Budget for Government Grants
Posted: June 6, 2009
Shawn H. Miller, CPA, CFE
Calibre CPA Group PLLC
This article was posted by Mr. Miller on the Non Profit Accounting Basics website in 2009 and is still very much prevalent today.
When you receive a grant from a governmental agency, it will typically include a program budget. This budget is likely the maximum that can be claimed for reimbursement from the governmental agency.
In the event that the expenditures exceed the program budget you have two options – (1) request additional funding from the government; or (2) obtain funding from other sources for the excess.
In many instances, the organizations unrestricted funds will have to be used for these excess expenditures. This budget may also provide detailed, line-item budget that identifies how the grant is to be spent – such as personnel, travel, meetings, professional costs… Often there are stipulations in the grant agreement that require you to request permission from the granting agency prior to reallocating any costs from one budget line to another.
The grant budget may contain other stipulations, such matching requirements or limits on indirect costs that are requirements of the grant. It is crucial that before you accept any grant you thoroughly review the budget and any related stipulations or conditions.
These seemingly minor items can have a significant impact of the ultimate collectability of reimbursement for costs incurred.
If you are just starting to apply for grants See Grant Management Non-Profit Fund Accounting Book chapter for sample Award Letters and familiarize yourself of the terms that your award may contain. As stated above it is very important that you know any stipulations provided in your award letter. You may have to return all funds received if your organization is not in compliance.
