Restricted funding creates a monitoring challenge that most commercial finance tools are not designed for. Ewa Kowalczyk has managed finances at a Cork-based nonprofit for seven years. She describes the dual-tracking system her team built and why standard budget software fell short.
The nature of restricted funding
How is nonprofit budget monitoring different?
Each grant has its own eligible cost categories, reporting periods, and sometimes its own currency. If a staff member works across three funded projects, their time must be allocated correctly to each. An error does not just affect internal reporting. It affects compliance with the donor agreement and can trigger a clawback request.
Where standard tools fail
What was missing from off-the-shelf software?
Most accounting platforms handle fund accounting poorly. They can tag transactions to a project code, but producing a donor-formatted budget report still required significant manual work. We spent more time reformatting data than analysing it.
The system they built
What does your current process look like?
We maintain a master budget tracker in spreadsheet form alongside our accounting system. Every transaction is coded to both a general ledger account and a project code. Monthly, we run a reconciliation between the two. The spreadsheet then maps those figures into each donor's reporting template.
It sounds like double entry, and in a sense it is. But the reconciliation step catches miscodings before they appear in a donor report. We also track budget utilisation rates by quarter. If a project is underspending significantly, that is a signal to investigate whether activities are on schedule, not just whether money is being saved.