Skip to content
Nonprofit Organizations
Restricted funds have to be tracked as restrictions, not as notes beside the balance.
A restriction is a commitment the organization made to a donor or a funder. If the accounting cannot demonstrate that it was honored, the organization cannot demonstrate it either.
Steingard Financial maintains nonprofit books with fund-level separation intact, so grant reporting and board reporting draw on the same records rather than being assembled separately.
What makes these books different
Restricted and unrestricted funds are commingled
Once restricted gifts flow into general operating activity, demonstrating that they were spent as intended becomes a reconstruction exercise.
Grant reporting needs figures the books cannot produce
Funders ask for spending against an award period and budget line. General ledger categories rarely map to either.
Board reporting and management reporting are different questions
A board needs position and trend. Management needs detail. One report rarely serves both well.
What the service includes
- Restricted, temporarily restricted and unrestricted funds tracked separately
- Grant expense tracking against award periods and budget lines
- Functional expense allocation across program, administrative and fundraising
- Donation, pledge and in-kind contribution recording
- Board-ready financial statements alongside management-level detail
- Coordination with the organization’s Form 990 preparer
How the engagement works
Establish the fund structure
Steingard defines how funds, grants and functional categories are represented so reporting obligations can be met from the records themselves.
Bring current activity onto the structure
Existing grants and restricted balances are brought onto the same basis so reporting is consistent across periods.
Report to both audiences monthly
The close produces statements for the board and the detail management and funders require.
What is different here
Accountability to funders, not owners
Nonprofit bookkeeping answers a different question from commercial bookkeeping. The issue is rarely whether there was a surplus — it is whether money was used for what it was given for, and whether that can be evidenced.
Restriction is the organising principle
Funds given for a specific purpose cannot be treated as general operating money. Books that do not distinguish restricted from unrestricted cannot answer the central question a funder or board will ask.
A healthy total can hide a shortfall
An organisation can hold a substantial balance and still be unable to pay next month’s rent, because most of it is restricted. A single cash figure actively misleads here.
The reporting audience is external
Boards, funders and public filings all read these records. That raises the bar on consistency and documentation well above what an owner-run business needs for itself.
Requirements for filings and for any audit or review are matters for your accountant and auditor. The bookkeeping maintains records capable of supporting them.
Where this fits best
- Organizations administering multiple grants at once
- Organizations preparing Form 990 through an outside preparer
- Organizations with a board finance committee to report to
- Organizations receiving restricted gifts of any size
- Organizations whose treasurer is a volunteer carrying the books alone
What the books need to handle
The mechanics that matter in a nonprofit
The areas below are where nonprofit bookkeeping most often needs deliberate structure rather than adaptation of a commercial setup.
- Restricted and unrestricted funds tracked separately. Not a report generated at year end but a structure the books carry continuously, so the position is knowable at any point.
- Grants tracked against their own terms. Each with its period, permitted uses and reporting dates. Grant reporting built from records kept for that purpose is straightforward; reconstructed, it is not.
- Expenses allocated across function. Program, administrative and fundraising costs separated consistently — this is what external readers and filings look at, and inconsistent allocation is hard to defend later.
- Contributions distinguished from exchange transactions. A donation and a payment for services received are different things, and treating them alike distorts both the revenue picture and the filings built on it.
- In-kind contributions recorded. Donated goods, services and space are real support. Omitted entirely, the organisation’s scale and cost base are both understated.
Board-ready reporting is a natural output of this rather than a separate exercise, provided the structure was set up with that audience in mind.
Frequently asked questions
Do you do fund accounting?
Restricted and unrestricted funds are tracked as part of the structure rather than reported on afterwards. That is the difference between records that can answer a funder’s question and records that cannot.
Can you prepare our Form 990?
Preparation and filing are the work of the properly authorised professional. What is provided here is the record keeping, allocation and documentation that filing depends on.
We are audited annually. Can you support that?
Records can be maintained in a form suited to review, and document requests handled. The audit itself is performed by your independent auditor, and their requirements govern.
How should we allocate shared costs?
Consistently, on a basis that is documented and defensible. The method is a decision for the organisation and its accountant; the bookkeeping applies it the same way every period.
Do we need to record donated services?
In-kind support is real and generally belongs in the picture. What qualifies for recognition is a question for your accountant, and the records are kept so the determination can be applied.
Why the structure comes first
Fund accounting is difficult to add retroactively and straightforward to maintain.
Nearly every nonprofit bookkeeping problem traces back to the same origin: the fund structure was established after the funds arrived. Restricted gifts were received into a general account, spending happened, and the question of which dollars were which is now answerable only by inference.
Set up in advance, the same tracking is unremarkable. Each gift is recorded against its restriction, spending is recorded against the fund, and the reporting a funder asks for is a query rather than a reconstruction.
Functional expense allocation works the same way. Deciding once how shared costs are split across program, administrative and fundraising activity — and applying it consistently — produces a defensible figure. Deciding at year end produces a defensible-sounding one.
Make the grant report a query, not a project.
Tell Steingard Financial how the organization is funded, and the review will cover what the records would need to support its reporting.