For a not-for-profit, grants are often the lifeblood, and many grants come with reporting or acquittal requirements: at some point you have to show you spent the money on what it was for. That is the acquittal, and for a lot of organisations it is one of the most stressful parts of the year. It does not have to be. A common cause of acquittal stress is that the grant was not tracked separately from the start.
What a grant acquittal is
A grant acquittal is the report you give a funder showing how their grant was spent. It usually needs to demonstrate that the money went towards the funded purpose, in line with the grant agreement and its budget, by a set deadline.
Where an acquittal is required, the grant agreement will set out what needs to be reported and when. It is a condition of the funding, and a clean acquittal is often what smooths the way to the next grant. So while it can feel like paperwork, it is genuinely important to the organisation.
Why acquittals become a scramble
When acquittals are painful, it is often because the grant was not tracked separately from the start. The money went into the general account, the spending was coded like everything else, and now, at deadline time, someone has to go back through months of transactions to work out what was actually spent from the grant and find the evidence for it.
That reconstruction is where the stress, the late nights and the mistakes come from. And it is completely avoidable.
Set it up once, and it is easy
The trick is to track each grant from the moment it arrives. In practice that means:
- Tag the grant. Set up a tracking category or project for the grant in your accounting software, so income and spending can be attributed to it.
- Code income and expenditure to it. As grant money comes in and is spent, code it to that grant, not just the general accounts.
- Keep the evidence. File invoices and receipts against the grant as you go.
- Report against the budget. Where the funder wants spending shown by budget category, set the tracking up to match those categories.
Do that, and much of the financial information needed for the acquittal is already available, with the supporting evidence easier to find and review. Bear in mind that some acquittals also require narrative reporting, certification, a review or audit, or a funder-specific format, so check the agreement for what else is expected.
Common grant acquittal mistakes
- Mixing grant money in with general funds, so it cannot be traced.
- Not tracking spending against the grant budget, so the acquittal does not line up with what the funder expects.
- Leaving it to the deadline, turning it into a reconstruction.
- No supporting evidence, or evidence that has to be hunted down.
Every one of these is solved by setting the bookkeeping up properly at the start of the grant.
How Hyndes helps
Hyndes Advisory provides bookkeeping, management reporting and advisory support for not-for-profits and community organisations, including setting up grant tracking so income and expenditure can be reported clearly. That means bookkeeping and accounts set up so each grant is tracked cleanly from day one, income and expenditure coded to it, evidence kept in order, and acquittals ready to run. With business advisory support, the reporting to the board and to funders stays clear and trustworthy. See the not-for-profits page for how it fits together.
Frequently asked questions
What is a grant acquittal?
A report to a funder showing how their grant money was spent, demonstrating it went towards the funded purpose in line with the agreement and budget, by a deadline. Where an acquittal is required, the grant agreement sets out what needs to be reported and when.
Why are grant acquittals so stressful?
Often because tracking was not set up at the start, so grant income and spending are mixed with everything else and have to be reconstructed at deadline time. Set up to track each grant from day one, much of the information is already there when the acquittal is due.
How do you track a grant in your accounting?
Tag income and expenditure to each grant using tracking categories or projects in software like Xero. Code the grant income and related spending to that grant as it happens, keep the documents, and you can report on how it was spent at any time.
What records do you need for an acquittal?
A clear record of the grant income, the expenditure funded by it coded against the grant, and supporting evidence like invoices and receipts, often shown against the grant's budget categories. The exact records and reporting required depend on the funding agreement. Kept as you go, the acquittal is straightforward.
Can a bookkeeper help with grant acquittals?
Yes. A bookkeeper sets up the tracking, codes income and expenditure to each grant through the year, keeps the evidence organised, and produces the figures the acquittal needs, turning acquittal time into running and reviewing a report.
What happens if you cannot acquit a grant properly?
It can put current or future funding at risk and, at best, creates stress and last-minute work. Funders rely on acquittals to show their money was used as intended, so getting them right protects the relationship and the organisation.
Make acquittals a non-event
If grant acquittals are a stress each year, book a free 30-minute chat and we will set your bookkeeping up so they are simple.
Book a free 30-minute chat or call 0403 606 444.