Grant

Funds awarded to an organization (typically a nonprofit) for a specific purpose, usually from a government agency, foundation, or corporation. Grants don't require repayment.

Grant Definition

A grant is a financial award given to an organization to fund specific activities, programs, or projects. Unlike loans, grants don't need to be repaid. Unlike donations, grants usually come with detailed reporting requirements and spending restrictions.

Types of Grants

Federal grants — from agencies like HHS, DOE, USDA (applied via grants.gov)

State and local grants — from state agencies, counties, cities

Foundation grants — from private or community foundations

Corporate grants — from businesses with giving programs

Grant Accounting Requirements

Track grant funds separately (use Classes in QBO)

Only spend on allowable costs defined in the grant agreement

Maintain time-and-effort documentation for personnel costs

Submit financial reports on the grantor's schedule

Keep records for 3-7 years after the grant closes

How Grants Work in QuickBooks

1. Create a separate Class for each grant

2. Record the grant award as income to a "Grant Revenue" account

3. Tag all grant-funded expenses to the grant's Class

4. Run P&L by Class to show exactly how grant money was spent

5. Use budget vs. actual reports for grant compliance

FAQ

Q: Is grant revenue taxable?

A: For 501(c)(3) nonprofits, grants for exempt purposes are not taxable. For businesses, grants are generally taxable income (including PPP/EIDL if not forgiven).

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