{"type":30,"marks":2943,"value":2944},[106],"With vs. Without Deferred Revenue",{"type":33,"children":2946},[2947,2949],{"type":30,"value":2948},"Imagine you receive a $200,000 grant in January, restricted to providing meals to seniors. You expect to spend $10,000 monthly on this service. Here’s what happens with and without a deferred revenue account.\n",{"type":30,"marks":2950,"value":2951},[106],"The Tempting (But Misleading) Approach",{"type":33,"children":2953},[2954,2956],{"type":30,"value":2955},"You might feel inclined to record it all at once. In January, you’d show: - Revenue: $200,000 - Expenses: $10,000 (e.g., meal program expenses) - Net Income: $190,000That looks amazing—but is it accurate?\n",{"type":30,"marks":2957,"value":2958},[106],"Why This Simple Approach is Problematic",{"type":33,"children":2960},[2961],{"type":30,"value":2962},"If you record the entire grant as revenue upfront, you’ll create a few key issues:",{"type":96,"style":241,"children":2964},[2965,2975,2984],{"type":100,"children":2966},[2967],{"type":33,"children":2968},[2969,2973],{"type":30,"marks":2970,"value":2972},[2971],"underline","Illusion of Profitability",{"type":30,"value":2974},": January would have an exagerated surplus, while subsequent months would show only expenses, making those months look less financially sound than they actually are.",{"type":100,"children":2976},[2977],{"type":33,"children":2978},[2979,2982],{"type":30,"marks":2980,"value":2981},[2971],"Misleading Liabilities",{"type":30,"value":2983},": Your financials wouldn’t reflect your obligation to deliver meals in exchange for the $200,000.",{"type":100,"children":2985},[2986],{"type":33,"children":2987},[2988,2991],{"type":30,"marks":2989,"value":2990},[2971],"Lack of Transparency",{"type":30,"value":2992},": Stakeholders won’t see how much of the grant still requires service delivery.",{"type":33,"children":2994},[2995,2998,3000,3003,3005,3009,3011,3014,3016,3019,3021,3024,3026,3029,3031,3034,3036,3038],{"type":30,"marks":2996,"value":2997},[106],"A More Accurate Approach: Deferred Revenue",{"type":30,"value":2999},"Instead, using deferred revenue provides a clearer picture. You would accomplish this by using two sets of account.\n",{"type":30,"marks":3001,"value":3002},[2971],"First Set",{"type":30,"value":3004},"The first set is used to track actual cash in and expenses. We'll call these accounts ",{"type":30,"marks":3006,"value":3008},[3007],"emphasis","Bank Account 1",{"type":30,"value":3010}," and ",{"type":30,"marks":3012,"value":3013},[3007],"Meal Program Expense",{"type":30,"value":3015},". To keep things simple, we are going to assume all expenses are paid for as soon as they are incurred and that we can put all expenses in one account. In reality, you would probably have more than one expense account, and you may be incurring expenses on credit that you pay for later.\n",{"type":30,"marks":3017,"value":3018},[2971],"Second Set",{"type":30,"value":3020},"We'll call the second set of accounts ",{"type":30,"marks":3022,"value":3023},[3007],"Deferred Revenue ",{"type":30,"value":3025},"and ",{"type":30,"marks":3027,"value":3028},[3007],"Grant Revenue",{"type":30,"value":3030},". ",{"type":30,"marks":3032,"value":3033},[3007],"Deferred Revenue",{"type":30,"value":3035}," tracks the amount of money you must spend on providing meals. ",{"type":30,"marks":3037,"value":3028},[3007],{"type":30,"value":3039}," tracks how much money you have earned by providing those services.Here’s the bookkeeping entries that would happen under this approach:",{"type":96,"style":241,"children":3041},[3042,3063],{"type":100,"children":3043},[3044],{"type":33,"children":3045},[3046,3049,3051,3053,3055,3057,3059,3061],{"type":30,"marks":3047,"value":3048},[2971],"Grant Received: ",{"type":30,"value":3050},"You record the $200,000 in ",{"type":30,"marks":3052,"value":3008},[3007],{"type":30,"value":3054}," when you receive the money, but because it’s for future service, you also increase ",{"type":30,"marks":3056,"value":3033},[3007],{"type":30,"value":3058}," by $200,000. The ",{"type":30,"marks":3060,"value":3023},[3007],{"type":30,"value":3062},"account is a liability account, so it reflects that you owe $200,000 is meal services.",{"type":100,"children":3064},[3065],{"type":33,"children":3066},[3067,3070],{"type":30,"marks":3068,"value":3069},[2971],"Monthly Service Provided",{"type":30,"value":3071},": Each month, as you serve meals:",{"type":96,"style":97,"children":3073},[3074,3084,3094,3100],{"type":100,"children":3075},[3076],{"type":33,"children":3077},[3078,3080,3082],{"type":30,"value":3079},"Decrease ",{"type":30,"marks":3081,"value":3033},[3007],{"type":30,"value":3083}," by $10,000, reflecting services delivered.",{"type":100,"children":3085},[3086],{"type":33,"children":3087},[3088,3090,3092],{"type":30,"value":3089},"Increase ",{"type":30,"marks":3091,"value":3028},[3007],{"type":30,"value":3093}," by $10,000, accurately tracking that you have earned $10,000 of the grant money by providing meal services.",{"type":100,"children":3095},[3096],{"type":33,"children":3097},[3098],{"type":30,"value":3099},"Increase Meal Program Expense by $10,000, showing the cost of providing meals.",{"type":100,"children":3101},[3102],{"type":33,"children":3103},[3104,3105,3107],{"type":30,"value":3079},{"type":30,"marks":3106,"value":3008},[3007],{"type":30,"value":3108}," to reflect the month’s cash outflow.",{"type":33,"children":3110},[3111,3113,3116],{"type":30,"value":3112},"Using deferred revenue gives you a more balanced monthly snapshot, showing stakeholders that while you have cash on hand, it’s meant for future services.\n",{"type":30,"marks":3114,"value":3115},[106],"Why This Helps Leadership",{"type":30,"marks":3117,"value":3118},[2971],"Make Informed Decisions",{"type":96,"style":97,"children":3120},[3121,3127],{"type":100,"children":3122},[3123],{"type":33,"children":3124},[3125],{"type":30,"value":3126},"You’ll know exactly how much service you still need to provide for the funds received.",{"type":100,"children":3128},[3129],{"type":33,"children":3130},[3131],{"type":30,"value":3132},"You can better plan and avoid misinterpretations based on the bank balance alone.",{"type":33,"children":3134},[3135],{"type":30,"marks":3136,"value":3137},[2971],"Improve Transparency",{"type":96,"style":97,"children":3139},[3140,3146],{"type":100,"children":3141},[3142],{"type":33,"children":3143},[3144],{"type":30,"value":3145},"Donors and board members gain clarity on how funds are allocated and used over time.",{"type":100,"children":3147},[3148],{"type":33,"children":3149},[3150],{"type":30,"value":3151},"Staff can better understand why available cash may still have limitations tied to grant obligations.",{"type":33,"children":3153},[3154],{"type":30,"marks":3155,"value":3156},[2971],"Strengthen Grant Management",{"type":96,"style":97,"children":3158},[3159,3165],{"type":100,"children":3160},[3161],{"type":33,"children":3162},[3163],{"type":30,"value":3164},"Deferred revenue helps track grant progress, making renewals easier with clear reporting.",{"type":100,"children":3166},[3167],{"type":33,"children":3168},[3169],{"type":30,"value":3170},"It provides a clear picture for when new funding may be necessary to meet obligations.",{"type":33,"children":3172},[3173],{"type":30,"marks":3174,"value":3175},[106],"Key Takeaways",{"type":96,"style":97,"children":3177},[3178,3184,3190,3196],{"type":100,"children":3179},[3180],{"type":33,"children":3181},[3182],{"type":30,"value":3183},"Deferred revenue isn’t just an accounting construct—it’s a powerful tool for understanding your nonprofit’s actual financial position.",{"type":100,"children":3185},[3186],{"type":33,"children":3187},[3188],{"type":30,"value":3189},"A full bank balance can be misleading, as it may conceal the fact that those funds are already allocated for specific services and cannot be used for other purposes.",{"type":100,"children":3191},[3192],{"type":33,"children":3193},[3194],{"type":30,"value":3195},"Proper revenue recognition helps match income with services delivered, promoting accurate monthly reporting.",{"type":100,"children":3197},[3198],{"type":33,"children":3199},[3200],{"type":30,"value":3201},"Clear deferred revenue records allow you to make better financial and strategic decisions.",{"type":33,"children":3203},[3204],{"type":30,"value":3205},"Properly managing deferred revenue enhances financial clarity for everyone involved in your nonprofit, empowering you to make impactful, mission-driven decisions with confidence.",[],[3208,3209,3211,3213,3216,3218,3221,3224,3226,3229,3231,3233,3236],{"__typename":619,"attributes":17,"content":2903,"tag":620},{"__typename":619,"attributes":3210,"content":17,"tag":624},{"property":623,"content":2903},{"__typename":619,"attributes":3212,"content":17,"tag":624},{"name":627,"content":2903},{"__typename":619,"attributes":3214,"content":17,"tag":624},{"property":630,"content":3215},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753733103-hands.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":3217,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":3219,"content":17,"tag":624},{"property":638,"content":3220},"685",{"__typename":619,"attributes":3222,"content":17,"tag":624},{"property":3223,"content":2910},"og:image:alt",{"__typename":619,"attributes":3225,"content":17,"tag":624},{"name":642,"content":3215},{"__typename":619,"attributes":3227,"content":17,"tag":624},{"name":3228,"content":2910},"twitter:image:alt",{"__typename":619,"attributes":3230,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":3232,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":3234,"content":17,"tag":624},{"property":653,"content":3235},"2026-05-27T14:10:25Z",{"__typename":619,"attributes":3237,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":3239,"title":3240,"slug":3241,"excerpt":3242,"_firstPublishedAt":3243,"_updatedAt":3244,"_status":13,"image":3245,"content":3248,"_seoMetaTags":3377},"YbXoRAAgRTSiCAKMhu5VMQ","Understanding Cash vs. Accrual Accounting: Which Method is Right ","understanding-cash-vs-accrual-accounting-which-method-is-right","When it comes to managing the finances of a nonprofit organization, choosing the right accounting method is important.","2025-07-28T16:02:35-04:00","2026-05-27T10:13:59-04:00",{"__typename":15,"url":3246,"alt":3247},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732915-cva.webp","A person kneeling on a wooden walkway writing in a ledger before a traditional garden house",{"__typename":19,"value":3249,"blocks":3376},{"schema":21,"document":3250},{"type":23,"children":3251},[3252,3256,3261,3276,3281,3290,3322,3327,3334,3360,3364,3368,3372],{"type":33,"children":3253},[3254],{"type":30,"value":3255},"When it comes to managing the finances of a nonprofit organization, choosing the right accounting method is important. Two of the most common approaches are cash accounting and accrual accounting. Each has its unique characteristics, benefits, and drawbacks. In this post, I’ll break down the differences between the two, and go over factors to consider when deciding which approach is best for your organization.\n",{"type":26,"level":3257,"children":3258},4,[3259],{"type":30,"value":3260},"An Example of Cash vs Accrual Accounting",{"type":33,"children":3262},[3263,3265,3269,3271,3274],{"type":30,"value":3264},"Imagine your nonprofit summer camp is promised a $5,000 donation in May to help fund supplies, but the check doesn’t actually arrive until July. ",{"url":2920,"type":58,"children":3266},[3267],{"type":30,"value":3268},"Cash accounting",{"type":30,"value":3270}," only recognizes the donation in July—when the money arrives in your bank account—so your financial records don’t show those funds in May. In ",{"url":2920,"type":58,"children":3272},[3273],{"type":30,"value":2939},{"type":30,"value":3275},", the $5,000 is recorded as an accounts receivable in May, right when it’s pledged, giving you the ability to report on the money that you expect will be coming in.\nIn other words, with cash accounting, you can only report on the flow of cash in and out. However, with accrual accounting, you can report on money you expect to come in and money you expect to go out, in addition to reporting on the actual flow of cash.\n",{"type":26,"level":3257,"children":3277},[3278],{"type":30,"marks":3279,"value":3280},[106],"Cash Accounting",{"type":33,"children":3282},[3283,3285,3288],{"type":30,"value":3284},"The cash method is easy to understand and implement because it's familiar—it’s how most of us think about household finances. It's also less administratively demanding, as there are fewer transactions to record.\nHowever, unless you're a very small organization with unusually simple financials, cash accounting won't provide the full, accurate picture of your financial situation. Your financials are the foundation for much of your decision-making, so it's important that they offer a complete view.\n",{"type":30,"marks":3286,"value":3287},[106],"Cash accounting is good when",{"type":30,"value":3289},":",{"type":96,"style":97,"children":3291},[3292,3298,3304,3310,3316],{"type":100,"children":3293},[3294],{"type":33,"children":3295},[3296],{"type":30,"value":3297},"You have few or no paid staff",{"type":100,"children":3299},[3300],{"type":33,"children":3301},[3302],{"type":30,"value":3303},"You have only one program area",{"type":100,"children":3305},[3306],{"type":33,"children":3307},[3308],{"type":30,"value":3309},"You do not accept restricted funds",{"type":100,"children":3311},[3312],{"type":33,"children":3313},[3314],{"type":30,"value":3315},"You have no plans for expansion",{"type":100,"children":3317},[3318],{"type":33,"children":3319},[3320],{"type":30,"value":3321},"Your have a small operating budget",{"type":26,"level":3257,"children":3323},[3324],{"type":30,"marks":3325,"value":3326},[106],"What is Accrual Accounting?",{"type":33,"children":3328},[3329,3331],{"type":30,"value":3330},"Accrual accounting, on the other hand, recognizes revenue when it is earned and expenses when they are incurred, regardless of when cash is actually exchanged. This method provides a more accurate picture of a nonprofit’s financial health, as it captures all financial activities. With a more accurate reflection of income and expenses, organizations can plan budgets and allocate resources more effectively. Many larger nonprofits and those that receive government grants are required to use accrual accounting to comply with accounting standards and regulations.\n",{"type":30,"marks":3332,"value":3333},[106],"Accrual accounting is good when:",{"type":96,"style":97,"children":3335},[3336,3342,3348,3354],{"type":100,"children":3337},[3338],{"type":33,"children":3339},[3340],{"type":30,"value":3341},"You receive restricted funds",{"type":100,"children":3343},[3344],{"type":33,"children":3345},[3346],{"type":30,"value":3347},"You have multiple programs",{"type":100,"children":3349},[3350],{"type":33,"children":3351},[3352],{"type":30,"value":3353},"You a required to have auditable financials",{"type":100,"children":3355},[3356],{"type":33,"children":3357},[3358],{"type":30,"value":3359},"Your operating budget is greater than 1,000,000",{"type":26,"level":3257,"children":3361},[3362],{"type":30,"value":3363},"About Switching Methods",{"type":33,"children":3365},[3366],{"type":30,"value":3367},"When your organization files Form 990, it indicates which method was used. If you decide to change methods, you may need to report the change to the federal government, state government and\u002For your grantors. Consult an accountant before attempting a change.\n",{"type":26,"level":3257,"children":3369},[3370],{"type":30,"value":3371},"Conclusion",{"type":33,"children":3373},[3374],{"type":30,"value":3375},"Choosing between cash and accrual accounting depends largely on the size, complexity, and needs of your nonprofit organization. Cash accounting may serve smaller entities with straightforward financials, while accrual accounting give the most complete picture of your financial situation. Regardless of the method you choose, a solid accounting foundation is essential for sustaining your mission and effectively serving your community.",[],[3378,3379,3381,3383,3386,3388,3390,3392,3394,3396,3398,3400,3403],{"__typename":619,"attributes":17,"content":3240,"tag":620},{"__typename":619,"attributes":3380,"content":17,"tag":624},{"property":623,"content":3240},{"__typename":619,"attributes":3382,"content":17,"tag":624},{"name":627,"content":3240},{"__typename":619,"attributes":3384,"content":17,"tag":624},{"property":630,"content":3385},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732915-cva.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":3387,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":3389,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":3391,"content":17,"tag":624},{"property":3223,"content":3247},{"__typename":619,"attributes":3393,"content":17,"tag":624},{"name":642,"content":3385},{"__typename":619,"attributes":3395,"content":17,"tag":624},{"name":3228,"content":3247},{"__typename":619,"attributes":3397,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":3399,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":3401,"content":17,"tag":624},{"property":653,"content":3402},"2026-05-27T14:13:59Z",{"__typename":619,"attributes":3404,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":3406,"title":3407,"slug":3408,"excerpt":3409,"_firstPublishedAt":3410,"_updatedAt":3411,"_status":13,"image":3412,"content":3415,"_seoMetaTags":3650},"HKKhJIkQTnuZkGI5yBNYwQ","How to Record Monetary Donations in QuickBooks Online","how-to-record-monetary-donations-in-quickbooks-online","This guide will walk you through how to record a cash or check donation, step by step.","2025-07-28T16:00:17-04:00","2026-05-27T10:15:42-04:00",{"__typename":15,"url":3413,"alt":3414},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732759-monetarydonations.webp","A woman writing in an open ledger at a desk in a garden setting",{"__typename":19,"value":3416,"blocks":3645},{"schema":21,"document":3417},{"type":23,"children":3418},[3419,3426,3430,3433,3437,3456,3460,3587,3616],{"type":33,"children":3420},[3421,3423],{"type":30,"value":3422},"QuickBooks is one of the most popular accounting tools for small and medium-sized nonprofits. Since it's tailored to for-profit businesses, recording donations may not be intuitive when you're just getting started. This guide will walk you through how to record a cash or check donation, step by step.\n",{"type":30,"marks":3424,"value":3425},[106],"Terminology Translations",{"type":33,"children":3427},[3428],{"type":30,"value":3429},"QuickBooks often uses for-profit terms that aren't intuitive for nonprofit organizations. Here’s a list that translates QuickBooks receipt terminology into its nonprofit equivalent.",{"item":3431,"type":3432},"D61NqJdHRW-OoTamiAH5iw","block",{"type":26,"level":162,"children":3434},[3435],{"type":30,"value":3436},"Recording Cash or Cheque Donations",{"type":33,"children":3438},[3439,3441,3444,3446,3455],{"type":30,"value":3440},"The following explains how to record a donation made by cash or checks.\n",{"type":30,"marks":3442,"value":3443},[106],"Create a Sales Receipt",{"type":30,"value":3445},"Why use a sales receipt? There are two main reasons. First, a sales receipt is an easy way to record and categorize incoming funds for an organization.. Second, you'll likely want to provide your donor with a receipt for their donation, and QuickBooks includes this functionality in the sales receipt feature. I also have a post that shows how to ",{"url":3447,"meta":3448,"type":58,"children":3452},"\u002Fblog\u002Fturn-quickbooks-sales-receipts-into-donation-receipts\u002F",[3449,3451],{"id":53,"value":3450},"noopener noreferrer",{"id":56,"value":57},[3453],{"type":30,"value":3454},"customize your sales receipt to serve as a donation receipt.",{"type":30,"value":2929},{"type":26,"level":3257,"children":3457},[3458],{"type":30,"value":3459},"Record a Donation",{"type":96,"style":241,"children":3461},[3462,3477,3497,3517,3533,3566,3577],{"type":100,"children":3463},[3464],{"type":33,"children":3465},[3466,3468,3471,3473,3476],{"type":30,"value":3467},"To record a donation, click the ",{"type":30,"marks":3469,"value":3470},[106],"+ New",{"type":30,"value":3472}," button and select ",{"type":30,"marks":3474,"value":3475},[106],"Sales Receipt",{"type":30,"value":119},{"type":100,"children":3478},[3479],{"type":33,"children":3480},[3481,3483,3486,3488,3491,3493,3496],{"type":30,"value":3482},"In the ",{"type":30,"marks":3484,"value":3485},[106],"Customer",{"type":30,"value":3487}," field, start typing the donor's name. If the donor has contributed before, you can select their name from the list. If it's a new donor, click ",{"type":30,"marks":3489,"value":3490},[106],"+ Add New",{"type":30,"value":3492}," to enter their information, then click ",{"type":30,"marks":3494,"value":3495},[106],"Save",{"type":30,"value":119},{"type":100,"children":3498},[3499],{"type":33,"children":3500},[3501,3503,3506,3508,3511,3513,3516],{"type":30,"value":3502},"Next, choose the ",{"type":30,"marks":3504,"value":3505},[106],"Payment Type",{"type":30,"value":3507},": ",{"type":30,"marks":3509,"value":3510},[106],"Cash",{"type":30,"value":3512}," or ",{"type":30,"marks":3514,"value":3515},[106],"Check",{"type":30,"value":119},{"type":100,"children":3518},[3519],{"type":33,"children":3520},[3521,3523,3526,3528,3531],{"type":30,"value":3522},"For ",{"type":30,"marks":3524,"value":3525},[106],"Deposited to",{"type":30,"value":3527},", you will probably want ",{"type":30,"marks":3529,"value":3530},[106],"Undeposited Funds",{"type":30,"value":3532},". This account temporarily holds cash and checks until they are deposited into your bank. If you are unsure which account to use, check with your bookkeeper or accountant.",{"type":100,"children":3534},[3535],{"type":33,"children":3536},[3537,3539,3542,3544,3547,3548,3551,3552,3555,3557,3564],{"type":30,"value":3538},"Under ",{"type":30,"marks":3540,"value":3541},[106],"Product\u002FService",{"type":30,"value":3543},", either select an existing product or create a new one. In QuickBooks, create a new product for donations when you need to track a distinct type of donation separately from others, especially if it needs to be reported on uniquely. For example, if you receive general donations, restricted grants, and in-kind contributions, you may want to set up separate products for each to track them accurately and align with fund accounting principles. Each product can be mapped to a specific income account that reflects the nature of the funding, such as ",{"type":30,"marks":3545,"value":3546},[3007],"Restricted Donations",{"type":30,"value":3512},{"type":30,"marks":3549,"value":3550},[3007],"General Contributions",{"type":30,"value":3030},{"type":30,"marks":3553,"value":3554},[106],"To avoid clutter, create new products only when there’s a specific need to differentiate income streams",{"type":30,"value":3556},"—typically, one product per income account or per type of donation category is sufficient. Having well-defined products helps streamline donation tracking and reporting. See ",{"url":3558,"meta":3559,"type":58,"children":3561},"\u002Fblog\u002Fdonations-are-products-in-quickbooks-how-to-set-them-up",[3560],{"id":53,"value":3450},[3562],{"type":30,"value":3563},"Donations are Products in QuickBooks: How To Set Them Up",{"type":30,"value":3565},", for further details.",{"type":100,"children":3567},[3568],{"type":33,"children":3569},[3570,3572,3575],{"type":30,"value":3571},"Enter the donation ",{"type":30,"marks":3573,"value":3574},[106],"amount",{"type":30,"value":3576}," for the transaction.",{"type":100,"children":3578},[3579],{"type":33,"children":3580},[3581,3583,3585],{"type":30,"value":3582},"It's time to ",{"type":30,"marks":3584,"value":3495},[106],{"type":30,"value":3586}," the receipt. You have three options:",{"type":96,"style":97,"children":3588},[3589,3598,3607],{"type":100,"children":3590},[3591],{"type":33,"children":3592},[3593,3596],{"type":30,"marks":3594,"value":3595},[106],"Save and Send",{"type":30,"value":3597}," will walk you through emailing the receipt to the donor.",{"type":100,"children":3599},[3600],{"type":33,"children":3601},[3602,3605],{"type":30,"marks":3603,"value":3604},[106],"Save and New",{"type":30,"value":3606}," will save the receipt and open a new one, allowing you to input the next donation.",{"type":100,"children":3608},[3609],{"type":33,"children":3610},[3611,3614],{"type":30,"marks":3612,"value":3613},[106],"Save and Close",{"type":30,"value":3615}," saves the receipt and closes the form.",{"type":33,"children":3617},[3618,3620,3623,3625,3628,3630,3633,3635,3643],{"type":30,"value":3619},"That’s it! You’ve successfully recorded the donation.\n",{"type":30,"marks":3621,"value":3622},[106],"TLDR;",{"type":30,"value":3624},"QuickBooks automatically performs some actions when you create a sales receipt. To see what happens behind the scenes, click the ",{"type":30,"marks":3626,"value":3627},[106],"More",{"type":30,"value":3629}," link at the bottom of your sales receipt and select ",{"type":30,"marks":3631,"value":3632},[106],"Transaction Journal",{"type":30,"value":3634},". This will show the accounting details of what QuickBooks did. Specifically, you'll notice that Undeposited Funds is debited (increased), and Unrestricted Contributions is credited (increased).It may seem odd that a debit increases an account, but you won't need to understand this if your job is just entering donations. However, if you are curious, it's because QuickBooks uses double-entry bookkeeping, where debits and credits don’t always align with everyday expectations. Here’s an explanation of ",{"url":3636,"meta":3637,"type":58,"children":3640},"https:\u002F\u002F501cbookkeeping.com\u002Fblog\u002Ff\u002Fhow-to-overcome-debit-and-credit-confusion-with-dealer",[3638,3639],{"id":53,"value":3450},{"id":56,"value":57},[3641],{"type":30,"value":3642},"how to overcome debit and credit confusion",{"type":30,"value":3644},".\nRecording donations in QuickBooks can seem complex at first, but with the steps outlined here, it becomes a simple process. By following these instructions, you'll easily track cash or check donations, provide donors with receipts, and maintain accurate records for your nonprofit!",[3646],{"__typename":3647,"id":3431,"storyImage":3648},"AssetRecord",{"__typename":15,"url":3649,"alt":17,"title":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732625-terminology.webp",[3651,3652,3654,3656,3659,3661,3663,3665,3667,3669,3671,3673,3676],{"__typename":619,"attributes":17,"content":3407,"tag":620},{"__typename":619,"attributes":3653,"content":17,"tag":624},{"property":623,"content":3407},{"__typename":619,"attributes":3655,"content":17,"tag":624},{"name":627,"content":3407},{"__typename":619,"attributes":3657,"content":17,"tag":624},{"property":630,"content":3658},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732759-monetarydonations.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":3660,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":3662,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":3664,"content":17,"tag":624},{"property":3223,"content":3414},{"__typename":619,"attributes":3666,"content":17,"tag":624},{"name":642,"content":3658},{"__typename":619,"attributes":3668,"content":17,"tag":624},{"name":3228,"content":3414},{"__typename":619,"attributes":3670,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":3672,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":3674,"content":17,"tag":624},{"property":653,"content":3675},"2026-05-27T14:15:42Z",{"__typename":619,"attributes":3677,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":3679,"title":3680,"slug":3681,"excerpt":3682,"_firstPublishedAt":3683,"_updatedAt":3684,"_status":13,"image":3685,"content":3688,"_seoMetaTags":4195},"R1mzAM-mQV25aj0jPkxw5A","How to Record In-kind Donations in QuickBooks Online","how-to-record-in-kind-donations-in-quickbooks-online","In-kind donations are non-cash gifts, such as donated equipment, professional services, or supplies. In-kind donations can be relatively easy to book. ","2025-07-28T15:57:14-04:00","2026-05-27T10:24:28-04:00",{"__typename":15,"url":3686,"alt":3687},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732561-inkind.webp","A person sitting beneath a blossoming tree writing in a notebook",{"__typename":19,"value":3689,"blocks":4192},{"schema":21,"document":3690},{"type":23,"children":3691},[3692,3696,3710,3714,3722,3724,3736,3745,3749,3753,3773,3778,3869,3874,3887,4028,4051,4056,4088,4188],{"type":26,"level":162,"children":3693},[3694],{"type":30,"value":3695},"Generating a Quickbooks Donation Receipt for In-Kind Donations",{"type":33,"children":3697},[3698,3700,3703,3705,3708],{"type":30,"value":3699},"In-kind donations are non-cash gifts, such as donated equipment, professional services, or supplies. In-kind donations can be relatively easy to book.\nLet's say we are accepting a fixed asset, like a couch. To book this we would increase the fixed asset account, let's call it ",{"type":30,"marks":3701,"value":3702},[106],"Furniture",{"type":30,"value":3704},", and increase an income account, let's call it ",{"type":30,"marks":3706,"value":3707},[106],"In-kind Contributions",{"type":30,"value":3709},". If we put this in terms of debits and credits, we would debit the Furniture account and credit the In-kind Donation account.",{"type":33,"children":3711},[3712],{"type":30,"value":3713},"\nYour donor will likely want a receipt for the donation. QuickBooks is limited in this regard. You would use the sales receipt functionality to generate the donation receipt, but it won't let you pick a fixed asset account when generating the receipt. You have the option to create a donation receipt outside of QuickBooks, but if your want to use QuickBooks, you will need a workaround. This post will walk you through it step by step.",{"type":33,"children":3715},[3716,3718,3721],{"type":30,"value":3717},"\nBefore we begin, it’s helpful to first familiarize ourselves with a couple of key concepts:\n",{"type":30,"marks":3719,"value":3720},[106],"1. Terminology",{"type":30,"value":3429},{"item":3723,"type":3432},"CJoeJqB8SgmDNVd1N3qEXA",{"type":33,"children":3725},[3726,3729,3731,3734],{"type":30,"marks":3727,"value":3728},[106],"2. 'Deposit to' Account",{"type":30,"value":3730},"To record your in-kind donation, you'll want to use a Sales Receipt. Why? This will generate a receipt to provide to your donor. The challenge with using a sales receipt for in-kind donations is that you’ll need to select a ",{"type":30,"marks":3732,"value":3733},[106],"Deposit To",{"type":30,"value":3735}," account, but the options QuickBooks presents won't include the appropriate account type. So, we need a workaround.",{"type":33,"children":3737},[3738,3740,3743],{"type":30,"value":3739},"\nThe solution is to create an account called ",{"type":30,"marks":3741,"value":3742},[3007],"In-kind Clearing Account",{"type":30,"value":3744}," and set it up as an account type that will appear in the dropdown list. Once we've created the sales receipt, we'll then make a journal entry to move the transaction to the correct account. It might be more efficient for a volunteer or staff member to create the sales receipt, while the bookkeeper handles the journal entry.\n",{"type":26,"level":3257,"children":3746},[3747],{"type":30,"value":3748},"Let's get Started",{"type":33,"children":3750},[3751],{"type":30,"value":3752},"To record our in-kind donations, we are going to:",{"type":96,"style":241,"children":3754},[3755,3761,3767],{"type":100,"children":3756},[3757],{"type":33,"children":3758},[3759],{"type":30,"value":3760},"Create a Clearing Account",{"type":100,"children":3762},[3763],{"type":33,"children":3764},[3765],{"type":30,"value":3766},"Create a Sales Receipt, and",{"type":100,"children":3768},[3769],{"type":33,"children":3770},[3771],{"type":30,"value":3772},"Adjust the Value to the Correct Account",{"type":26,"level":3257,"children":3774},[3775],{"type":30,"marks":3776,"value":3777},[106],"Creating the Clearing Account",{"type":96,"style":241,"children":3779},[3780,3795,3806,3820,3846,3860],{"type":100,"children":3781},[3782],{"type":33,"children":3783},[3784,3786,3789,3791,3794],{"type":30,"value":3785},"From the menu, click ",{"type":30,"marks":3787,"value":3788},[106],"Transactions",{"type":30,"value":3790},", then select ",{"type":30,"marks":3792,"value":3793},[106],"Chart of Accounts",{"type":30,"value":119},{"type":100,"children":3796},[3797],{"type":33,"children":3798},[3799,3801,3804],{"type":30,"value":3800},"Click the ",{"type":30,"marks":3802,"value":3803},[106],"New",{"type":30,"value":3805}," button",{"type":100,"children":3807},[3808],{"type":33,"children":3809},[3810,3812,3815,3817],{"type":30,"value":3811},"Enter ",{"type":30,"marks":3813,"value":3814},[3007],"In-kind Clearing",{"type":30,"value":3816}," account for the ",{"type":30,"marks":3818,"value":3819},[106],"Account Name",{"type":100,"children":3821},[3822],{"type":33,"children":3823},[3824,3826,3829,3831,3834,3836,3839,3841,3844],{"type":30,"value":3825},"Select ",{"type":30,"marks":3827,"value":3828},[106],"Other Current Assets ",{"type":30,"value":3830},"for the ",{"type":30,"marks":3832,"value":3833},[3007],"Account Type",{"type":30,"value":3835},". This is how to make it show up as one of the options for ",{"type":30,"marks":3837,"value":3838},[106],"Deposit to",{"type":30,"value":3840},". Only ",{"type":30,"marks":3842,"value":3843},[3007],"Other Current Assets",{"type":30,"value":3845}," are available in the list.",{"type":100,"children":3847},[3848],{"type":33,"children":3849},[3850,3851,3853,3855,3858],{"type":30,"value":3825},{"type":30,"marks":3852,"value":3843},[106],{"type":30,"value":3854}," as the ",{"type":30,"marks":3856,"value":3857},[106],"Detail Type.",{"type":30,"value":3859}," This doesn’t matter much, but the default value for this field can be confusing.",{"type":100,"children":3861},[3862],{"type":33,"children":3863},[3864,3866,3868],{"type":30,"value":3865},"Click ",{"type":30,"marks":3867,"value":3495},[106],{"type":30,"value":119},{"type":26,"level":3257,"children":3870},[3871],{"type":30,"marks":3872,"value":3873},[106],"Creating the Sales Receipt",{"type":33,"children":3875},[3876,3878,3885],{"type":30,"value":3877},"The default for-profit language in the Sales Receipt may not suit your needs, so you might want to ",{"url":3447,"meta":3879,"type":58,"children":3882},[3880,3881],{"id":53,"value":3450},{"id":56,"value":57},[3883],{"type":30,"value":3884},"customize",{"type":30,"value":3886}," it before proceeding with these instructions.",{"type":96,"style":241,"children":3888},[3889,3925,3937,3963,3974,3987,4012,4020],{"type":100,"children":3890},[3891],{"type":33,"children":3892},[3893,3895,3903,3905,3913,3915,3923],{"type":30,"value":3894},"Establish the value of the donation. Unlike cash donations, the value of an in-kind donation is not known, so you will need to determine its ",{"url":3896,"meta":3897,"type":58,"children":3900},"https:\u002F\u002Fen.wikipedia.org\u002Fwiki\u002FFair_market_value",[3898,3899],{"id":53,"value":3450},{"id":56,"value":57},[3901],{"type":30,"value":3902},"Fair Market Valu",{"type":30,"value":3904},"e. The IRS requires that the donor establish this value for tax purposes, but if they ask for guidance, you can suggest ",{"url":3906,"meta":3907,"type":58,"children":3910},"https:\u002F\u002Fwww.irs.gov\u002Fforms-pubs\u002Fabout-publication-561",[3908,3909],{"id":53,"value":3450},{"id":56,"value":57},[3911],{"type":30,"value":3912},"IRS Publication 561",{"type":30,"value":3914}," or the ",{"url":3916,"meta":3917,"type":58,"children":3920},"https:\u002F\u002Fsatruck.org\u002FHome\u002FDonationValueGuide",[3918,3919],{"id":53,"value":3450},{"id":56,"value":57},[3921],{"type":30,"value":3922},"Salvation Army’s published evaluations",{"type":30,"value":3924},". Ultimately, however, you cannot establish the value for tax purposes. If the value is for internal reporting only, you can use an estimate. Consult with your accountant for guidance on establishing Fair Market Value.",{"type":100,"children":3926},[3927],{"type":33,"children":3928},[3929,3931,3933,3934,3936],{"type":30,"value":3930},"Once you have the Fair Market Value, go to the ",{"type":30,"marks":3932,"value":3470},[106],{"type":30,"value":3472},{"type":30,"marks":3935,"value":3475},[106],{"type":30,"value":119},{"type":100,"children":3938},[3939],{"type":33,"children":3940},[3941,3943,3945,3947,3949,3951,3954,3956,3958,3960,3962],{"type":30,"value":3942},"Enter the ",{"type":30,"marks":3944,"value":3485},[106],{"type":30,"value":3946}," name. QuickBooks uses the term ",{"type":30,"marks":3948,"value":3485},[3007],{"type":30,"value":3950}," instead of ",{"type":30,"marks":3952,"value":3953},[3007],"Donor",{"type":30,"value":3955},", so type the donor's name into the customer field. If the donor has donated before, their name will appear in the search results. If it’s a new donor, click ",{"type":30,"marks":3957,"value":3490},[106],{"type":30,"value":3959},", enter their details, and click ",{"type":30,"marks":3961,"value":3495},[106],{"type":30,"value":119},{"type":100,"children":3964},[3965],{"type":33,"children":3966},[3967,3968,3970,3971,3973],{"type":30,"value":3825},{"type":30,"marks":3969,"value":3510},[106],{"type":30,"value":3854},{"type":30,"marks":3972,"value":3505},[106],{"type":30,"value":119},{"type":100,"children":3975},[3976],{"type":33,"children":3977},[3978,3979,3981,3983,3985],{"type":30,"value":3522},{"type":30,"marks":3980,"value":3525},[106],{"type":30,"value":3982},", choose the ",{"type":30,"marks":3984,"value":3814},[106],{"type":30,"value":3986}," account (the account you set up earlier).",{"type":100,"children":3988},[3989],{"type":33,"children":3990},[3991,3992,3994,3995,3997,3998,4000,4001,4003,4004,4011],{"type":30,"value":3538},{"type":30,"marks":3993,"value":3541},[106],{"type":30,"value":3543},{"type":30,"marks":3996,"value":3546},[3007],{"type":30,"value":3512},{"type":30,"marks":3999,"value":3550},[3007],{"type":30,"value":3030},{"type":30,"marks":4002,"value":3554},[106],{"type":30,"value":3556},{"url":4005,"meta":4006,"type":58,"children":4009},"\u002Fblog\u002Fdonations-are-products-in-quickbooks-how-to-set-them-up\u002F",[4007,4008],{"id":53,"value":3450},{"id":56,"value":57},[4010],{"type":30,"value":3563},{"type":30,"value":3565},{"type":100,"children":4013},[4014],{"type":33,"children":4015},[4016,4017,4019],{"type":30,"value":3571},{"type":30,"marks":4018,"value":3574},[106],{"type":30,"value":3576},{"type":100,"children":4021},[4022],{"type":33,"children":4023},[4024,4025,4027],{"type":30,"value":3582},{"type":30,"marks":4026,"value":3495},[106],{"type":30,"value":3586},{"type":96,"style":97,"children":4029},[4030,4037,4044],{"type":100,"children":4031},[4032],{"type":33,"children":4033},[4034,4036],{"type":30,"marks":4035,"value":3595},[106],{"type":30,"value":3597},{"type":100,"children":4038},[4039],{"type":33,"children":4040},[4041,4043],{"type":30,"marks":4042,"value":3604},[106],{"type":30,"value":3606},{"type":100,"children":4045},[4046],{"type":33,"children":4047},[4048,4050],{"type":30,"marks":4049,"value":3613},[106],{"type":30,"value":3615},{"type":26,"level":3257,"children":4052},[4053],{"type":30,"marks":4054,"value":4055},[106],"Adjusting the Value to the Correct Account",{"type":33,"children":4057},[4058,4060,4062,4064,4066,4068,4070,4071,4073,4075,4077,4079,4082,4084,4086],{"type":30,"value":4059},"Remember how only accounts categorized as ",{"type":30,"marks":4061,"value":3843},[106],{"type":30,"value":4063}," will appear in the ",{"type":30,"marks":4065,"value":3733},[106],{"type":30,"value":4067}," list when you create a sales receipt? In-kind donations come in several forms, and many of these may not be classified as current assets. This is why it’s necessary to move the donation to the correct account now. You could have skipped creating the sales receipt and used a journal entry to record the donation directly to the correct account, but then you wouldn’t have a donation receipt to provide to the donor.\nIf you’re unsure which account to use for your in-kind donation, consult your bookkeeper or accountant.\nLet’s say we’re accepting an in-kind donation of a couch — a fixed asset. We’ll assume the fair market value of the couch is $1,000. After creating a sales receipt and selecting ",{"type":30,"marks":4069,"value":3814},[3007],{"type":30,"value":3854},{"type":30,"marks":4072,"value":3733},[106],{"type":30,"value":4074}," account (which is an Other Current Asset account), we now need to move the $1,000 from the ",{"type":30,"marks":4076,"value":3814},[3007],{"type":30,"value":4078}," account to a ",{"type":30,"marks":4080,"value":4081},[3007],"Fixed Asset",{"type":30,"value":4083}," account called ",{"type":30,"marks":4085,"value":3702},[106],{"type":30,"value":4087},". Here are the steps to transfer the funds:",{"type":96,"style":241,"children":4089},[4090,4099,4113,4122,4145,4160,4171,4180],{"type":100,"children":4091},[4092],{"type":33,"children":4093},[4094,4095,4097],{"type":30,"value":3800},{"type":30,"marks":4096,"value":3470},[106],{"type":30,"value":4098}," button.",{"type":100,"children":4100},[4101],{"type":33,"children":4102},[4103,4105,4108,4109,4112],{"type":30,"value":4104},"Select",{"type":30,"marks":4106,"value":4107},[106]," Journal",{"type":30,"value":1231},{"type":30,"marks":4110,"value":4111},[106],"Entry",{"type":30,"value":119},{"type":100,"children":4114},[4115],{"type":33,"children":4116},[4117,4119],{"type":30,"value":4118},"Select the correct ",{"type":30,"marks":4120,"value":4121},[106],"Date",{"type":100,"children":4123},[4124],{"type":33,"children":4125},[4126,4128,4131,4133,4136,4138,4140,4142],{"type":30,"value":4127},"On the first line, set the following values. ",{"type":30,"marks":4129,"value":4130},[106],"Account",{"type":30,"value":4132},": In-kind Clearing account. ",{"type":30,"marks":4134,"value":4135},[106],"Credit",{"type":30,"value":4137},": $1,000. This will decrease the ",{"type":30,"marks":4139,"value":3814},[3007],{"type":30,"value":4141}," account to $0.00. If it's confusing to think that crediting an account decreases its value, you are not alone. It's not intuitive. Check out ",{"type":30,"marks":4143,"value":4144},[2971],"How to Overcome Debit and Credit Confusion.",{"type":100,"children":4146},[4147],{"type":33,"children":4148},[4149,4151,4153,4155,4158],{"type":30,"value":4150},"One the second line, set the following values. ",{"type":30,"marks":4152,"value":4130},[106],{"type":30,"value":4154},": Furniture. ",{"type":30,"marks":4156,"value":4157},[106],"Debit",{"type":30,"value":4159},": $1,000. This will increase the value in the Furniture account by $1,000.",{"type":100,"children":4161},[4162],{"type":33,"children":4163},[4164,4166,4169],{"type":30,"value":4165},"Enter a ",{"type":30,"marks":4167,"value":4168},[106],"Description",{"type":30,"value":4170},". It's helpful to include a clear description. For example, in this transaction, you could use \"In-kind donation of a couch.\" It's common practice to use the same description on both the debit and the credit lines.",{"type":100,"children":4172},[4173],{"type":33,"children":4174},[4175,4177],{"type":30,"value":4176},"You probably also want to add a class. For nonprofits, we need to track the function of the money we get and spend. That's beyond the scope of this post, but you can check out ",{"type":30,"marks":4178,"value":4179},[2971],"Using Classes To Track Function in QuickBooks.",{"type":100,"children":4181},[4182],{"type":33,"children":4183},[4184,4185,4187],{"type":30,"value":3865},{"type":30,"marks":4186,"value":3495},[106],{"type":30,"value":119},{"type":33,"children":4189},[4190],{"type":30,"value":4191},"That's it. Your in-kind donation has been correctly recorded!",[4193],{"__typename":3647,"id":3723,"storyImage":4194},{"__typename":15,"url":3649,"alt":17,"title":17},[4196,4197,4199,4201,4204,4206,4208,4210,4212,4214,4216,4218,4221],{"__typename":619,"attributes":17,"content":3680,"tag":620},{"__typename":619,"attributes":4198,"content":17,"tag":624},{"property":623,"content":3680},{"__typename":619,"attributes":4200,"content":17,"tag":624},{"name":627,"content":3680},{"__typename":619,"attributes":4202,"content":17,"tag":624},{"property":630,"content":4203},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732561-inkind.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":4205,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":4207,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":4209,"content":17,"tag":624},{"property":3223,"content":3687},{"__typename":619,"attributes":4211,"content":17,"tag":624},{"name":642,"content":4203},{"__typename":619,"attributes":4213,"content":17,"tag":624},{"name":3228,"content":3687},{"__typename":619,"attributes":4215,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":4217,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":4219,"content":17,"tag":624},{"property":653,"content":4220},"2026-05-27T14:24:28Z",{"__typename":619,"attributes":4222,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":4224,"title":4225,"slug":4226,"excerpt":4227,"_firstPublishedAt":4228,"_updatedAt":4229,"_status":13,"image":4230,"content":4233,"_seoMetaTags":4352},"cOsZfz0uR6Cr9npwzAaUkQ","How to Overcome Debit and Credit Confusion with D.E.A.L.E.R.","how-to-overcome-debit-and-credit-confusion-with-d-e-a-l-e-r","If you're new to QuickBooks, understanding how debits and credits work can be confusing. ","2025-07-25T08:56:58-04:00","2026-05-27T10:36:40-04:00",{"__typename":15,"url":4231,"alt":4232},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753392067-dealer1.webp","A balance scale holding equal stacks of coins between two trees",{"__typename":19,"value":4234,"blocks":4345},{"schema":21,"document":4235},{"type":23,"children":4236},[4237,4241,4245,4268,4272,4274,4316,4335,4337],{"type":33,"children":4238},[4239],{"type":30,"value":4240},"If you're new to QuickBooks, understanding how debits and credits work can be confusing. Sometimes, debiting an account increases its balance; other times, it decreases it, and the same applies to credits. This can be especially tricky because most of us associate debits with reducing an account balance and credits with increasing it, based on how banks typically use these terms.",{"type":33,"children":4242},[4243],{"type":30,"value":4244},"To make it easier, try to set aside what you’ve learned about debits and credits in the past. Approaching this concept with a fresh perspective can make it easier.",{"type":33,"children":4246},[4247,4249,4252,4254,4257,4259,4262,4263,4266],{"type":30,"value":4248},"QuickBooks is a double-entry accounting system. Double-entry systems are based on T-accounts. A T-account is just what it sounds like, an account that looks like a \"T.\" A T-account will have the name of the account, with the ",{"type":30,"marks":4250,"value":4251},[106],"left column always",{"type":30,"value":4253}," representing ",{"type":30,"marks":4255,"value":4256},[106],"debits",{"type":30,"value":4258}," and the ",{"type":30,"marks":4260,"value":4261},[106],"right column always",{"type":30,"value":4253},{"type":30,"marks":4264,"value":4265},[106],"credits",{"type":30,"value":4267},". That’s the first new piece of information to remember: left column = debits, and right column = credits.",{"type":33,"children":4269},[4270],{"type":30,"value":4271},"Some accounts typically carry a debit balance, meaning their debits are greater than their credits. Others carry a credit balance, where credits are greater than debits.",{"item":4273,"type":3432},"VlmXra-9TTSTHexMVKCPqg",{"type":33,"children":4275},[4276,4278,4281,4283,4286,4288,4291,4293,4296,4298,4301,4302,4305,4306,4309,4311,4314],{"type":30,"value":4277},"Accounts with a normal debit balance include ",{"type":30,"marks":4279,"value":4280},[106],"Dividends",{"type":30,"value":4282},", ",{"type":30,"marks":4284,"value":4285},[106],"Expenses",{"type":30,"value":4287},", and ",{"type":30,"marks":4289,"value":4290},[106],"Assets",{"type":30,"value":4292},". For these accounts, ",{"type":30,"marks":4294,"value":4295},[106],"debits increase the account’s value",{"type":30,"value":4297},", while credits decrease it.\nConversely, accounts with a normal credit balance are ",{"type":30,"marks":4299,"value":4300},[106],"Liabilities",{"type":30,"value":4282},{"type":30,"marks":4303,"value":4304},[106],"Equity",{"type":30,"value":4287},{"type":30,"marks":4307,"value":4308},[106],"Revenue ",{"type":30,"value":4310},"(aka income). For these accounts, ",{"type":30,"marks":4312,"value":4313},[106],"debits decrease the account’s value",{"type":30,"value":4315},", and credits increase it.",{"type":33,"children":4317},[4318,4320,4323,4325,4328,4330,4333],{"type":30,"value":4319},"An easy way to remember this is by using the acronym ",{"type":30,"marks":4321,"value":4322},[106],"D.E.A.L.E.R",{"type":30,"value":4324},". In a T-account, debits are always on the left side. In ",{"type":30,"marks":4326,"value":4327},[106],"D.E.A.L.E.R.",{"type":30,"value":4329},", D, E, and A (for Dividends, Expenses, and Assets) are on the left, representing accounts with debit balances. L, E, and R (for Liabilities, Equity, and Revenue) are on the right, representing accounts with credit balances. ",{"type":30,"marks":4331,"value":4332},[106],"Debit-balance accounts increase when debited, and credit-balance accounts increase when credited. ",{"type":30,"value":4334},"Simple!",{"item":4336,"type":3432},"Z47Zb3LrRESTR0cNf3TAJQ",{"type":33,"children":4338},[4339,4341,4343],{"type":30,"value":4340},"So, whenever you're unsure, remember: ",{"type":30,"marks":4342,"value":4327},[106],{"type":30,"value":4344}," helps clarify which side of the entry will increase each type of account. Keep practicing, and debit and credit will start to be second nature!",[4346,4349],{"__typename":3647,"id":4273,"storyImage":4347},{"__typename":15,"url":4348,"alt":17,"title":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753448136-dealer2.webp",{"__typename":3647,"id":4336,"storyImage":4350},{"__typename":15,"url":4351,"alt":17,"title":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753448150-dealer.webp",[4353,4354,4356,4358,4361,4363,4365,4367,4369,4371,4373,4375,4378],{"__typename":619,"attributes":17,"content":4225,"tag":620},{"__typename":619,"attributes":4355,"content":17,"tag":624},{"property":623,"content":4225},{"__typename":619,"attributes":4357,"content":17,"tag":624},{"name":627,"content":4225},{"__typename":619,"attributes":4359,"content":17,"tag":624},{"property":630,"content":4360},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753392067-dealer1.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":4362,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":4364,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":4366,"content":17,"tag":624},{"property":3223,"content":4232},{"__typename":619,"attributes":4368,"content":17,"tag":624},{"name":642,"content":4360},{"__typename":619,"attributes":4370,"content":17,"tag":624},{"name":3228,"content":4232},{"__typename":619,"attributes":4372,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":4374,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":4376,"content":17,"tag":624},{"property":653,"content":4377},"2026-05-27T14:36:40Z",{"__typename":619,"attributes":4379,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":4381,"title":3563,"slug":4382,"excerpt":4383,"_firstPublishedAt":4384,"_updatedAt":4385,"_status":13,"image":4386,"content":4389,"_seoMetaTags":4544},"TV1pVMPTQe6K9q0fbToZrg","donations-are-products-in-quickbooks-how-to-set-them-up","Recording donations in QuickBooks is typically done using a sales receipt, which both records the information correctly and allows you to easily print or email a donation receipt.","2025-07-24T17:17:52-04:00","2026-05-27T10:35:28-04:00",{"__typename":15,"url":4387,"alt":4388},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391864-donationbox.webp","Open doors revealing stocked shelves around a box labelled \"Donation\"",{"__typename":19,"value":4390,"blocks":4543},{"schema":21,"document":4391},{"type":23,"children":4392},[4393,4396,4400,4404,4408,4412,4415,4419,4432,4435,4530],{"type":33,"children":4394},[4395],{"type":30,"value":4383},{"type":33,"children":4397},[4398],{"type":30,"value":4399},"When creating a sales receipt in QuickBooks, you’ll need to use a product. A common mistake is creating too many products. Only create a new product when you need to track a distinct type of donation separately, particularly if it requires unique reporting.",{"type":33,"children":4401},[4402],{"type":30,"value":4403},"For example, a cash donation collected at a silent auction might be unrestricted funds, while donations raised specifically for a roof repair project would be classified as restricted funds. In such cases, you would need separate products for each donation type. The silent auction donations would go into the unrestricted funds account, while the roof repair donations would be allocated to the roof repair fund.",{"type":33,"children":4405},[4406],{"type":30,"value":4407},"When setting up a product, you specify which income account the funds will be deposited into, so having one product for each donation category ensures that funds are properly tracked.",{"type":33,"children":4409},[4410],{"type":30,"value":4411},"To avoid unnecessary clutter, only create new products when there’s a clear need to differentiate income streams. Typically, one product per income account or donation category is sufficient. Well-defined products help streamline donation tracking and reporting.",{"type":26,"level":3257,"children":4413},[4414],{"type":30,"value":3748},{"type":33,"children":4416},[4417],{"type":30,"value":4418},"Edit Image",{"type":96,"style":241,"children":4420},[4421],{"type":100,"children":4422},[4423],{"type":33,"children":4424},[4425,4427,4430],{"type":30,"value":4426},"Click on the ",{"type":30,"marks":4428,"value":4429},[106],"magnifying glass",{"type":30,"value":4431}," in the top right.",{"type":33,"children":4433},[4434],{"type":30,"value":4418},{"type":96,"style":241,"children":4436},[4437,4452,4460,4470,4486,4495,4501,4521],{"type":100,"children":4438},[4439],{"type":33,"children":4440},[4441,4443,4446,4448,4451],{"type":30,"value":4442},"Type in ",{"type":30,"marks":4444,"value":4445},[3007],"product",{"type":30,"value":4447},". In the search results, click ",{"type":30,"marks":4449,"value":4450},[106],"Products and Services",{"type":30,"value":119},{"type":100,"children":4453},[4454],{"type":33,"children":4455},[4456,4457,4459],{"type":30,"value":3800},{"type":30,"marks":4458,"value":3803},[106],{"type":30,"value":4098},{"type":100,"children":4461},[4462],{"type":33,"children":4463},[4464,4465,4468],{"type":30,"value":3825},{"type":30,"marks":4466,"value":4467},[106],"Service",{"type":30,"value":4469}," as the product type.",{"type":100,"children":4471},[4472],{"type":33,"children":4473},[4474,4476,4479,4481,4484],{"type":30,"value":4475},"Give the product a clear name, like ",{"type":30,"marks":4477,"value":4478},[106,3007],"Donation - Unrestricted ",{"type":30,"value":4480},"or ",{"type":30,"marks":4482,"value":4483},[106,3007],"Donation - Roof Repair Fund",{"type":30,"value":4485},". This will be the product name on the donation receipt as well as what you will see on your internal reports",{"type":100,"children":4487},[4488],{"type":33,"children":4489},[4490,4491,4493],{"type":30,"value":4165},{"type":30,"marks":4492,"value":4168},[106],{"type":30,"value":4494},". This will display as the description on the donation receipt.",{"type":100,"children":4496},[4497],{"type":33,"children":4498},[4499],{"type":30,"value":4500},"Leave the price blank. You can enter this at the time you create the sales receipt.",{"type":100,"children":4502},[4503],{"type":33,"children":4504},[4505,4507,4510,4512,4515,4516,4519],{"type":30,"value":4506},"Assign the appropriate ",{"type":30,"marks":4508,"value":4509},[106],"Income Account",{"type":30,"value":4511},". The account selected here dictates which income account will be credited with the payment. For our example, we would likely find accounts named something like ",{"type":30,"marks":4513,"value":4514},[3007],"Unrestricted Contributions",{"type":30,"value":3512},{"type":30,"marks":4517,"value":4518},[3007],"Restricted - Roof Repair Fund",{"type":30,"value":4520},". If you're unsure which account to choose, it's a good idea to consult with your bookkeeper or accountant for guidance.",{"type":100,"children":4522},[4523],{"type":33,"children":4524},[4525,4526,4529],{"type":30,"value":3865},{"type":30,"marks":4527,"value":4528},[106],"Save and close",{"type":30,"value":119},{"type":33,"children":4531},[4532,4534,4541],{"type":30,"value":4533},"That's it! You have created a product to be used when ",{"url":4535,"meta":4536,"type":58,"children":4538},"\u002Fblog\u002Fhow-to-record-monetary-donations-in-quickbooks-online\u002F",[4537],{"id":53,"value":3450},[4539],{"type":30,"value":4540},"recording a donation with a sales receipt",{"type":30,"value":4542},".\nSetting up products for tracking donations makes it easy to see the funds you've collected by restriction and fund, separate from any other contributions. It a",[],[4545,4546,4548,4550,4553,4555,4557,4559,4561,4563,4565,4567,4570],{"__typename":619,"attributes":17,"content":3563,"tag":620},{"__typename":619,"attributes":4547,"content":17,"tag":624},{"property":623,"content":3563},{"__typename":619,"attributes":4549,"content":17,"tag":624},{"name":627,"content":3563},{"__typename":619,"attributes":4551,"content":17,"tag":624},{"property":630,"content":4552},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391864-donationbox.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":4554,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":4556,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":4558,"content":17,"tag":624},{"property":3223,"content":4388},{"__typename":619,"attributes":4560,"content":17,"tag":624},{"name":642,"content":4552},{"__typename":619,"attributes":4562,"content":17,"tag":624},{"name":3228,"content":4388},{"__typename":619,"attributes":4564,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":4566,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":4568,"content":17,"tag":624},{"property":653,"content":4569},"2026-05-27T14:35:28Z",{"__typename":619,"attributes":4571,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":4573,"title":4574,"slug":4575,"excerpt":4576,"_firstPublishedAt":4577,"_updatedAt":4578,"_status":13,"image":4579,"content":4582,"_seoMetaTags":4765},"Ar64k4gMT_ub_rtnKCQVxA","Turn QuickBooks Sales Receipts into Donation Receipts","turn-quickbooks-sales-receipts-into-donation-receipts","When using QuickBooks, a Sales Receipt can be used to accept donations and provide donors with a receipt.","2025-07-24T17:15:00-04:00","2025-07-24T17:14:58-04:00",{"__typename":15,"url":4580,"alt":4581},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391692-donation.webp","Printed donation receipts lying on a desk beside a pen, with a garden at sunset behind",{"__typename":19,"value":4583,"blocks":4764},{"schema":21,"document":4584},{"type":23,"children":4585},[4586,4594,4760],{"type":33,"children":4587},[4588,4590,4592],{"type":30,"value":4589},"When using QuickBooks, a ",{"type":30,"marks":4591,"value":3475},[106],{"type":30,"value":4593}," can be used to accept donations and provide donors with a receipt. However, the default for-profit language on the receipt may not be ideal for nonprofit organizations.Here's how to customize a QuickBooks Sales Receipt to create a professional, nonprofit-specific receipt for your donors.Edit Image",{"type":96,"style":97,"children":4595},[4596,4602,4617,4631,4641,4651,4666,4690,4712,4731,4741],{"type":100,"children":4597},[4598],{"type":33,"children":4599},[4600],{"type":30,"value":4601},"Click the gear icon in the upper-right corner.",{"type":100,"children":4603},[4604],{"type":33,"children":4605},[4606,4608,4611,4613,4616],{"type":30,"value":4607},"Under",{"type":30,"marks":4609,"value":4610},[106]," Your Company",{"type":30,"value":4612},", select ",{"type":30,"marks":4614,"value":4615},[106],"Custom Form Styles",{"type":30,"value":119},{"type":100,"children":4618},[4619],{"type":33,"children":4620},[4621,4623,4626,4628,4630],{"type":30,"value":4622},"Click",{"type":30,"marks":4624,"value":4625},[106]," New Style",{"type":30,"value":4627}," and select ",{"type":30,"marks":4629,"value":3475},[106],{"type":30,"value":119},{"type":100,"children":4632},[4633],{"type":33,"children":4634},[4635,4637,4640],{"type":30,"value":4636},"Notice the three tabs: ",{"type":30,"marks":4638,"value":4639},[106],"Design, Content, and Email",{"type":30,"value":119},{"type":100,"children":4642},[4643],{"type":33,"children":4644},[4645,4646,4649],{"type":30,"value":3482},{"type":30,"marks":4647,"value":4648},[106],"Design tab",{"type":30,"value":4650},", you can modify the layout, colors, and fonts. Customize the receipt’s appearance to be visually appropriate for your nonprofit.",{"type":100,"children":4652},[4653],{"type":33,"children":4654},[4655,4657,4660,4662,4665],{"type":30,"value":4656},"Go to the ",{"type":30,"marks":4658,"value":4659},[106],"Content ",{"type":30,"value":4661},"tab. This tab shows the three sections of the receipt: ",{"type":30,"marks":4663,"value":4664},[106],"Header, Table, and Footer",{"type":30,"value":119},{"type":100,"children":4667},[4668],{"type":33,"children":4669},[4670,4672,4675,4677,4680,4682,4684,4686,4689],{"type":30,"value":4671},"Click the pencil icon in the top right of the ",{"type":30,"marks":4673,"value":4674},[106],"Header",{"type":30,"value":4676}," section. On the left, you’ll see ",{"type":30,"marks":4678,"value":4679},[106],"Form Names",{"type":30,"value":4681},". Change ",{"type":30,"marks":4683,"value":3475},[106],{"type":30,"value":4685}," to ",{"type":30,"marks":4687,"value":4688},[106],"Donation Receipt",{"type":30,"value":119},{"type":100,"children":4691},[4692],{"type":33,"children":4693},[4694,4695,4698,4700,4703,4705,4707,4708,4710],{"type":30,"value":3800},{"type":30,"marks":4696,"value":4697},[106],"Footer",{"type":30,"value":4699}," section. Review the available options. You may want to add a thank-you message here. You’ll notice it says ",{"type":30,"marks":4701,"value":4702},[106],"Balance Due",{"type":30,"value":4704},". Although there’s no way to remove this, as long as you select ",{"type":30,"marks":4706,"value":3510},[106],{"type":30,"value":3512},{"type":30,"marks":4709,"value":3515},[106],{"type":30,"value":4711}," as the payment type for the donation, it will display as $0.00.",{"type":100,"children":4713},[4714],{"type":33,"children":4715},[4716,4718,4721,4723,4726,4728,4730],{"type":30,"value":4717},"Go to the",{"type":30,"marks":4719,"value":4720},[106]," Email ",{"type":30,"value":4722},"tab. This tab allows you to customize the email message sent to your donors when you select ",{"type":30,"marks":4724,"value":4725},[106],"Save and Send ",{"type":30,"value":4727},"while creating a new ",{"type":30,"marks":4729,"value":3475},[3007],{"type":30,"value":119},{"type":100,"children":4732},[4733],{"type":33,"children":4734},[4735,4737,4740],{"type":30,"value":4736},"Once you have finished your customizations, click ",{"type":30,"marks":4738,"value":4739},[106],"Done",{"type":30,"value":119},{"type":100,"children":4742},[4743],{"type":33,"children":4744},[4745,4747,4750,4752,4755,4757,4759],{"type":30,"value":4746},"Find the template you just created, click the downward-facing ",{"type":30,"marks":4748,"value":4749},[106],"chevron",{"type":30,"value":4751}," icon on that row, and select ",{"type":30,"marks":4753,"value":4754},[106],"Make Default",{"type":30,"value":4756},". This sets it as the default template whenever you create a new ",{"type":30,"marks":4758,"value":3475},[3007],{"type":30,"value":119},{"type":33,"children":4761},[4762],{"type":30,"value":4763},"This customization helps you provide a professional and tax-compliant receipt for donors, making it easier for them to track contributions for their tax filings!",[],[4766,4767,4769,4771,4774,4776,4778,4780,4782,4784,4786,4788,4791],{"__typename":619,"attributes":17,"content":4574,"tag":620},{"__typename":619,"attributes":4768,"content":17,"tag":624},{"property":623,"content":4574},{"__typename":619,"attributes":4770,"content":17,"tag":624},{"name":627,"content":4574},{"__typename":619,"attributes":4772,"content":17,"tag":624},{"property":630,"content":4773},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391692-donation.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":4775,"content":17,"tag":624},{"property":634,"content":635},{"__typename":619,"attributes":4777,"content":17,"tag":624},{"property":638,"content":635},{"__typename":619,"attributes":4779,"content":17,"tag":624},{"property":3223,"content":4581},{"__typename":619,"attributes":4781,"content":17,"tag":624},{"name":642,"content":4773},{"__typename":619,"attributes":4783,"content":17,"tag":624},{"name":3228,"content":4581},{"__typename":619,"attributes":4785,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":4787,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":4789,"content":17,"tag":624},{"property":653,"content":4790},"2025-07-24T21:14:58Z",{"__typename":619,"attributes":4792,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":4794,"title":4795,"slug":4796,"excerpt":4797,"_firstPublishedAt":4798,"_updatedAt":4799,"_status":13,"image":4800,"content":4803,"_seoMetaTags":5027},"Wh7aU8k9Sf-n7Auho4SVeA","Statement of Financial Position: A Leader's Guide","statement-of-financial-position-a-leader-s-guide","The Statement of Financial Position is also known as the Balance Sheet and provides a snapshot of your organization’s finances.","2025-07-24T17:12:44-04:00","2026-10-27T10:40:58-04:00",{"__typename":15,"url":4801,"alt":4802},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391553-financial.webp","A balance scale weighing a plus sign against a minus sign in a stylised garden",{"__typename":19,"value":4804,"blocks":5023},{"schema":21,"document":4805},{"type":23,"children":4806},[4807,4821,4825,4827,4863,4868,4872,4904,4908,4912,4918,4926,4946,4951,4959,4979,4992,4996,5005,5014],{"type":33,"children":4808},[4809,4811,4814,4816,4819],{"type":30,"value":4810},"The ",{"type":30,"marks":4812,"value":4813},[106],"Statement of Financial Position",{"type":30,"value":4815}," is also known as the ",{"type":30,"marks":4817,"value":4818},[106],"Balance Sheet",{"type":30,"value":4820},". It provides a snapshot of your organization’s finances and is crucial for understanding its financial health because it reveals the flexibility of your funding, highlighting your organization’s capacity to cover additional operating expenses and take the risks needed for growth.",{"type":33,"children":4822},[4823],{"type":30,"value":4824},"\nThe Statement of Financial Position has three sections:",{"item":4826,"type":3432},"GKJaSEFETdin7Lf2PFonUg",{"type":96,"style":97,"children":4828},[4829,4837,4854],{"type":100,"children":4830},[4831],{"type":33,"children":4832},[4833,4835],{"type":30,"marks":4834,"value":4290},[106],{"type":30,"value":4836},": What your organization owns. These are things like cash, receivables, investments, equipment, and property.",{"type":100,"children":4838},[4839],{"type":33,"children":4840},[4841,4843,4845,4852],{"type":30,"marks":4842,"value":4300},[106],{"type":30,"value":4844},": What your organization owes to other people or organizations. Examples include loans, accounts payable, and ",{"url":4846,"meta":4847,"type":58,"children":4849},"\u002Fblog\u002Fmaking-sense-of-deferred-revenue-in-nonprofit-finances",[4848],{"id":53,"value":3450},[4850],{"type":30,"value":4851},"deferred revenue ",{"type":30,"value":4853},"(e.g., grants received for future periods).",{"type":100,"children":4855},[4856],{"type":33,"children":4857},[4858,4861],{"type":30,"marks":4859,"value":4860},[106],"Net Assets",{"type":30,"value":4862},": This is everything that is left over after you subtract what you owe (liabilities) from what you own (assets). It can be summed up as:",{"type":33,"children":4864},[4865],{"type":30,"marks":4866,"value":4867},[3007],"Net Assets = Total Assets - Total Liabilities",{"type":33,"children":4869},[4870],{"type":30,"value":4871},"It's important to think of net assets as having three categories:",{"type":96,"style":97,"children":4873},[4874,4883,4892],{"type":100,"children":4875},[4876],{"type":33,"children":4877},[4878,4881],{"type":30,"marks":4879,"value":4880},[106],"Without Donor Restrictions",{"type":30,"value":4882},": Funds available for any purpose. Because these funds can be used for anything, they give you the greatest financial flexibility and resilience.",{"type":100,"children":4884},[4885],{"type":33,"children":4886},[4887,4890],{"type":30,"marks":4888,"value":4889},[106],"With Donor Restrictions: purpose or timing",{"type":30,"value":4891},": Funds earmarked for specific uses or timeframes. For example, funds raised to repair the roof on a church would be restricted to a specific use. A grant to cover expense for calendar year 2025 would be a time restricted grant.",{"type":100,"children":4893},[4894],{"type":33,"children":4895},[4896,4899,4902],{"type":30,"marks":4897,"value":4898},[106],"With Donor Restrictions: held in perpetuity: ",{"type":30,"marks":4900,"value":4901},[3007],"With donor restrictions: held in perpetuity",{"type":30,"value":4903}," means that the principle is restricted forever, or without expiration. This is often referred to as a permanently restricted donation, endowment, or scholarship fund.",{"type":33,"children":4905},[4906],{"type":30,"value":4907},"When assessing your organization’s financial health, it’s crucial to distinguish between restricted and unrestricted donations. If you don’t separate these funds properly, you might overestimate how much money is available to cover your expenses, which can lead to budgetary issues or hinder your ability to make strategic decisions. Understanding the difference ensures a more accurate picture of your available resources and helps you manage your finances effectively.\n",{"type":26,"level":3257,"children":4909},[4910],{"type":30,"value":4911},"Key Insights From The Statement Of Financial Position",{"type":33,"children":4913},[4914,4915],{"type":30,"value":2929},{"type":30,"marks":4916,"value":4917},[106],"1. Financial Stability and Liquidity",{"type":33,"children":4919},[4920,4921,4924],{"type":30,"value":4810},{"type":30,"marks":4922,"value":4923},[3007],"Statement of Financial Position ",{"type":30,"value":4925},"reveals whether the nonprofit has enough current assets (like cash and receivables) to cover current liabilities (such as accounts payable and short-term loans). This is essential for assessing:",{"type":96,"style":97,"children":4927},[4928,4937],{"type":100,"children":4929},[4930],{"type":33,"children":4931},[4932,4935],{"type":30,"marks":4933,"value":4934},[106],"Short-term stability",{"type":30,"value":4936},": Can the organization meet its obligations, such as payroll or vendor payments, without relying on additional funding?",{"type":100,"children":4938},[4939],{"type":33,"children":4940},[4941,4944],{"type":30,"marks":4942,"value":4943},[106],"Liquidity",{"type":30,"value":4945},": How quickly can assets be converted to cash if needed? A strong liquidity position ensures the organization can handle unexpected expenses or delays in funding.",{"type":33,"children":4947},[4948],{"type":30,"marks":4949,"value":4950},[106,3007],"2. Financial Flexibility",{"type":33,"children":4952},[4953,4955,4957],{"type":30,"value":4954},"By examining net assets without restrictions",{"type":30,"marks":4956,"value":1231},[106],{"type":30,"value":4958},"vs net assets with restrictions, nonprofits can determine:",{"type":96,"style":97,"children":4960},[4961,4970],{"type":100,"children":4962},[4963],{"type":33,"children":4964},[4965,4968],{"type":30,"marks":4966,"value":4967},[106],"Operational flexibility",{"type":30,"value":4969},": How much unrestricted funding is available to cover day-to-day operations and unexpected needs.",{"type":100,"children":4971},[4972],{"type":33,"children":4973},[4974,4977],{"type":30,"marks":4975,"value":4976},[106],"Dependence on restricted funds",{"type":30,"value":4978},": If most funds are restricted, the nonprofit may face challenges in meeting general operating expenses.",{"type":33,"children":4980},[4981,4983,4991],{"type":30,"value":4982},"Together, these insights help nonprofits evaluate their financial health, plan for sustainability, and align resources with their mission.\n\nConsider partnering with a professional nonprofit bookkeeper to help create and interpret your Statement of Financial Position. With their expertise, you can gain valuable insights and work together to explore next steps for your organization—whether that involves planning for growth, expanding programs, or reassessing your revenue generation and financial management strategies.\nGet help:",{"url":4984,"meta":4985,"type":58,"children":4988},"https:\u002F\u002F501cbookkeeping.com\u002Ffree-consultation",[4986,4987],{"id":53,"value":3450},{"id":56,"value":57},[4989],{"type":30,"value":4990},"SCHEDULE A FREE CONSULTATION",{"type":30,"value":2929},{"type":26,"level":3257,"children":4993},[4994],{"type":30,"value":4995},"Other Important Financial Statements",{"type":33,"children":4997},[4998],{"url":4999,"meta":5000,"type":58,"children":5002},"\u002Fblog\u002Fstatement-of-activities-your-nonprofit-s-story-of-impact",[5001],{"id":53,"value":3450},[5003],{"type":30,"value":5004},"Statement of Activities: Your Nonprofit’s Story of Impact",{"type":33,"children":5006},[5007],{"url":5008,"meta":5009,"type":58,"children":5011},"\u002Fblog\u002Fcash-flow-statement-insights-nonprofit-leader-should-know",[5010],{"id":53,"value":3450},[5012],{"type":30,"value":5013},"Cash Flow Statement Insights Nonprofit Leader Should Know",{"type":33,"children":5015},[5016],{"url":5017,"meta":5018,"type":58,"children":5020},"\u002Fblog\u002Fstatement-of-functional-expenses-a-nonprofit-leader-s-guide",[5019],{"id":53,"value":3450},[5021],{"type":30,"value":5022},"Statement of Functional Expenses: A Nonprofit Leader's Guide",[5024],{"__typename":3647,"id":4826,"storyImage":5025},{"__typename":15,"url":5026,"alt":17,"title":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753731997-sofe.webp",[5028,5029,5031,5033,5036,5038,5040,5042,5044,5046,5048,5050,5053],{"__typename":619,"attributes":17,"content":4795,"tag":620},{"__typename":619,"attributes":5030,"content":17,"tag":624},{"property":623,"content":4795},{"__typename":619,"attributes":5032,"content":17,"tag":624},{"name":627,"content":4795},{"__typename":619,"attributes":5034,"content":17,"tag":624},{"property":630,"content":5035},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391553-financial.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":5037,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":5039,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":5041,"content":17,"tag":624},{"property":3223,"content":4802},{"__typename":619,"attributes":5043,"content":17,"tag":624},{"name":642,"content":5035},{"__typename":619,"attributes":5045,"content":17,"tag":624},{"name":3228,"content":4802},{"__typename":619,"attributes":5047,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":5049,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":5051,"content":17,"tag":624},{"property":653,"content":5052},"2026-10-27T14:40:58Z",{"__typename":619,"attributes":5054,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":5056,"title":5057,"slug":5058,"excerpt":5059,"_firstPublishedAt":5060,"_updatedAt":5061,"_status":13,"image":5062,"content":5065,"_seoMetaTags":5242},"FkRkINSySLa5kIydgyM6xQ","A Guide to Nonprofits' Key Financial Reports","a-guide-to-nonprofits-key-financial-reports","Financial statements are crucial for understanding your nonprofit’s financial health, making informed decisions, and raising new funds","2025-07-24T17:10:16-04:00","2026-05-27T10:46:54-04:00",{"__typename":15,"url":5063,"alt":5064},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391399-guide.webp","A jigsaw puzzle with two missing pieces, captioned \"A Guide To Key Financial Reports: How to Understand the Puzzle of Your Nonprofit's Finances\"",{"__typename":19,"value":5066,"blocks":5238},{"schema":21,"document":5067},{"type":23,"children":5068},[5069,5073,5093,5097,5101,5103,5121,5147,5166,5186,5205,5219],{"type":33,"children":5070},[5071],{"type":30,"value":5072},"For nonprofit leaders, understanding financial statements is more than a technical skill—it’s a way to ensure your organization fulfills:",{"type":96,"style":97,"children":5074},[5075,5081,5087],{"type":100,"children":5076},[5077],{"type":33,"children":5078},[5079],{"type":30,"value":5080},"its mission effectively,",{"type":100,"children":5082},[5083],{"type":33,"children":5084},[5085],{"type":30,"value":5086},"remains accountable to donors and stakeholders, and",{"type":100,"children":5088},[5089],{"type":33,"children":5090},[5091],{"type":30,"value":5092},"complies with legal and regulatory requirements.",{"type":26,"level":3257,"children":5094},[5095],{"type":30,"value":5096},"What Can Financial Statements Help You Do?",{"type":33,"children":5098},[5099],{"type":30,"value":5100},"Financial statements are crucial for understanding your nonprofit’s financial health, making informed decisions, and raising new funds.\n\nIf financial reports feel overwhelming, you're not alone. Many nonprofit leaders come from mission-driven backgrounds, not finance. Here are some simple guides to help you understand the essentials of your nonprofit’s key financial statements and how you can use them:\n",{"item":5102,"type":3432},"fpPlXhKuTPOOexITkOgcsw",{"type":33,"children":5104},[5105,5108,5116,5117,5119],{"type":30,"marks":5106,"value":5107},[106],"1. ",{"url":5109,"meta":5110,"type":58,"children":5112},"\u002Fblog\u002Fstatement-of-financial-position-a-leader-s-guide",[5111],{"id":53,"value":3450},[5113],{"type":30,"marks":5114,"value":5115},[106],"Guide to the Statement of Financial Position",{"type":30,"value":4810},{"type":30,"marks":5118,"value":4813},[106],{"type":30,"value":5120}," shows what you own, what you owe and what's left over. It helps you answer questions like:",{"type":96,"style":97,"children":5122},[5123,5129,5135,5141],{"type":100,"children":5124},[5125],{"type":33,"children":5126},[5127],{"type":30,"value":5128},"Are we stable enough to grow or start new projects?",{"type":100,"children":5130},[5131],{"type":33,"children":5132},[5133],{"type":30,"value":5134},"How much cash do we have for emergencies or unexpected costs?",{"type":100,"children":5136},[5137],{"type":33,"children":5138},[5139],{"type":30,"value":5140},"Can we take on more debt, or is it too risky?",{"type":100,"children":5142},[5143],{"type":33,"children":5144},[5145],{"type":30,"value":5146},"Can we afford to pay our bills and keep running?",{"type":33,"children":5148},[5149,5150,5153,5160,5161,5164],{"type":30,"value":2929},{"type":30,"marks":5151,"value":5152},[106],"2. ",{"url":4999,"meta":5154,"type":58,"children":5156},[5155],{"id":53,"value":3450},[5157],{"type":30,"marks":5158,"value":5159},[106],"Guide to the Statement of Activities",{"type":30,"value":4810},{"type":30,"marks":5162,"value":5163},[106],"Statement of Activities",{"type":30,"value":5165}," shows how much money your nonprofit earned and spent over a certain time. It helps you answer questions like:",{"type":96,"style":97,"children":5167},[5168,5174,5180],{"type":100,"children":5169},[5170],{"type":33,"children":5171},[5172],{"type":30,"value":5173},"Are we bringing in enough money to cover our costs?",{"type":100,"children":5175},[5176],{"type":33,"children":5177},[5178],{"type":30,"value":5179},"How well are we using our funds to support our mission?",{"type":100,"children":5181},[5182],{"type":33,"children":5183},[5184],{"type":30,"value":5185},"Are we spending too much administration?",{"type":33,"children":5187},[5188,5189,5192,5199,5200,5203],{"type":30,"value":2929},{"type":30,"marks":5190,"value":5191},[106],"3. ",{"url":5008,"meta":5193,"type":58,"children":5195},[5194],{"id":53,"value":3450},[5196],{"type":30,"marks":5197,"value":5198},[106],"Guide to the Statement of Cash Flows",{"type":30,"value":4810},{"type":30,"marks":5201,"value":5202},[106],"Cash Flow Statement",{"type":30,"value":5204}," shows how cash is coming in and going out of your nonprofit over time. It helps you answer questions like:",{"type":96,"style":97,"children":5206},[5207,5213],{"type":100,"children":5208},[5209],{"type":33,"children":5210},[5211],{"type":30,"value":5212},"Do we have enough cash to pay our bills right now?",{"type":100,"children":5214},[5215],{"type":33,"children":5216},[5217],{"type":30,"value":5218},"Are we spending too much too quickly?",{"type":33,"children":5220},[5221,5222,5225,5232,5233,5236],{"type":30,"value":2929},{"type":30,"marks":5223,"value":5224},[106],"4. ",{"url":5017,"meta":5226,"type":58,"children":5228},[5227],{"id":53,"value":3450},[5229],{"type":30,"marks":5230,"value":5231},[106],"Guide to the Statement of Functional Expenses",{"type":30,"value":4810},{"type":30,"marks":5234,"value":5235},[106],"Statement of Functional Expenses",{"type":30,"value":5237}," breaks down where your nonprofit spends its money. It helps you answer questions like:",[5239],{"__typename":3647,"id":5102,"storyImage":5240},{"__typename":15,"url":5241,"alt":17,"title":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732328-financialstatement.webp",[5243,5244,5246,5248,5251,5254,5257,5259,5261,5263,5265,5267,5270],{"__typename":619,"attributes":17,"content":5057,"tag":620},{"__typename":619,"attributes":5245,"content":17,"tag":624},{"property":623,"content":5057},{"__typename":619,"attributes":5247,"content":17,"tag":624},{"name":627,"content":5057},{"__typename":619,"attributes":5249,"content":17,"tag":624},{"property":630,"content":5250},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391399-guide.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":5252,"content":17,"tag":624},{"property":634,"content":5253},"610",{"__typename":619,"attributes":5255,"content":17,"tag":624},{"property":638,"content":5256},"518",{"__typename":619,"attributes":5258,"content":17,"tag":624},{"property":3223,"content":5064},{"__typename":619,"attributes":5260,"content":17,"tag":624},{"name":642,"content":5250},{"__typename":619,"attributes":5262,"content":17,"tag":624},{"name":3228,"content":5064},{"__typename":619,"attributes":5264,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":5266,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":5268,"content":17,"tag":624},{"property":653,"content":5269},"2026-05-27T14:46:54Z",{"__typename":619,"attributes":5271,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":5273,"title":5004,"slug":5274,"excerpt":5275,"_firstPublishedAt":5276,"_updatedAt":5277,"_status":13,"image":5278,"content":5281,"_seoMetaTags":5596},"fGc7s-CRSZmi6ASvWLa9kA","statement-of-activities-your-nonprofit-s-story-of-impact","You will also hear this report called an Income Statement or a Profit & Loss Statement.","2025-07-24T17:06:51-04:00","2026-05-27T10:50:48-04:00",{"__typename":15,"url":5279,"alt":5280},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391193-activities.webp","A team gathered around a table reviewing printed charts and financial reports",{"__typename":19,"value":5282,"blocks":5592},{"schema":21,"document":5283},{"type":23,"children":5284},[5285,5318,5320,5325,5329,5334,5341,5388,5406,5444,5448,5456,5460,5511,5516,5548,5567,5571,5578,5585],{"type":33,"children":5286},[5287,5289,5292,5294,5297,5298,5300,5302,5305,5307,5310,5312,5317],{"type":30,"value":5288},"You will also hear this report called an ",{"type":30,"marks":5290,"value":5291},[106],"Income Statement ",{"type":30,"value":5293},"or a ",{"type":30,"marks":5295,"value":5296},[106],"Profit & Loss Statement. ",{"type":30,"value":4810},{"type":30,"marks":5299,"value":5163},[106],{"type":30,"value":5301}," shows how your organization’s resources were earned and how they were spent over a specific period.It connects financial activity to mission effectiveness, helping stakeholders assess the nonprofit's performance and sustainability. While for-profit organizations use their ",{"type":30,"marks":5303,"value":5304},[3007],"Income Statement",{"type":30,"value":5306}," to assess profitability, nonprofits use the ",{"type":30,"marks":5308,"value":5309},[106],"Statement of Activities ",{"type":30,"value":5311},"to evaluate how revenue and expenses are being utilized to support their mission. It will also be used by your tax preparer when filing your ",{"url":5313,"type":58,"children":5314},"\u002Fblog\u002Firs-compliance-basics-what-you-need-to-know-about-form-990",[5315],{"type":30,"value":5316},"Form 990",{"type":30,"value":119},{"item":5319,"type":3432},"EdgXUChlRWyN1VMcVrePsg",{"type":26,"level":3257,"children":5321},[5322],{"type":30,"marks":5323,"value":5324},[106],"Unrestricted vs Restricted",{"type":33,"children":5326},[5327],{"type":30,"value":5328},"Nonprofit organizations often receive revenue with restrictions set by the fund source. For example, a grantor might require that their funds be used for a specific program or purpose. Restricted revenue must be spent exactly as the donor intended, while unrestricted revenue can be used by the nonprofit however it sees fit, whether for operations, projects, or other expenses. The nonprofit Statement of Activities clearly separates restricted and unrestricted revenue, helping organizations understand how much flexibility they have with their funding.",{"type":26,"level":3257,"children":5330},[5331],{"type":30,"marks":5332,"value":5333},[106],"Key Sections",{"type":33,"children":5335},[5336,5339],{"type":30,"marks":5337,"value":5338},[106],"Section 1: REVENUE",{"type":30,"value":5340},":This is the money coming into your organization. It includes donations, grants, program service revenue, and investment income. A little about each source of revenue:",{"type":96,"style":97,"children":5342},[5343,5352,5361,5370,5379],{"type":100,"children":5344},[5345],{"type":33,"children":5346},[5347,5350],{"type":30,"marks":5348,"value":5349},[106],"Cash Contributions",{"type":30,"value":5351},": When nonprofits raise funds from individual donors, major supporters, or corporate partners, these are classified as cash contributions.",{"type":100,"children":5353},[5354],{"type":33,"children":5355},[5356,5359],{"type":30,"marks":5357,"value":5358},[106],"In-Kind Donations or Non-cash Contributions",{"type":30,"value":5360},": Nonprofits receive valuable support through non-cash contributions, which can include donated goods, services, assets like land or stocks, equipment, or professional services. These donations are crucial to recognize in financial reports, as they represent significant resources that support the organization's mission, even though they do not involve direct monetary transfers.",{"type":100,"children":5362},[5363],{"type":33,"children":5364},[5365,5368],{"type":30,"marks":5366,"value":5367},[106],"Grants",{"type":30,"value":5369},": Funds received from government entities or private foundations are considered grants. It’s crucial to include this revenue in your statement of activities.",{"type":100,"children":5371},[5372],{"type":33,"children":5373},[5374,5377],{"type":30,"marks":5375,"value":5376},[106],"Program Fees",{"type":30,"value":5378},": Nonprofits often generate income by charging fees for services or membership, which can make up a significant portion of their funding. For example, many associations charge members to access benefits.",{"type":100,"children":5380},[5381],{"type":33,"children":5382},[5383,5386],{"type":30,"marks":5384,"value":5385},[106],"Net Assets Released From Restrictions:",{"type":30,"value":5387}," These are funds that were restricted, but can now be used for any purpose at any time.",{"type":33,"children":5389},[5390,5391,5394,5396,5404],{"type":30,"value":2929},{"type":30,"marks":5392,"value":5393},[106],"Section 2: EXPENSES:",{"type":30,"value":5395},"Your organization’s expenses should support its mission, whether it’s covering daily operations or specific projects.\n",{"url":5397,"meta":5398,"type":58,"children":5401},"https:\u002F\u002Ffasb.org\u002Fpage\u002FPageContent?pageId=\u002Freference-library\u002Fsuperseded-standards\u002Fsummary-of-statement-no-117.html",[5399,5400],{"id":53,"value":3450},{"id":56,"value":57},[5402],{"type":30,"value":5403},"FASB",{"type":30,"value":5405}," requires you to report expenses by function, breaking them down into categories like administrative, fundraising, and program costs.\nSome example of operating expenses are:",{"type":96,"style":97,"children":5407},[5408,5414,5420,5426,5432,5438],{"type":100,"children":5409},[5410],{"type":33,"children":5411},[5412],{"type":30,"value":5413},"Rent and utilities",{"type":100,"children":5415},[5416],{"type":33,"children":5417},[5418],{"type":30,"value":5419},"Professional Services (legal, bookkeeping, etc)",{"type":100,"children":5421},[5422],{"type":33,"children":5423},[5424],{"type":30,"value":5425},"Salaries and benefits",{"type":100,"children":5427},[5428],{"type":33,"children":5429},[5430],{"type":30,"value":5431},"Fundraising expenses",{"type":100,"children":5433},[5434],{"type":33,"children":5435},[5436],{"type":30,"value":5437},"Office supplied and equipment",{"type":100,"children":5439},[5440],{"type":33,"children":5441},[5442],{"type":30,"value":5443},"Insurance",{"type":33,"children":5445},[5446],{"type":30,"value":5447},"Program expenses vary widely between nonprofits so they will be particular to your organization",{"type":33,"children":5449},[5450,5451,5454],{"type":30,"value":2929},{"type":30,"marks":5452,"value":5453},[106],"Sections 3: CHANGE IN NET ASSETS:",{"type":30,"value":5455},"Your change in net assets are simply your revenue minus expenses, giving you a snapshot of your organization’s financial health and sustainability. It's important to distinguish between restricted and unrestricted net assets, as restrictions may limit your access to certain funds, potentially leading you to believe you have more income available than you actually do.\n",{"type":26,"level":3257,"children":5457},[5458],{"type":30,"value":5459},"Key Insights From The Statement Of Activities",{"type":96,"style":241,"children":5461},[5462,5471,5480,5489,5498],{"type":100,"children":5463},[5464],{"type":33,"children":5465},[5466,5469],{"type":30,"marks":5467,"value":5468},[106],"Revenue Composition",{"type":30,"value":5470},": Highlights funding sources (e.g., donations, grants) and shows reliance on specific streams.",{"type":100,"children":5472},[5473],{"type":33,"children":5474},[5475,5478],{"type":30,"marks":5476,"value":5477},[106],"Expense Allocation",{"type":30,"value":5479},": Breaks down costs into program, administrative, and fundraising categories, revealing efficiency in mission spending. It helps you determine where your hard-earned fundraising dollars go.",{"type":100,"children":5481},[5482],{"type":33,"children":5483},[5484,5487],{"type":30,"marks":5485,"value":5486},[106],"Net Change in Assets",{"type":30,"value":5488},": Indicates whether the nonprofit operated at a surplus or deficit, informing financial sustainability.",{"type":100,"children":5490},[5491],{"type":33,"children":5492},[5493,5496],{"type":30,"marks":5494,"value":5495},[106],"Donor Restrictions",{"type":30,"value":5497},": Distinguishes between restricted and unrestricted funds, showing flexibility in resource use.",{"type":100,"children":5499},[5500],{"type":33,"children":5501},[5502,5505,5507,5509],{"type":30,"marks":5503,"value":5504},[106],"Budgeting",{"type":30,"value":5506},": When reviewing your nonprofit's ",{"type":30,"marks":5508,"value":5163},[3007],{"type":30,"value":5510},", you should ensure that the line items align with those in your organization’s budget. This comparison helps confirm that your organization is staying on track with its planned operating expenses.",{"type":26,"level":3257,"children":5512},[5513],{"type":30,"marks":5514,"value":5515},[106],"Impact of Year-End Closing on the Statement of Activities",{"type":33,"children":5517},[5518,5520,5523,5525,5528,5530,5533,5535,5537,5539,5542,5544,5546],{"type":30,"value":5519},"Closing the books at the end of the year is a critical financial management process that helps your nonprofit understand its financial performance and prepare for the future. Think of it like an annual financial reset button that does three important things:\n",{"type":30,"marks":5521,"value":5522},[106],"1. Net Assets Transfer",{"type":30,"value":5524},": At year-end, the net change in your organization's financial position (total revenues minus total expenses) gets transferred to your Statement of Financial Position (balance sheet). This transfer shows whether you ended the year with a surplus or deficit, which is crucial for understanding your financial health. ",{"type":30,"marks":5526,"value":5527},[106,3007],"Impact",{"type":30,"value":5529},": The net asset transfer creates a direct bridge between the income statement and the balance sheet, reflecting the organization's profitability and financial momentum from the past year.\n",{"type":30,"marks":5531,"value":5532},[106],"2. Fresh Start for the New Year",{"type":30,"value":5534},": Once the books are closed, your revenue and expense accounts are reset to zero. This means you start the new fiscal year with a clean slate, ready to track a new year's financial activities without any lingering balances from the previous year. ",{"type":30,"marks":5536,"value":5527},[106,3007],{"type":30,"value":5538},": Resetting accounts ensures a clear and unencumbered starting point for the income statement, allowing for precise tracking of financial performance in the upcoming fiscal period.\n",{"type":30,"marks":5540,"value":5541},[106],"3. Financial Performance Snapshot",{"type":30,"value":5543},": The year-end closing process finalizes your nonprofit's financial results for the year. It ensures that all revenues and expenses are accurately recorded and categorized, giving you a clear picture of how your organization performed financially. ",{"type":30,"marks":5545,"value":5527},[106,3007],{"type":30,"value":5547},": This comprehensive review directly influences the income statement by providing a definitive and accurate representation of the organization's financial performance for the reporting period.Understanding your Statement of Activities is a strategic tool that provides critical insights into your nonprofit's mission and financial health. By carefully analyzing your revenue sources, expense allocations, and net asset changes, you gain a comprehensive view of how effectively your organization is translating financial resources into mission impact.",{"type":33,"children":5549},[5550,5552,5555,5563,5566],{"type":30,"value":5551},"Outsourcing your bookkeeping to a professional nonprofit bookkeeper is a smart, cost-effective choice. They can help create and interpret your financial statements, streamline tax season, and highlight the important financial insights you need to focus on to help your organization thrive.\n",{"type":30,"marks":5553,"value":5554},[106],"Get help by ",{"url":5556,"meta":5557,"type":58,"children":5559},"\u002Fcontact",[5558],{"id":53,"value":3450},[5560],{"type":30,"marks":5561,"value":5562},[106],"SCHEDULING A FREE CONSULTATION",{"type":30,"marks":5564,"value":5565},[106]," now",{"type":30,"value":2929},{"type":26,"level":3257,"children":5568},[5569],{"type":30,"value":5570},"Other Important Financial Reports",{"type":33,"children":5572},[5573],{"url":5109,"meta":5574,"type":58,"children":5576},[5575],{"id":53,"value":3450},[5577],{"type":30,"value":4795},{"type":33,"children":5579},[5580],{"url":5008,"meta":5581,"type":58,"children":5583},[5582],{"id":53,"value":3450},[5584],{"type":30,"value":5013},{"type":33,"children":5586},[5587],{"url":5017,"meta":5588,"type":58,"children":5590},[5589],{"id":53,"value":3450},[5591],{"type":30,"value":5022},[5593],{"__typename":3647,"id":5319,"storyImage":5594},{"__typename":15,"url":5595,"alt":17,"title":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753732221-statementofactivities.webp",[5597,5598,5600,5602,5605,5607,5609,5611,5613,5615,5617,5619,5622],{"__typename":619,"attributes":17,"content":5004,"tag":620},{"__typename":619,"attributes":5599,"content":17,"tag":624},{"property":623,"content":5004},{"__typename":619,"attributes":5601,"content":17,"tag":624},{"name":627,"content":5004},{"__typename":619,"attributes":5603,"content":17,"tag":624},{"property":630,"content":5604},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753391193-activities.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":5606,"content":17,"tag":624},{"property":634,"content":635},{"__typename":619,"attributes":5608,"content":17,"tag":624},{"property":638,"content":635},{"__typename":619,"attributes":5610,"content":17,"tag":624},{"property":3223,"content":5280},{"__typename":619,"attributes":5612,"content":17,"tag":624},{"name":642,"content":5604},{"__typename":619,"attributes":5614,"content":17,"tag":624},{"name":3228,"content":5280},{"__typename":619,"attributes":5616,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":5618,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":5620,"content":17,"tag":624},{"property":653,"content":5621},"2026-05-27T14:50:48Z",{"__typename":619,"attributes":5623,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":5625,"title":5013,"slug":5626,"excerpt":5627,"_firstPublishedAt":5628,"_updatedAt":5629,"_status":13,"image":5630,"content":5633,"_seoMetaTags":5898},"Uk4kTCJbRFepCp4_POdd8A","cash-flow-statement-insights-nonprofit-leader-should-know","The Cash Flow Statement primarily focuses on liquid cash, meaning actual cash that the organization has on hand, and cash equivalents.","2025-07-24T17:02:07-04:00","2026-05-27T10:53:48-04:00",{"__typename":15,"url":5631,"alt":5632},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753390913-cashflow.webp","A stream of dollar signs winding like a river through a blossoming garden",{"__typename":19,"value":5634,"blocks":5894},{"schema":21,"document":5635},{"type":23,"children":5636},[5637,5659,5664,5673,5685,5687,5716,5723,5730,5756,5763,5789,5794,5798,5845,5850,5854,5869,5873,5880,5887],{"type":33,"children":5638},[5639,5640,5642,5644,5647,5649,5652,5654,5657],{"type":30,"value":4810},{"type":30,"marks":5641,"value":5202},[106],{"type":30,"value":5643}," primarily focuses on ",{"type":30,"marks":5645,"value":5646},[106],"liquid cash",{"type":30,"value":5648},", meaning actual cash that the organization has on hand, and cash equivalents. Cash equivalents are short-term investments that can quickly be converted to cash, such as money market funds or Treasury bills. It ",{"type":30,"marks":5650,"value":5651},[106],"does not include",{"type":30,"value":5653}," things like stocks, accounts receivable, or payables, which are not considered liquid cash. The goal of the C",{"type":30,"marks":5655,"value":5656},[3007],"ash Flow Statement",{"type":30,"value":5658}," is to track the actual cash your organization has access to, showing how it comes into the organization and how it is spent over a specific period, whether monthly, quarterly, or annually. This helps ensure you have enough funds to support your mission, meet your obligations, and plan for the future. Nonprofits usually create this report every month to make sure their spending and the money they make match up with their annual operating budgets.",{"type":26,"level":3257,"children":5660},[5661],{"type":30,"marks":5662,"value":5663},[106],"Key Parts of a Nonprofit Cash Flow Statement",{"type":33,"children":5665},[5666,5668,5671],{"type":30,"value":5667},"A",{"type":30,"marks":5669,"value":5670},[3007]," Cash Flow Statement",{"type":30,"value":5672}," for nonprofits is typically divided into three sections:",{"type":33,"children":5674},[5675,5678,5680,5683],{"type":30,"marks":5676,"value":5677},[106],"Section 1: Operating Activities",{"type":30,"value":5679}," This section tracks the cash that comes in and goes out as a result of your nonprofit’s day-to-day activities, ",{"type":30,"marks":5681,"value":5682},[2971],"primarily related to your mission",{"type":30,"value":5684},". It includes:",{"item":5686,"type":3432},"DMdi916UQKKghTDU0S1iNw",{"type":96,"style":97,"children":5688},[5689,5698,5707],{"type":100,"children":5690},[5691],{"type":33,"children":5692},[5693,5696],{"type":30,"marks":5694,"value":5695},[106],"Cash Inflows",{"type":30,"value":5697},": Revenue generated from donations, grants, fundraising events, and membership fees.",{"type":100,"children":5699},[5700],{"type":33,"children":5701},[5702,5705],{"type":30,"marks":5703,"value":5704},[106],"Cash Outflows",{"type":30,"value":5706},": Payments for operating expenses such as salaries, rent, utilities, program costs, upfront fundraising campaign costs, and supplies.",{"type":100,"children":5708},[5709],{"type":33,"children":5710},[5711,5714],{"type":30,"marks":5712,"value":5713},[106],"What it tells you",{"type":30,"value":5715},": The operating activities section helps you understand whether your nonprofit is generating enough cash from its core activities to sustain operations. If cash inflows from donations or grants are not enough to cover expenses, you may need to adjust your fundraising strategy or manage costs more efficiently.",{"type":33,"children":5717},[5718,5721],{"type":30,"marks":5719,"value":5720},[106],"Note:",{"type":30,"value":5722}," In-kind donations and sponsorships usually don’t appear on the cash flow statement. This is because when you get goods, services, or other non-cash donations, it doesn’t change the amount of cash your organization has.",{"type":33,"children":5724},[5725,5728],{"type":30,"marks":5726,"value":5727},[106],"Section 2: Investing Activities",{"type":30,"value":5729}," This section records the cash flow associated with investments in assets or other long-term ventures, such as purchasing property, equipment, or investments that will support future growth.",{"type":96,"style":97,"children":5731},[5732,5740,5748],{"type":100,"children":5733},[5734],{"type":33,"children":5735},[5736,5738],{"type":30,"marks":5737,"value":5695},[106],{"type":30,"value":5739},": The sale of property or investments or interest\u002Fdividend payments earned on investments.",{"type":100,"children":5741},[5742],{"type":33,"children":5743},[5744,5746],{"type":30,"marks":5745,"value":5704},[106],{"type":30,"value":5747},": Purchases of long-term assets like equipment, buildings, or vehicles; spending money on improvements to existing fixed assets; investing reserve funds into new things like stocks, bonds, etc.",{"type":100,"children":5749},[5750],{"type":33,"children":5751},[5752,5754],{"type":30,"marks":5753,"value":5713},[106],{"type":30,"value":5755},": This section gives insight into how much your nonprofit is investing in its future. Large outflows here might suggest that your nonprofit is expanding its capacity to deliver services, but it also means that cash is being tied up in assets, which might limit flexibility for short-term needs.",{"type":33,"children":5757},[5758,5761],{"type":30,"marks":5759,"value":5760},[106],"Section 3: Financing Activities",{"type":30,"value":5762}," Financing activities involve the cash flows related to debt financing or other forms of external support.",{"type":96,"style":97,"children":5764},[5765,5773,5781],{"type":100,"children":5766},[5767],{"type":33,"children":5768},[5769,5771],{"type":30,"marks":5770,"value":5695},[106],{"type":30,"value":5772},": New loans or capital contributions.",{"type":100,"children":5774},[5775],{"type":33,"children":5776},[5777,5779],{"type":30,"marks":5778,"value":5704},[106],{"type":30,"value":5780},": Repayment of loans or long-term debt.",{"type":100,"children":5782},[5783],{"type":33,"children":5784},[5785,5787],{"type":30,"marks":5786,"value":5713},[106],{"type":30,"value":5788},": This section shows how your nonprofit is managing its financial leverage. Are you relying on loans or external financing to fund your programs? How much of your nonprofit's cash is being directed toward paying down debt? This can impact your ability to fund future initiatives.",{"type":26,"level":3257,"children":5790},[5791],{"type":30,"marks":5792,"value":5793},[106],"Key Insights from Your Cash Flow Statement",{"type":33,"children":5795},[5796],{"type":30,"value":5797},"By looking at each of these three sections, you can glean valuable insights into the financial health and future outlook of your nonprofit. Here’s what you can learn:",{"type":96,"style":241,"children":5799},[5800,5809,5818,5827,5836],{"type":100,"children":5801},[5802],{"type":33,"children":5803},[5804,5807],{"type":30,"marks":5805,"value":5806},[106],"Cash Liquidity",{"type":30,"value":5808},": The cash flow statement shows you how much cash you have on hand to cover immediate operational needs. If the cash flow from operating activities is consistently negative, you may need to reassess your income generation strategy or find ways to reduce expenses.",{"type":100,"children":5810},[5811],{"type":33,"children":5812},[5813,5816],{"type":30,"marks":5814,"value":5815},[106],"Budgeting:",{"type":30,"value":5817}," Understanding how money comes in and goes out each month helps you plan your future budgets. For example, your cash flow might show you earn more money in the spring during your big funding drive, but spend more on programs in the fall. This lets you adjust your budget to match these patterns.",{"type":100,"children":5819},[5820],{"type":33,"children":5821},[5822,5825],{"type":30,"marks":5823,"value":5824},[106],"Sustainability of Operations",{"type":30,"value":5826},": Positive cash flow from operating activities indicates that your nonprofit can sustain its operations with the revenue generated from its core mission. Negative cash flow could suggest that you are spending more than you’re bringing in, which could be a warning sign for the financial health of your organization.",{"type":100,"children":5828},[5829],{"type":33,"children":5830},[5831,5834],{"type":30,"marks":5832,"value":5833},[106],"Investment and Growth Plans",{"type":30,"value":5835},": By reviewing your investing activities, you can assess how much your nonprofit is investing in its future growth. If you’re purchasing property or assets, this may be a sign of expanding your capacity to serve more people or improve programs. But, it also means cash might be tied up in assets, which could limit flexibility in the short term.",{"type":100,"children":5837},[5838],{"type":33,"children":5839},[5840,5843],{"type":30,"marks":5841,"value":5842},[106],"Financial Flexibility",{"type":30,"value":5844},": The financing activities section shows how much external funding or debt your nonprofit has taken on. If you rely too heavily on loans or external financing, it might be time to reconsider your strategy for growing revenue sustainably.",{"type":26,"level":3257,"children":5846},[5847],{"type":30,"marks":5848,"value":5849},[106],"Why Your Cash Flow Statement Matters",{"type":33,"children":5851},[5852],{"type":30,"value":5853},"Cash flow management is essential for any nonprofit to thrive. A positive cash flow allows you to pay your staff, fund your programs, and invest in your future growth. On the other hand, poor cash flow can lead to missed opportunities, the inability to pay bills on time, or even solvency problems. Your Cash Flow Statement is a tool to help you make smarter financial decisions for the future. By regularly reviewing this statement, you can adjust your fundraising, spending, and investment strategies to ensure that your nonprofit remains financially healthy and mission-driven.",{"type":33,"children":5855},[5856,5858,5860,5866,5868],{"type":30,"value":5857},"By working with an expert nonprofit bookkeeper, you can ensure you're fully understanding and making the most of your Cash Flow Statement to support your nonprofit’s unique needs and goals.\n",{"type":30,"marks":5859,"value":5554},[106],{"url":5556,"meta":5861,"type":58,"children":5863},[5862],{"id":53,"value":3450},[5864],{"type":30,"marks":5865,"value":5562},[106],{"type":30,"marks":5867,"value":5565},[106],{"type":30,"value":2929},{"type":26,"level":3257,"children":5870},[5871],{"type":30,"marks":5872,"value":5570},[106],{"type":33,"children":5874},[5875],{"url":5109,"meta":5876,"type":58,"children":5878},[5877],{"id":53,"value":3450},[5879],{"type":30,"value":4795},{"type":33,"children":5881},[5882],{"url":4999,"meta":5883,"type":58,"children":5885},[5884],{"id":53,"value":3450},[5886],{"type":30,"value":5004},{"type":33,"children":5888},[5889],{"url":5017,"meta":5890,"type":58,"children":5892},[5891],{"id":53,"value":3450},[5893],{"type":30,"value":5022},[5895],{"__typename":3647,"id":5686,"storyImage":5896},{"__typename":15,"url":5897,"alt":17,"title":17},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753390861-statement.webp",[5899,5900,5902,5904,5907,5909,5911,5913,5915,5917,5919,5921,5924],{"__typename":619,"attributes":17,"content":5013,"tag":620},{"__typename":619,"attributes":5901,"content":17,"tag":624},{"property":623,"content":5013},{"__typename":619,"attributes":5903,"content":17,"tag":624},{"name":627,"content":5013},{"__typename":619,"attributes":5905,"content":17,"tag":624},{"property":630,"content":5906},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1753390913-cashflow.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":5908,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":5910,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":5912,"content":17,"tag":624},{"property":3223,"content":5632},{"__typename":619,"attributes":5914,"content":17,"tag":624},{"name":642,"content":5906},{"__typename":619,"attributes":5916,"content":17,"tag":624},{"name":3228,"content":5632},{"__typename":619,"attributes":5918,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":5920,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":5922,"content":17,"tag":624},{"property":653,"content":5923},"2026-05-27T14:53:48Z",{"__typename":619,"attributes":5925,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":5927,"title":5022,"slug":5928,"excerpt":5929,"_firstPublishedAt":5930,"_updatedAt":5931,"_status":13,"image":5932,"content":5935,"_seoMetaTags":6343},"bo9VAXAzQtacKA99RNchzw","statement-of-functional-expenses-a-nonprofit-leader-s-guide","The Statement of Functional Expenses (SFE) is a cornerstone report for nonprofit organizations","2025-07-11T13:23:42-04:00","2026-05-28T09:37:54-04:00",{"__typename":15,"url":5933,"alt":5934},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1752254601-sfe.webp","Three labelled buckets — Program Expenses, Fundraising and Admin — holding documents in a bamboo grove",{"__typename":19,"value":5936,"blocks":6342},{"schema":21,"document":5937},{"type":23,"children":5938},[5939,5948,5952,5970,5974,6003,6007,6011,6015,6020,6027,6047,6053,6079,6085,6105,6111,6125,6129,6133,6171,6175,6180,6184,6213,6222,6227,6231,6236,6240,6244,6291,6295,6298,6314,6317,6320,6327,6334],{"type":33,"children":5940},[5941,5943,5946],{"type":30,"value":5942},"The ",{"type":30,"marks":5944,"value":5945},[106],"Statement of Functional Expenses (SFE)",{"type":30,"value":5947}," is a cornerstone report for nonprofit organizations, offering transparency into how funds are allocated by breaking down expenses into functional categories. While it serves a vital role in compliance, the SFE is much more than that—it’s a powerful tool for decision-making, storytelling, and strategic planning.",{"type":26,"level":27,"children":5949},[5950],{"type":30,"value":5951},"What Is a Statement of Functional Expenses?",{"type":33,"children":5953},[5954,5956,5958,5960,5963,5965,5968],{"type":30,"value":5955},"A ",{"type":30,"marks":5957,"value":5945},[106],{"type":30,"value":5959}," is a detailed financial report that categorizes an organization's expenses by both ",{"type":30,"marks":5961,"value":5962},[106],"natural classification",{"type":30,"value":5964}," (e.g., salaries, rent, supplies) and ",{"type":30,"marks":5966,"value":5967},[106],"functional classification",{"type":30,"value":5969}," (program services, administration, and fundraising).\n",{"type":33,"children":5971},[5972],{"type":30,"value":5973},"To fully understand the SFE, it’s important to grasp the purpose of each functional category and how they relate to the organization’s mission and operations:",{"type":96,"style":97,"children":5975},[5976,5985,5994],{"type":100,"children":5977},[5978],{"type":33,"children":5979},[5980,5983],{"type":30,"marks":5981,"value":5982},[106],"Program Services",{"type":30,"value":5984},": These are the expenses directly tied to your mission. For example, if your nonprofit focuses on literacy, costs for books, teacher salaries, and tutoring spaces would be included here.",{"type":100,"children":5986},[5987],{"type":33,"children":5988},[5989,5992],{"type":30,"marks":5990,"value":5991},[106],"Administration (or Management & General)",{"type":30,"value":5993},": These are administrative costs that keep the organization operational, such as office rent, utilities, and software subscriptions.",{"type":100,"children":5995},[5996],{"type":33,"children":5997},[5998,6001],{"type":30,"marks":5999,"value":6000},[106],"Fundraising",{"type":30,"value":6002},": These are costs associated with raising funds, such as event expenses, donor communications, and grant writing.",{"type":33,"children":6004},[6005],{"type":30,"value":6006},"The primary purpose of the SFE is to provide a clear picture of how donor dollars are utilized. This level of transparency builds trust with donors, stakeholders, and grantors while ensuring compliance with IRS requirements.",{"type":26,"level":27,"children":6008},[6009],{"type":30,"value":6010},"Understanding Expense Allocation",{"type":33,"children":6012},[6013],{"type":30,"value":6014},"Some expenses touch every part of your nonprofit—like rent, utilities, or office supplies—you can't simply assign them to one functional category. Instead, you'll allocation expenses to fairly distribute these shared costs across program services, administration, and fundraising. Here are the most common ways nonprofits divide up these organization-wide expenses:\n",{"type":33,"children":6016},[6017],{"type":30,"marks":6018,"value":6019},[2971,106],"Common Allocation Methods:",{"type":33,"children":6021},[6022,6025],{"type":30,"marks":6023,"value":6024},[106],"1. Direct Identification",{"type":30,"value":6026}," ",{"type":96,"style":97,"children":6028},[6029,6035,6041],{"type":100,"children":6030},[6031],{"type":33,"children":6032},[6033],{"type":30,"value":6034},"Expenses directly tied to a specific function are easily categorized",{"type":100,"children":6036},[6037],{"type":33,"children":6038},[6039],{"type":30,"value":6040},"Example: A program coordinator's salary goes directly to Program Services",{"type":100,"children":6042},[6043],{"type":33,"children":6044},[6045],{"type":30,"value":6046},"Simplest and most straightforward allocation method",{"type":33,"children":6048},[6049,6052],{"type":30,"marks":6050,"value":6051},[106],"2. Time and Effort Tracking",{"type":30,"value":6026},{"type":96,"style":97,"children":6054},[6055,6061,6067,6073],{"type":100,"children":6056},[6057],{"type":33,"children":6058},[6059],{"type":30,"value":6060},"Used for employees working across multiple functions",{"type":100,"children":6062},[6063],{"type":33,"children":6064},[6065],{"type":30,"value":6066},"Requires periodic time studies or employee time tracking",{"type":100,"children":6068},[6069],{"type":33,"children":6070},[6071],{"type":30,"value":6072},"Staff record the percentage of time spent in each functional area",{"type":100,"children":6074},[6075],{"type":33,"children":6076},[6077],{"type":30,"value":6078},"Provides the most accurate allocation for mixed-role employees",{"type":33,"children":6080},[6081,6084],{"type":30,"marks":6082,"value":6083},[106],"3. Square Footage Allocation",{"type":30,"value":6026},{"type":96,"style":97,"children":6086},[6087,6093,6099],{"type":100,"children":6088},[6089],{"type":33,"children":6090},[6091],{"type":30,"value":6092},"Useful for shared expenses like rent and utilities",{"type":100,"children":6094},[6095],{"type":33,"children":6096},[6097],{"type":30,"value":6098},"Allocate costs based on the physical space used by each functional area",{"type":100,"children":6100},[6101],{"type":33,"children":6102},[6103],{"type":30,"value":6104},"Calculate by measuring the square footage dedicated to each function",{"type":33,"children":6106},[6107,6110],{"type":30,"marks":6108,"value":6109},[106],"4. Headcount Allocation",{"type":30,"value":6026},{"type":96,"style":97,"children":6112},[6113,6119],{"type":100,"children":6114},[6115],{"type":33,"children":6116},[6117],{"type":30,"value":6118},"Distribute shared expenses based on the number of employees in each functional category",{"type":100,"children":6120},[6121],{"type":33,"children":6122},[6123],{"type":30,"value":6124},"Simple method when other allocation bases are difficult to determine",{"type":33,"children":6126},[6127],{"type":30,"value":6128},"",{"type":26,"level":162,"children":6130},[6131],{"type":30,"value":6132},"Best Practices for Expense Allocation",{"type":96,"style":97,"children":6134},[6135,6144,6153,6162],{"type":100,"children":6136},[6137],{"type":33,"children":6138},[6139,6142],{"type":30,"marks":6140,"value":6141},[106],"Consistency",{"type":30,"value":6143},": Use the same allocation method consistently across reporting periods",{"type":100,"children":6145},[6146],{"type":33,"children":6147},[6148,6151],{"type":30,"marks":6149,"value":6150},[106],"Documentation",{"type":30,"value":6152},": Maintain clear documentation of allocation methodologies",{"type":100,"children":6154},[6155],{"type":33,"children":6156},[6157,6160],{"type":30,"marks":6158,"value":6159},[106],"Regular Review",{"type":30,"value":6161},": Periodically reassess allocation methods as organizational structure changes",{"type":100,"children":6163},[6164],{"type":33,"children":6165},[6166,6169],{"type":30,"marks":6167,"value":6168},[106],"Transparency",{"type":30,"value":6170},": Be prepared to explain allocation methods to stakeholders",{"type":26,"level":27,"children":6172},[6173],{"type":30,"value":6174},"How to Read the SFE",{"type":33,"children":6176},[6177],{"type":30,"marks":6178,"value":6179},[106],"Focus on Percentages",{"type":33,"children":6181},[6182],{"type":30,"value":6183},"One key insight comes from calculating the percentage of each functional expense category against total expenses. In the example report above, it would be:",{"type":96,"style":97,"children":6185},[6186,6195,6204],{"type":100,"children":6187},[6188],{"type":33,"children":6189},[6190,6192],{"type":30,"value":6191},"Program Services: ",{"type":30,"marks":6193,"value":6194},[106],"67%",{"type":100,"children":6196},[6197],{"type":33,"children":6198},[6199,6201],{"type":30,"value":6200},"Administration: ",{"type":30,"marks":6202,"value":6203},[106],"22%",{"type":100,"children":6205},[6206],{"type":33,"children":6207},[6208,6210],{"type":30,"value":6209},"Fundraising: ",{"type":30,"marks":6211,"value":6212},[106],"11%",{"type":33,"children":6214},[6215,6217,6220],{"type":30,"value":6216},"A commonly cited guideline for nonprofits is the ",{"type":30,"marks":6218,"value":6219},[106],"65\u002F35 rule",{"type":30,"value":6221},", which suggests that at least 65% of spending should go toward program expenses, while overhead costs—such as administration and fundraising—should make up no more than 35%. However, every nonprofit is unique, and spending might not always align with this rule. Instead of just focusing on the ration, prioritize directing  funds toward programs and reducing unnecessary administrative or fundraising costs.",{"type":33,"children":6223},[6224],{"type":30,"marks":6225,"value":6226},[106],"Identify Trends Over Time",{"type":33,"children":6228},[6229],{"type":30,"value":6230},"Review SFEs from multiple periods to spot trends. Is program spending increasing? Are fundraising costs staying reasonable? These trends can indicate organizational health.",{"type":33,"children":6232},[6233],{"type":30,"marks":6234,"value":6235},[106],"Compare to Peers",{"type":33,"children":6237},[6238],{"type":30,"value":6239},"Look at SFEs from similar organizations to benchmark your spending patterns. Are you spending significantly more or less on fundraising or administration?",{"type":26,"level":27,"children":6241},[6242],{"type":30,"value":6243},"Insights For Nonprofit Leaders",{"type":96,"style":241,"children":6245},[6246,6255,6264,6273,6282],{"type":100,"children":6247},[6248],{"type":33,"children":6249},[6250,6253],{"type":30,"marks":6251,"value":6252},[106],"Mission Focus",{"type":30,"value":6254},"\nIf program service expenses are low, it might signal mission drift. Leaders should ensure resources align with the organization’s goals.",{"type":100,"children":6256},[6257],{"type":33,"children":6258},[6259,6262],{"type":30,"marks":6260,"value":6261},[106],"Operational Efficiency",{"type":30,"value":6263},"\nHigh administrative expenses could indicate inefficiency, but it’s important to remember that some administrative costs are necessary for sustainability.",{"type":100,"children":6265},[6266],{"type":33,"children":6267},[6268,6271],{"type":30,"marks":6269,"value":6270},[106],"Fundraising Effectiveness",{"type":30,"value":6272},"\nAnalyze fundraising costs relative to income generated. If fundraising isn’t yielding a significant return, it might be time to reevaluate strategies.",{"type":100,"children":6274},[6275],{"type":33,"children":6276},[6277,6280],{"type":30,"marks":6278,"value":6279},[106],"Budgeting Guidance",{"type":30,"value":6281},"\nUse the SFE to guide future budgeting decisions. For example, if supplies are a growing expense, it might be worth negotiating with vendors or seeking in-kind donations.",{"type":100,"children":6283},[6284],{"type":33,"children":6285},[6286,6289],{"type":30,"marks":6287,"value":6288},[106],"Stakeholder Communication",{"type":30,"value":6290},"\nThis report can help you craft narratives for grant proposals and donor appeals, showcasing how effectively your organization uses funds to achieve its mission.",{"type":33,"children":6292},[6293],{"type":30,"value":6294},"The Statement of Functional Expense is more than just a financial document. It's a strategic tool that reflects your nonprofit's commitment to financial transparency, operational efficiency, and mission-driven work.",{"type":33,"children":6296},[6297],{"type":30,"value":6128},{"type":33,"children":6299},[6300,6303,6311],{"type":30,"marks":6301,"value":6302},[106],"Get help by ",{"url":5556,"meta":6304,"type":58,"children":6307},[6305],{"id":53,"value":6306},"noopener",[6308],{"type":30,"marks":6309,"value":6310},[106],"SCHEDULING  A FREE CONSULTATION",{"type":30,"marks":6312,"value":6313},[106]," now",{"type":33,"children":6315},[6316],{"type":30,"value":6128},{"type":26,"level":3257,"children":6318},[6319],{"type":30,"value":5570},{"type":33,"children":6321},[6322],{"url":5109,"meta":6323,"type":58,"children":6325},[6324],{"id":53,"value":6306},[6326],{"type":30,"value":4795},{"type":33,"children":6328},[6329],{"url":4999,"meta":6330,"type":58,"children":6332},[6331],{"id":53,"value":6306},[6333],{"type":30,"value":5004},{"type":33,"children":6335},[6336],{"url":5008,"meta":6337,"type":58,"children":6339},[6338],{"id":53,"value":6306},[6340],{"type":30,"value":6341},"Nonprofit Cash Flow Stmt: Managing Your Mission’s Money Wisely",[],[6344,6345,6347,6349,6352,6354,6356,6358,6360,6362,6364,6366,6369],{"__typename":619,"attributes":17,"content":5022,"tag":620},{"__typename":619,"attributes":6346,"content":17,"tag":624},{"property":623,"content":5022},{"__typename":619,"attributes":6348,"content":17,"tag":624},{"name":627,"content":5022},{"__typename":619,"attributes":6350,"content":17,"tag":624},{"property":630,"content":6351},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1752254601-sfe.webp?auto=format&fit=max&w=1200",{"__typename":619,"attributes":6353,"content":17,"tag":624},{"property":634,"content":1130},{"__typename":619,"attributes":6355,"content":17,"tag":624},{"property":638,"content":3220},{"__typename":619,"attributes":6357,"content":17,"tag":624},{"property":3223,"content":5934},{"__typename":619,"attributes":6359,"content":17,"tag":624},{"name":642,"content":6351},{"__typename":619,"attributes":6361,"content":17,"tag":624},{"name":3228,"content":5934},{"__typename":619,"attributes":6363,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":6365,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":6367,"content":17,"tag":624},{"property":653,"content":6368},"2026-05-28T13:37:54Z",{"__typename":619,"attributes":6370,"content":17,"tag":624},{"name":657,"content":658},{"__typename":6,"id":6372,"title":6373,"slug":6374,"excerpt":6375,"_firstPublishedAt":6376,"_updatedAt":6377,"_status":13,"image":6378,"content":6381,"_seoMetaTags":6959},"Ths0naTRS0O_0IcAkKRaWw","IRS Compliance Basics: What You Need to Know About Form 990","irs-compliance-basics-what-you-need-to-know-about-form-990","Running a nonprofit means staying on top of IRS filing requirements","2025-07-11T11:10:25-04:00","2025-07-17T17:45:42-04:00",{"__typename":15,"url":6379,"alt":6380},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1752243482-form990.jpg","An IRS Form 990 lying on an engraved floral background with butterflies",{"__typename":19,"value":6382,"blocks":6958},{"schema":21,"document":6383},{"type":23,"children":6384},[6385,6389,6402,6407,6411,6418,6422,6471,6492,6499,6503,6525,6535,6541,6545,6553,6563,6570,6574,6588,6598,6603,6607,6611,6625,6635,6640,6644,6648,6653,6671,6708,6728,6735,6740,6744,6749,6758,6762,6782,6786,6806,6811,6831,6865,6870,6877,6893,6900,6912,6929,6945,6950,6954],{"type":33,"children":6386},[6387],{"type":30,"value":6388},"Running a nonprofit means staying on top of IRS filing requirements. Failure to file can result in penalty fees; tax-exempt revocation, and taxes may be due on the income you collected if your exemption is revoked. ",{"type":33,"children":6390},[6391,6393,6401],{"type":30,"value":6392},"This guide will help you understand key filing details, deadlines, and how to stay compliant. The IRS also offers ",{"url":6394,"meta":6395,"type":58,"children":6398},"https:\u002F\u002Fwww.stayexempt.irs.gov\u002Fhome\u002Fexisting-organizations\u002Fexisting-organizations",[6396,6397],{"id":53,"value":6306},{"id":56,"value":57},[6399],{"type":30,"value":6400},"online training",{"type":30,"value":119},{"type":26,"level":3257,"children":6403},[6404],{"type":30,"marks":6405,"value":6406},[106],"Which Form 990 Series Do I Need to Use?",{"type":33,"children":6408},[6409],{"type":30,"value":6410},"There are several variations of Form 990.  Which form to use depends on your nonprofit:",{"type":26,"level":3257,"children":6412},[6413,6416],{"type":30,"marks":6414,"value":6415},[106],"Form 990-N",{"type":30,"value":6417}," (e-Postcard)",{"type":33,"children":6419},[6420],{"type":30,"value":6421},"Easiest reporting requirements. ",{"type":96,"style":97,"children":6423},[6424,6440,6455],{"type":100,"children":6425},[6426],{"type":33,"children":6427},[6428,6430,6433,6435,6438],{"type":30,"value":6429},"For small nonprofits with annual gross receipts ",{"type":30,"marks":6431,"value":6432},[2971],"less",{"type":30,"value":6434}," than or ",{"type":30,"marks":6436,"value":6437},[2971],"equal",{"type":30,"value":6439}," to $50,000.",{"type":100,"children":6441},[6442],{"type":33,"children":6443},[6444,6446,6454],{"type":30,"value":6445},"Some categories of nonprofits are ",{"url":6447,"meta":6448,"type":58,"children":6451},"https:\u002F\u002Fwww.irs.gov\u002Fcharities-non-profits\u002Fform-990-n-e-postcard-organizations-not-permitted-to-file",[6449,6450],{"id":53,"value":6306},{"id":56,"value":57},[6452],{"type":30,"value":6453},"not permitted",{"type":30,"value":119},{"type":100,"children":6456},[6457],{"type":33,"children":6458},[6459,6461,6469],{"type":30,"value":6460},"You may still elect to file Form 990 or 990-EZ. This can be desirable if you want the information to be public in order to build donor trust, and some grants or states may require it. ",{"url":6462,"meta":6463,"type":58,"children":6466},"https:\u002F\u002Fbrytebridge.com\u002Fnonprofit-requirements\u002F",[6464,6465],{"id":53,"value":6306},{"id":56,"value":57},[6467],{"type":30,"value":6468},"Find out if you need 990-EZ i",{"type":30,"value":6470},"n your state.",{"type":33,"children":6472},[6473,6481,6483,6491],{"url":6474,"meta":6475,"type":58,"children":6478},"https:\u002F\u002Fwww.irs.gov\u002Fpub\u002Firs-pdf\u002Fp5248.pdf",[6476,6477],{"id":53,"value":6306},{"id":56,"value":57},[6479],{"type":30,"value":6480},"IRS 990-N User Guide",{"type":30,"value":6482},", ",{"url":6484,"meta":6485,"type":58,"children":6488},"https:\u002F\u002Fwww.irs.gov\u002Fcharities-non-profits\u002Fannual-electronic-notice-form-990-n-frequently-asked-questions",[6486,6487],{"id":53,"value":6306},{"id":56,"value":57},[6489],{"type":30,"value":6490},"990-N FAQ",{"type":30,"value":119},{"type":26,"level":3257,"children":6493},[6494,6497],{"type":30,"marks":6495,"value":6496},[106],"Form 990-EZ",{"type":30,"value":6498}," (Short Form)",{"type":33,"children":6500},[6501],{"type":30,"value":6502},"Less complex reporting requirements than full Form 990.",{"type":96,"style":97,"children":6504},[6505,6519],{"type":100,"children":6506},[6507],{"type":33,"children":6508},[6509,6511,6513,6515,6517],{"type":30,"value":6510},"For small to medium sized organizations with gross receipts ",{"type":30,"marks":6512,"value":6432},[2971],{"type":30,"value":6514}," than $200,000 AND total assets ",{"type":30,"marks":6516,"value":6432},[2971],{"type":30,"value":6518}," than $500,000.",{"type":100,"children":6520},[6521],{"type":33,"children":6522},[6523],{"type":30,"value":6524},"As with the 990-N, you may still elect to file Form 990.",{"type":33,"children":6526},[6527],{"url":6528,"meta":6529,"type":58,"children":6532},"https:\u002F\u002Fwww.irs.gov\u002Fpub\u002Firs-pdf\u002Fi990ez.pdf",[6530,6531],{"id":53,"value":6306},{"id":56,"value":57},[6533],{"type":30,"value":6534},"IRS 990-EZ Instructions",{"type":26,"level":3257,"children":6536},[6537,6539],{"type":30,"marks":6538,"value":5316},[106],{"type":30,"value":6540}," (Standard)",{"type":33,"children":6542},[6543],{"type":30,"value":6544},"Most comprehensive of the 990 series.",{"type":96,"style":97,"children":6546},[6547],{"type":100,"children":6548},[6549],{"type":33,"children":6550},[6551],{"type":30,"value":6552},"For larger nonprofits with gross receipts greater than or equal to $200,000 OR total assets greater than or equal to $500,000.",{"type":33,"children":6554},[6555],{"url":6556,"meta":6557,"type":58,"children":6560},"https:\u002F\u002Fwww.irs.gov\u002Fpub\u002Firs-pdf\u002Fi990.pdf",[6558,6559],{"id":53,"value":6306},{"id":56,"value":57},[6561],{"type":30,"value":6562},"IRS 990 Instructions.",{"type":26,"level":3257,"children":6564},[6565,6568],{"type":30,"marks":6566,"value":6567},[106],"Form 990-PF",{"type":30,"value":6569}," (Private Foundations)",{"type":33,"children":6571},[6572],{"type":30,"value":6573},"This form is for private foundations only.",{"type":96,"style":97,"children":6575},[6576,6582],{"type":100,"children":6577},[6578],{"type":33,"children":6579},[6580],{"type":30,"value":6581},"Includes detailed information about grants, investments, and trustees",{"type":100,"children":6583},[6584],{"type":33,"children":6585},[6586],{"type":30,"value":6587},"Required regardless of financial size",{"type":33,"children":6589},[6590],{"url":6591,"meta":6592,"type":58,"children":6595},"https:\u002F\u002Fwww.irs.gov\u002Fpub\u002Firs-pdf\u002Fi990pf.pdf",[6593,6594],{"id":53,"value":6306},{"id":56,"value":57},[6596],{"type":30,"value":6597},"IRS 990-PF Instructions",{"type":26,"level":3257,"children":6599},[6600],{"type":30,"marks":6601,"value":6602},[106],"Form 990-T — Unrelated Business Taxable Income",{"type":33,"children":6604},[6605],{"type":30,"value":6606},"Unrelated Business Taxable Income (UBTI) refers to the income generated by a tax-exempt organization from activities that are not substantially related to its exempt purpose. \n ",{"type":33,"children":6608},[6609],{"type":30,"value":6610},"For example, if a charity runs a thrift store that sells donated items, the income from that store is typically not considered UBTI. However, if the charity operates a for-profit business unrelated to its mission, such as a commercial parking lot, that income could be subject to UBTI tax.",{"type":96,"style":97,"children":6612},[6613,6619],{"type":100,"children":6614},[6615],{"type":33,"children":6616},[6617],{"type":30,"value":6618},"Required when income not directly related to a nonprofit’s exempt purpose.",{"type":100,"children":6620},[6621],{"type":33,"children":6622},[6623],{"type":30,"value":6624},"Can be filed by any type of tax-exempt organization.",{"type":33,"children":6626},[6627],{"url":6628,"meta":6629,"type":58,"children":6632},"https:\u002F\u002Fwww.irs.gov\u002Fpub\u002Firs-pdf\u002Fi990t.pdf",[6630,6631],{"id":53,"value":6306},{"id":56,"value":57},[6633],{"type":30,"value":6634},"IRS 990-T Instructions",{"type":26,"level":3257,"children":6636},[6637],{"type":30,"marks":6638,"value":6639},[106],"When Are the Filing Deadlines?",{"type":33,"children":6641},[6642],{"type":30,"value":6643},"If your fiscal year ends on December 31st, your return is due May 15th of the following year. (Unless that falls on a weekend, in which case it will be the following business day.) Your fiscal year is stated on the last 990 you filed.",{"type":33,"children":6645},[6646],{"type":30,"value":6647},"If your fiscal year ends on a different day, your return is due on the 15th day of the 5th month after the end of your nonprofit’s fiscal year. For example, if your fiscal year ends on June 30, your Form 990 is due November 15.",{"type":26,"level":3257,"children":6649},[6650],{"type":30,"marks":6651,"value":6652},[106],"Can I Get an Extension? ",{"type":33,"children":6654},[6655,6657,6660,6662,6670],{"type":30,"value":6656},"You cannot request an extension for Form ",{"type":30,"marks":6658,"value":6659},[3007],"990-N",{"type":30,"value":6661},",  ",{"url":6663,"meta":6664,"type":58,"children":6667},"https:\u002F\u002Fwww.irs.gov\u002Fcharities-non-profits\u002Fannual-electronic-filing-requirement-for-small-exempt-organizations-form-990-n-e-postcard",[6665,6666],{"id":53,"value":6306},{"id":56,"value":57},[6668],{"type":30,"value":6669},"but there is no penalty for submitting it late",{"type":30,"value":119},{"type":33,"children":6672},[6673,6675,6678,6679,6682,6683,6686,6688,6691,6693,6696,6698,6706],{"type":30,"value":6674},"Forms ",{"type":30,"marks":6676,"value":6677},[3007],"990",{"type":30,"value":6482},{"type":30,"marks":6680,"value":6681},[3007],"990-EZ",{"type":30,"value":6482},{"type":30,"marks":6684,"value":6685},[3007],"990-PF",{"type":30,"value":6687}," and",{"type":30,"marks":6689,"value":6690},[3007]," 990-T ",{"type":30,"value":6692}," are eligible for an automatic 6 months extension.  An organization will only be allowed one 6 months extension per return in a given year. To apply for an extension, use ",{"type":30,"marks":6694,"value":6695},[106],"Form 8868 ",{"type":30,"value":6697},"(",{"url":6699,"meta":6700,"type":58,"children":6703},"https:\u002F\u002Fwww.irs.gov\u002Fpub\u002Firs-pdf\u002Fi8868.pdf",[6701,6702],{"id":53,"value":6306},{"id":56,"value":57},[6704],{"type":30,"value":6705},"IRS Instructions",{"type":30,"value":6707},"). The automatic 6-month extension will be granted if:",{"type":96,"style":97,"children":6709},[6710,6716,6722],{"type":100,"children":6711},[6712],{"type":33,"children":6713},[6714],{"type":30,"value":6715},"the form is properly completed, ",{"type":100,"children":6717},[6718],{"type":33,"children":6719},[6720],{"type":30,"value":6721},"filed before the due date on your annual return, and ",{"type":100,"children":6723},[6724],{"type":33,"children":6725},[6726],{"type":30,"value":6727},"any balance due on line 3c is paid by the due date for the return for which the extension applies. ",{"type":33,"children":6729},[6730,6733],{"type":30,"marks":6731,"value":6732},[106],"Note",{"type":30,"value":6734},": Filing for an extension for your tax filing does not extend the deadline for any taxes owed. ",{"type":26,"level":3257,"children":6736},[6737],{"type":30,"marks":6738,"value":6739},[106],"What Should I Do if I Am Late?",{"type":33,"children":6741},[6742],{"type":30,"value":6743},"If you miss the filing deadline, file as soon as possible to minimize penalties. ",{"type":26,"level":3257,"children":6745},[6746],{"type":30,"marks":6747,"value":6748},[106],"What Are the Penalties If I Am Late?",{"type":33,"children":6750},[6751,6753,6756],{"type":30,"value":6752},"For Form 990, 990-EZ, 990-PF and 990-T, the IRS imposes penalties if there is no reasonable cause for late filing. (See ‘",{"type":30,"marks":6754,"value":6755},[106],"Can I Get Penalties Reduced",{"type":30,"value":6757},"?’). Penalties are based on gross receipts. Gross receipts are the total amounts the organization received from all sources during its annual accounting period, without subtracting any costs or expenses.  ",{"type":33,"children":6759},[6760],{"type":30,"value":6761},"If you failed to file in 2023, the penalties were:",{"type":96,"style":97,"children":6763},[6764,6773],{"type":100,"children":6765},[6766],{"type":33,"children":6767},[6768,6771],{"type":30,"marks":6769,"value":6770},[106],"$20 per day",{"type":30,"value":6772}," for organizations with annual gross receipts under $1,208,500, up to a maximum of $12,000 or 5% of gross receipts, whichever is less.",{"type":100,"children":6774},[6775],{"type":33,"children":6776},[6777,6780],{"type":30,"marks":6778,"value":6779},[106],"$120 per day",{"type":30,"value":6781}," for organizations with annual gross receipts over $1,208,500, with a maximum penalty of $60,000.",{"type":33,"children":6783},[6784],{"type":30,"value":6785},"If you fail to file in 2024, they will be:",{"type":96,"style":97,"children":6787},[6788,6797],{"type":100,"children":6789},[6790],{"type":33,"children":6791},[6792,6795],{"type":30,"marks":6793,"value":6794},[106],"$25 per day",{"type":30,"value":6796}," for organizations with annual gross receipts under $1,274,000, up to a maximum of $12,500 or 5% of gross receipts, whichever is less.",{"type":100,"children":6798},[6799],{"type":33,"children":6800},[6801,6804],{"type":30,"marks":6802,"value":6803},[106],"$125 per day",{"type":30,"value":6805}," for organizations with annual gross receipts over $1,274,000, with a maximum penalty of $63,500.",{"type":26,"level":3257,"children":6807},[6808],{"type":30,"marks":6809,"value":6810},[106],"Can I Get Penalties Reduced?",{"type":33,"children":6812},[6813,6815,6820,6822,6829],{"type":30,"value":6814},"Possibly. You may be able to have the penalties reduced or eliminated if you have a ",{"url":6816,"type":58,"children":6817},"https:\u002F\u002Fwww.irs.gov\u002Fcharities-non-profits\u002Fexempt-organizations-annual-reporting-requirements-filing-procedures-abatement-of-late-filing-penalties",[6818],{"type":30,"value":6819},"reasonable cause",{"type":30,"value":6821}," for the filing being late. You can make your case by adding a ",{"url":6816,"meta":6823,"type":58,"children":6826},[6824,6825],{"id":53,"value":6306},{"id":56,"value":57},[6827],{"type":30,"value":6828},"statement with your 990",{"type":30,"value":6830},".  It should address the following:",{"type":96,"style":97,"children":6832},[6833,6839],{"type":100,"children":6834},[6835],{"type":33,"children":6836},[6837],{"type":30,"value":6838},"The reason the penalty was charged. The daily delinquency penalty may be charged for either a late filed return, an incomplete return, or both.",{"type":100,"children":6840},[6841,6845],{"type":33,"children":6842},[6843],{"type":30,"value":6844},"Explain what prevented the organization from complying with the law, including:",{"type":96,"style":97,"children":6846},[6847,6853,6859],{"type":100,"children":6848},[6849],{"type":33,"children":6850},[6851],{"type":30,"value":6852},"what prevented the organization from requesting an extension, if the organization did not request such an extension;",{"type":100,"children":6854},[6855],{"type":33,"children":6856},[6857],{"type":30,"value":6858},"how the organization was not neglectful or careless, but exercised ordinary business care and prudence; and",{"type":100,"children":6860},[6861],{"type":33,"children":6862},[6863],{"type":30,"value":6864},"what steps have been taken to prevent the same situation from occurring in the future.",{"type":26,"level":3257,"children":6866},[6867],{"type":30,"marks":6868,"value":6869},[106],"Other Things To Keep In Mind",{"type":33,"children":6871},[6872,6875],{"type":30,"marks":6873,"value":6874},[106],"990 as a Marketing Tool:",{"type":30,"value":6876}," Some potential donors review a nonprofit's Form 990 before deciding whether to contribute. Ensure the narrative section clearly and compellingly tells your nonprofit's story. Many fundraisers consider the Form 990 a valuable marketing tool.",{"type":33,"children":6878},[6879,6882,6884,6892],{"type":30,"marks":6880,"value":6881},[106],"State Filing",{"type":30,"value":6883},": Don’t forget your ",{"url":6885,"meta":6886,"type":58,"children":6889},"https:\u002F\u002Fwww.councilofnonprofits.org\u002Frunning-nonprofit\u002Fgovernance-leadership\u002Fstate-filing-requirements-nonprofits",[6887,6888],{"id":53,"value":6306},{"id":56,"value":57},[6890],{"type":30,"value":6891},"state filing requirements",{"type":30,"value":119},{"type":33,"children":6894},[6895,6898],{"type":30,"marks":6896,"value":6897},[106],"Proper Signature Requirements:",{"type":30,"value":6899}," Form 990 must be signed by an authorized officer, such as the current president, vice president, treasurer, or chief accounting officer. Incorrect or incomplete filings can result in penalties.",{"type":33,"children":6901},[6902,6905,6907,6910],{"type":30,"marks":6903,"value":6904},[106],"Recordkeeping Requirements:",{"type":30,"value":6906}," Keep records supporting Form 990 series filings for ",{"type":30,"marks":6908,"value":6909},[106],"at least three years",{"type":30,"value":6911}," from the filing date or the return’s due date, whichever is later.",{"type":33,"children":6913},[6914,6917,6919,6927],{"type":30,"marks":6915,"value":6916},[106],"Good Governance: ",{"type":30,"value":6918},"Good governance practices require the full board of directors to review the Form 990 prior to filing. These are other ",{"url":6920,"meta":6921,"type":58,"children":6924},"https:\u002F\u002Fwww.councilofnonprofits.org\u002Frunning-nonprofit\u002Fgovernance-leadership\u002Fgood-governance-policies-nonprofits",[6922,6923],{"id":53,"value":6306},{"id":56,"value":57},[6925],{"type":30,"value":6926},"good governance practices",{"type":30,"value":6928}," to consider.",{"type":33,"children":6930},[6931,6934,6935,6943],{"type":30,"marks":6932,"value":6933},[106],"Need Help:",{"type":30,"value":6026},{"url":6936,"meta":6937,"type":58,"children":6940},"https:\u002F\u002Fwww.501cbookkeeping.com\u002F",[6938,6939],{"id":53,"value":6306},{"id":56,"value":57},[6941],{"type":30,"value":6942},"501cBookkeeping",{"type":30,"value":6944}," can help get your financial reports in order and make 990 filings a simple affair.",{"type":26,"level":3257,"children":6946},[6947],{"type":30,"marks":6948,"value":6949},[106],"Stay Compliant and Thrive",{"type":33,"children":6951},[6952],{"type":30,"value":6953},"Staying current with IRS filing requirements ensures your nonprofit remains in good standing. If you need help navigating Form 990 or organizing your financial records, reach out for expert support. Your mission is too important to risk compliance issues!",{"type":33,"children":6955},[6956],{"type":30,"value":6957},"This article is for informational purposes only and does not constitute tax, legal, or accounting advice.",[],[6960,6961,6963,6965,6968,6970,6972,6974,6976,6978,6980,6982,6985],{"__typename":619,"attributes":17,"content":6373,"tag":620},{"__typename":619,"attributes":6962,"content":17,"tag":624},{"property":623,"content":6373},{"__typename":619,"attributes":6964,"content":17,"tag":624},{"name":627,"content":6373},{"__typename":619,"attributes":6966,"content":17,"tag":624},{"property":630,"content":6967},"https:\u002F\u002Fwww.datocms-assets.com\u002F164045\u002F1752243482-form990.jpg?auto=format&fit=max&w=1200",{"__typename":619,"attributes":6969,"content":17,"tag":624},{"property":634,"content":635},{"__typename":619,"attributes":6971,"content":17,"tag":624},{"property":638,"content":635},{"__typename":619,"attributes":6973,"content":17,"tag":624},{"property":3223,"content":6380},{"__typename":619,"attributes":6975,"content":17,"tag":624},{"name":642,"content":6967},{"__typename":619,"attributes":6977,"content":17,"tag":624},{"name":3228,"content":6380},{"__typename":619,"attributes":6979,"content":17,"tag":624},{"property":645,"content":646},{"__typename":619,"attributes":6981,"content":17,"tag":624},{"property":649,"content":650},{"__typename":619,"attributes":6983,"content":17,"tag":624},{"property":653,"content":6984},"2025-07-17T21:45:42Z",{"__typename":619,"attributes":6986,"content":17,"tag":624},{"name":657,"content":658},{},1793196469462]