Managing Restricted Funds

When donors give with restrictions—"for youth programs" or "for the new building"—you need to track those funds separately and release the restrictions only when spent for the designated purpose. GrantLink simplifies this entire workflow.

What Are Restricted Funds?

Under nonprofit accounting standards (ASU 2016-14), contributions are classified as:

Classification	Description	Example
Without Donor Restrictions	No restrictions on use	General operating donations
With Donor Restrictions (Time/Purpose)	Must be used for specific purpose or after specific date	"For 2025 programs"
With Donor Restrictions (Perpetual)	Principal must be maintained forever	Endowment gifts

How GrantLink Helps

GrantLink serves as a grant subledger that tracks restricted funds throughout their lifecycle:

1. Create the Grant — Set up the restricted purpose with proper classification
2. Record Fund Receipts — Track donations from one or multiple donors
3. Allocate Expenses — Tag spending to the grant as restrictions are satisfied
4. Calculate Indirect Costs — Apply F&A overhead rates automatically
5. Report to Funders — Generate budget vs. actual reports

What GrantLink Does

• Creates QBO Classes automatically for each grant
• Tracks award amounts, receipts, and spending
• Calculates and posts indirect cost journal entries
• Provides real-time budget vs. actual dashboards
• Generates funder reports

What Your Accountant Handles

GrantLink does not automatically post the GAAP-required "Net Assets Released from Restrictions" journal entry. This reclassification moves amounts between "With Donor Restrictions" and "Without Donor Restrictions" on your Balance Sheet.

Your accountant uses GrantLink's spending totals to prepare this entry at period-end. See Working with Your Accountant for details.

The Restricted Fund Lifecycle

RECEIVE → TRACK → SPEND → RELEASE → REPORT
   │         │        │        │         │
   ▼         ▼        ▼        ▼         ▼
 Fund     Grant    Allocate  Accountant  Funder
Receipt  Dashboard  Expenses   Posts JE   Report

Related Guides

• Understanding Fund Receipts — Recording donations to grants
• Managing Multi-Donor Grants — Multiple donors, one restricted purpose
• Running Indirect Cost Calculations — F&A overhead automation
• Working with Your Accountant — Net asset release entries
• Grant Status Lifecycle — From prospect to closed

Best Practices

1. Classify correctly at setup — Set the restriction type when creating the grant
2. Record receipts promptly — Link deposits within a week of receipt
3. Allocate regularly — Process expense allocations weekly
4. Run IDC monthly — Calculate and post indirect costs each month
5. Coordinate with your accountant — Share spending totals for release entries