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).

Related Terms

> Need help making sense of your books? Ketchup cleans up your QuickBooks in 3–7 business days — so your numbers actually make sense. Get your price →

Related Terms

Unearned Revenue

Unearned revenue is money you've received from customers for goods or services you haven't delivered yet. It's recorded as a liability — not income — because you owe the customer either the product/service or a refund. Common examples include annual subscriptions paid upfront, deposits for future wo

Asset

An asset is anything your business owns that has economic value — something that can be converted to cash, used to generate revenue, or provides future benefit. Assets include cash, equipment, inventory, real estate, accounts receivable, and even intangible things like patents. They appear on the le

Current Liability

A current liability is a debt or obligation your business expects to pay within one year. Accounts payable, credit card balances, payroll taxes due, and the current portion of loans are all current liabilities.

Accrual Basis

Accrual basis accounting records revenue when it's earned and expenses when they're incurred — regardless of when cash actually changes hands. It's the opposite of cash basis, where you only record transactions when money moves. Most businesses over $25 million in revenue are required to use accrual

Need these terms applied to your books?

Accounting Ketchup catches up your QuickBooks so the glossary becomes your reality. Flat rate.

Get My Price →