Grant accounting goes wrong at the seam between two teams that use the same words differently. The grant office thinks in applications and awards; finance thinks in restricted and unrestricted funds, in periods, and in what an auditor will ask for. Most of the friction disappears once the grant record carries four facts finance actually needs, and once both sides agree on who the grantee is, which sounds obvious until a fiscal sponsor or a subaward is involved.
Who is the grantee, and why it matters on day one
The grantee is the organisation that receives the award and is legally responsible for it: for the money, for the work and for the reports. If you are fiscally sponsored, the sponsor is usually the grantee and you are not, which changes who signs, who reports and whose audit it lands in. If you pass money on, you are a pass-through and the receiving organisation is a subrecipient with obligations you now have to monitor. Getting this wrong at application time is expensive to correct later.
The four facts finance needs from every award
What was asked and what was granted, which are rarely the same. The period of performance, because an award landing in October and running eighteen months touches two fiscal years. Whether the money is restricted and to what. And the reporting dates, because the financial report is a finance deliverable with a grant-office deadline attached to it.
Indirect cost, stated once and used everywhere
If you have no federally negotiated rate, the Uniform Guidance lets you elect a de minimis rate of up to 15% of modified total direct costs, and you determine the appropriate rate up to that limit. Whatever you elect, it belongs on the award record rather than being re-decided per application, because a different rate on each budget is the kind of inconsistency an auditor notices and a programme officer asks about.
How long the paperwork has to survive
For federal awards, records must be retained for three years from the date the final financial report is submitted. That is usually long after the person who wrote the application has left, which is the practical argument for keeping the agreement, the budget, the reports and the correspondence against the award as you go rather than assembling them when asked.
Questions people ask about nonprofit grant accounting
What is the difference between restricted and unrestricted?
Restricted money may only be spent on what the funder specified; unrestricted may be spent on the mission as the organisation judges. Most grant income is restricted.
Who is the grantee if we are fiscally sponsored?
Usually the sponsor. They sign, they report and it is their audit. Confirm it before you apply, not after the award.
How long do we keep grant records?
Three years from the submission of the final financial report for federal awards, under 2 CFR 200.334; award terms and state rules can be longer.