itsual Nonprofit and Fund Accounting Basics
Overview
Fund accounting tracks resources by restriction and purpose. It ensures donor-restricted funds are used and reported correctly.
When to Use
- Nonprofit financial management
- Grant accounting and compliance
- Restricted vs unrestricted net assets
- Board reporting for mission organizations
Core Concepts
- Without-donor-restriction vs with-donor-restriction net assets
- Release from restrictions
- Grant budgets, allowability, and reporting
- Functional expense allocation (program, admin, fundraising)
Principles
- Restrictions are legal and ethical obligations
- Commingling restricted funds operationally requires careful tracking
- Overhead allocation policies must be defensible
- Transparency supports donor trust
Verification
- Restricted funds are tracked by purpose
- Releases are supported by qualifying spend
- Grant reports reconcile to books