Grant Revenue Recognition

Not every grant becomes revenue the moment the cash arrives. Under nonprofit accounting rules (ASC 958-605), when you record grant money as revenue depends on the kind of grant it is. NP Ledger handles this for you: you tell it the grant type, and it posts the right journal entries automatically as cash comes in, expenses post, and conditions are met. This feature requires a Standard plan or higher.

Recording grant revenue too early is one of the most common — and most consequential — nonprofit accounting mistakes. It overstates your revenue, misstates your net assets, and can trigger audit findings. For government grants, getting it wrong can mean returning money. Recognizing revenue at the right moment keeps your books accurate and your funders confident.

NP Ledger supports four grant types. You set the type on the grant detail page (Grants → a grant → Change type).

Unconditional

The simplest case. Cash arrives, revenue is recognized. Nothing else to track.

Conditional

The funder attached a barrier: a report they must accept, an outcome you must achieve, matching funds you must raise. Until that barrier is cleared, the cash you receive is held as a refundable advance (a liability), not revenue. When you mark the last required condition met, NP Ledger releases the advance to revenue automatically.

You'll see this on the grant detail page: cash received shows up under Deferred (refundable advance), and Recognized stays at $0 until conditions are met.

Reimbursable (cost-reimbursement)

The funder pays you back for costs you've already incurred. As you post expenses against the grant, NP Ledger accrues a Grant Receivable and recognizes restricted revenue. The expenses then appear on your Ready to Bill list so you can invoice the funder. When the reimbursement cash arrives, it clears the receivable.

Advance (refundable advance)

The funder sends cash up front, but you must return anything you don't spend. The cash starts as a refundable-advance liability. As you incur allowable expenses, NP Ledger releases an equal amount to revenue — so revenue tracks your actual spending, never more than the advance you hold.

Every recognition entry NP Ledger creates is a separate, automatic journal entry — your original entry stays exactly as you recorded it. These automatic entries are tagged and listed under Auto-generated entries on the grant detail page, so an auditor can trace any recognition back to the event that caused it.

You never post these entries by hand. NP Ledger creates them when:

• Cash is received on a conditional or advance grant → it's moved to the refundable-advance liability.
• An expense posts on a reimbursable or advance grant → revenue is recognized.
• A condition is marked met on a conditional grant → the advance is released to revenue.

1. Open the grant from the Grant Dashboard and click Grant Detail.
2. Click Change type and choose the grant type. NP Ledger shows a plain-English preview of when revenue will be recognized.
3. For a conditional grant, add the conditions that gate recognition.
4. Optionally add an installment schedule — the payments you expect from the award letter. Receipts auto-match to these so you can spot late or short draws.

On the grant detail page, find the condition and click Mark met. Record at least a sentence of evidence (the funder's acknowledgment, the accepted report) and the date. When you submit, NP Ledger releases the appropriate revenue and logs the action. If other required conditions are still open, the revenue waits until the last one is met.

• Grant Dashboard — track budget, spending, and remaining balance
• Foundation vs. Government Grants — which rules apply to which funder
• Budget vs. Actual — compare grant spending to budget