How can nonprofits track restricted grant activity effectively?

Using customers and sub-customers or projects is the most effective method for nonprofits to track restricted grant activity. This approach allows organizations to assign specific grants to distinct projects or sub-entities within their accounting software, which helps ensure that each grant's income and expenses are accurately recorded and monitored. By organizing financial activities in this way, nonprofits can easily generate reports that detail how funds from specific grants are being utilized, ensuring compliance with grant restrictions.

This method facilitates clear visibility into which funds are tied to which projects, enabling effective management of resources and compliance with donor requirements. As a result, it enhances transparency and accountability, which are crucial for nonprofit organizations when handling restricted grants.