QuickBooks Classes vs Customers for Grant Tracking

When nonprofits set up QuickBooks Online for grants, one early choice is whether to track each grant with a Class or with a Customer, often with a Project under it. Both approaches can work, and each has limits. The sections below compare them so you can choose the one that fits your organization.

Comparison

Feature	Classes	Customers and Projects
Plans	Plus and Advanced	Customers on all plans. Projects on Plus and Advanced
Limit on Plus	40 active Classes and Locations combined	No comparable limit on Customers
Track income by grant	Yes	Yes
Track expenses by grant	Yes	Yes
Budgets	Profit and loss budgets can be subdivided by Class	Check current budget options for your plan
Several donors to one grant or fund	Yes	Difficult, because each Project has one Customer
Hierarchy	Sub-classes	Customer, sub-customer, and Project
Project profitability and time reports	No	Yes, with Projects
Invoicing a funder	Needs a Customer for the funder	Yes
Setup effort	Usually lower	Usually higher

When to use Classes

Classes usually fit better when:

• Several donors give to the same restricted purpose.
• You don't invoice funders through QuickBooks.
• You want one reporting dimension across many grants, and the Plus limit of 40 Classes and Locations combined is enough, or you use Advanced.
• You want to keep Locations free for programs or sites.

To track grants with Classes:

1. Create a Class for each grant, for example "Ford Foundation 2024."
2. Apply the Class to recognized revenue when your accounting policy calls for it.
3. Apply the Class to the grant's expenses.
4. Run Profit and Loss by Class to see income and expenses for each grant.

Here is an example Class hierarchy.

Foundation Grants (parent)
├── Ford Foundation 2024
├── Kellogg Foundation 2024
└── Gates Foundation 2025

Government Grants (parent)
├── HHS Youth Services
└── DOE Education Grant

Classes have limits:

• A Class is a reporting tag. It isn't a chart of accounts attribute, a donor restriction, a self-balancing fund, or a record of which donor gave.
• A Class doesn't calculate a reliable grant balance by itself.
• You still build funder reports by hand.
• QuickBooks doesn't require a Class unless you turn on the warning, so staff can forget it.

On Plus and Advanced, you can create profit and loss budgets for a fiscal year, subdivide them by Class, and run the Budgets vs. Actuals report. Check Intuit's current plans and budget instructions instead of an old feature comparison.

When to use Customers and Projects

Customers and Projects usually fit better when:

• You invoice funders for reimbursement, as with cost-reimbursement grants.
• You need to track staff time against grants.
• You want QuickBooks Online project profitability reports.
• Each grant has exactly one funder.
• You manage a small number of grants.

To track grants with Customers and Projects:

1. Create a Customer for each funder.
2. Create a Project under that Customer for each grant.
3. Apply the Project to the grant's income and expenses.
4. Use Project reports to review each grant.

Here is an example structure.

Ford Foundation (Customer)
├── Youth Programs 2024 (Project)
└── Education Initiative 2025 (Project)

Gates Foundation (Customer)
└── Health Access Grant (Project)

Customers and Projects have limits:

• Each Project has exactly one Customer, so you can't attach several donors to one restricted fund.
• Grants with several donors need workarounds, such as sales receipts combined with journal entries.
• Project features may not match a grant budget's categories and periods.
• Setup takes more work.

Restricted funds with several donors

Funds with several donors often decide the choice. Suppose three donors each give $10,000 to a new building fund.

With Classes, you create one Class called "Building Fund." You record three deposits, each tagged with that Class, and you tag the building expenses with the same Class.

With Customers and Projects, you need a Project called "Building Fund," but a Project must belong to one Customer. You would need to create a placeholder Customer for the fund, or use workarounds with sales receipts and journal entries, which add steps and room for error.

If you often have grants or funds with several donors, Classes are usually the better choice.

Using both

Some organizations use all three dimensions:

• Classes for grants
• Customers for funders, for invoicing and receivables
• Locations for programs or sites, as a separate tag that applies to the whole transaction

The combination gives you more reporting options, but every transaction may need three tags. For example, a $500 office supply expense could carry the Class "Ford Foundation Grant" to show which grant pays, the Customer "Ford Foundation" if you track receivables, and the Location "Youth Services" to show which program benefits.

Choosing an approach

Consider Classes when the following points match your reporting needs:

1. Classes take less setup and upkeep.
2. Classes handle funds with several donors without workarounds.
3. Classes give one consistent dimension across many grants, within the Plus limit of 40 Classes and Locations, or without a limit on Advanced.
4. Classes leave Customers free for actual funders and customers.
5. Classes can work alongside Locations as a second dimension.

Consider Customers and Projects when:

• You invoice funders through QuickBooks.
• You need time tracking against grants.
• Every grant has exactly one funder.
• You have a small number of grants.

What neither approach provides

QuickBooks Online dimensions alone don't provide:

• A reliable remaining grant balance, unless you define an accounting and reporting process for it
• Tracking of restriction status
• Funder reports
• Compliance monitoring

A grant award isn't automatically income. Unconditional contributions, conditional contributions, and exchange transactions follow different recognition rules. Classes and Projects don't record restriction releases or show compliance, so use a recognition policy that your CPA approves.

If you need these features, you can add a grant management tool that connects to QuickBooks Online and keep your accounting in QuickBooks.

Switching approaches

To move from Classes to Customers and Projects:

• Create the new Customer and Project structure.
• Use the new structure for new transactions.
• Leave older transactions on their Classes for reference.
• Combine both in reports when you need the full history.

To move from Customers and Projects to Classes:

• Create the Class structure, with a Class for each existing Project.
• Use Classes for new transactions.
• Keep a record of which funder each Class relates to.

Switching partway through a grant makes reporting harder. If you can, decide before you have much history.

How GrantLink supports this today

You can add a grant manually or from a PDF of the award letter, agreement, or RFP. On the grant's Details page, use the QuickBooks panel to pick the Customers, sub-customers, Projects, Locations, or Classes for the grant on the Expenses and Money received tabs. GrantLink allocates eligible expense lines that match the Expenses links automatically. Money received links match income or revenue records, so a matched line isn't always a cash receipt.

To create a report, select Draft report with Assistant on the grant's Reporting > Reports page, or open Chats > New chat. Finished reports appear on the grant's Reports page. GrantLink doesn't require one tracking type for the whole organization, and it doesn't group grants by parent Class.

GrantLink doesn't change QuickBooks Online unless your organization allows that change in Settings > QuickBooks > Permissions. Grant links are set on each grant, and the shared settings in Settings > QuickBooks > Mapping don't relink existing grants.

Sources

• Intuit: Turn on class tracking: which plans include Classes and how Classes are assigned to transactions or rows.
• Intuit: Learn about usage limits: the combined Class and Location limit on each plan.
• Intuit: Create projects: which plans include Projects and how each Project relates to one Customer.
• Intuit: Create budgets: budget subdivisions and supported plans.