Nonprofit Accounting Basics
Accounting for Government Grants: Sample Journal Entries
Note: Articles published before January 1, 2017 may be out of date. We are in the process of updating this content.
Following are some examples of journal entries for accounting for government grants.
Proper Accounting for Contributions:
Unrestricted award
Temporarily Restricted award
Permanently Restricted award
NOTE: The investment income will be recorded into the unrestricted, temporarily restricted or permanently restricted fund based on the donor's guidance. In the absence of specific instructions all investment earnings are to be considered unrestricted.
Cost reimbursable grants
When grant awarded
No entry made since award is conditional upon incurring qualifying expenses
In-kind contributions
NOTE: The expense account charged should be based on the service provided (i.e. pro-bono legal services should be charged to legal expense)
Agency transactions
Split interest agreements (assuming charitable gift annuity)
NOTE: The annuity payment liability represents the net present value of the expected future distributions to 3rd parties. The revenue is recorded as the difference between the assets transferred and the liability recorded.
NOTE: The "Change in value of split-interest agreements" is an income account that belongs on the statement of activities.
Conditional contributions
No entry made until conditions are met