Foundation vs. Government Grants
Different funders, different rules — how to treat each kind of grant.
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Foundation grants and government grants follow different rules. A foundation grant usually turns on whether the funder attached a condition. A government grant usually involves cost-reimbursement or refundable advances under federal Uniform Guidance. Knowing which kind you have tells you which grant type to choose in NP Ledger and how revenue will be recognized. This is background context, not a substitute for your auditor's judgment.
Choosing the wrong grant type misstates revenue and net assets. Government grantees in particular face stricter requirements — including the possibility of a Single Audit — and getting recognition wrong can lead to questioned costs or returned funds. Matching the grant type to the funder's rules keeps you compliant from day one.
Most substantive foundation grants are conditional: the funder ties the money to a measurable outcome, an accepted report, or matching funds you must raise. Under ASC 958-605, you can't recognize the revenue until that barrier is overcome.
| Question | Foundation grant |
|---|---|
| Typical NP Ledger type | Conditional (or Unconditional if no strings) |
| Governing standard | ASC 958-605 (conditional vs. unconditional contributions) |
| Typical conditions | Interim/final reports accepted, outcome metrics achieved, matching funds raised |
| Reporting cadence | Per the grant agreement — often interim + final narrative and financial reports |
If a foundation grant has no barrier and no right of return, it's unconditional — recognize it when the cash arrives.
Government grants are governed by federal Uniform Guidance (2 CFR 200) and equivalent state/local rules. They are usually reimbursable or advance:
| Question | Government grant |
|---|---|
| Typical NP Ledger type | Reimbursable (cost-reimbursement) or Advance (refundable advance) |
| Governing standards | ASC 958-605 and 2 CFR 200 (Uniform Guidance) |
| Typical conditions | Allowable costs incurred per the approved budget; performance/reporting requirements |
| Reporting cadence | Periodic financial reports (e.g., SF-425), drawdown requests, performance reports |
| Watch for | Advance payments must be minimized and any unspent advance is refundable (2 CFR 200.305); larger federal spend may trigger a Single Audit |
Reimbursable vs. advance
- Reimbursable: you spend first, then invoice the funder. NP Ledger accrues a receivable as expenses post and lists them under Ready to Bill.
- Advance: the funder sends cash up front. NP Ledger holds it as a refundable-advance liability and releases revenue only as you incur allowable expenses.
A foundation awards $50,000 contingent on a final outcomes report. Set the grant type to Conditional, add the report as a required condition. The $50,000 received sits as a refundable advance until you mark the report accepted — then it releases to revenue.
A city reimburses your after-school program for actual costs. Set the grant type to Reimbursable. As you post program expenses, a receivable builds and revenue is recognized. The expenses appear on Ready to Bill so you can invoice the city.
A state sends a $30,000 advance you must return if unspent. Set the grant type to Advance. The $30,000 is a refundable-advance liability; as you incur allowable expenses, an equal amount releases to revenue.
If you pass part of a government grant to another organization to run a piece of the program, that's a subaward, and it comes with its own set of Uniform Guidance rules — a subrecipient determination, a pre-award risk assessment, and ongoing monitoring. NP Ledger tracks all of it. See Subawards and Subrecipients for how that works.
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