Keeping restricted funds apart in your chart of accounts

How a non-profit can lay out its chart of accounts so each restricted grant's income, spending and balance can be read on its own in Achekam.

By Achekam · 11 October 2026 · 5 min read · For Non-profit businesses in South Africa, Nigeria, Kenya

A funder's monitoring visit usually includes one simple-sounding request: "Show us our money." Not the organisation's total income and expenditure, but this grant's receipts, this grant's spending and what is left. If every grant's money runs through the same handful of accounts, that request means a day of sorting transactions by hand, and the answer is only as reliable as the person doing the sorting.

Restricted money is given for a stated purpose, and it comes with a promise attached. The organisation must be able to show it went where it was meant to go. The simplest way to make that possible is to build the separation into the chart of accounts from the start, so each fund's figures can be read straight from the books.

This article explains how to do that in Achekam, and the naming discipline that keeps it manageable.

Why each grant's money must be visible on its own

Funders ask to see their money separately for good reasons:

to confirm it was spent on the activities and budget lines they approved;
to check nothing was used to cover other programmes or general costs without agreement;
to see the unspent balance, which they may want returned or carried forward;
to compare spending with the budget, line by line.

An organisation that can answer those questions from its ledger, rather than a spreadsheet rebuilt for each report, spends less time on reporting and earns more trust. It also protects itself: when two grants fund similar work, clear separation is the only defence against an accusation that one funder's money paid for another's activities.

Adding, renaming and switching off fund accounts

Every organisation in Achekam has its own double-entry ledger with a standard chart of accounts, created when the books first open. Accounts can be added, renamed or switched off.

For each restricted grant, consider a small family of accounts:

income for the grant, or a liability for grant money received in advance if your accountant treats it that way;
expense accounts for the grant's main budget lines, such as salaries, programme materials, travel and training;
where needed, an inter-fund account if this grant ever borrows from or lends to another fund.

Keep the unrestricted, general fund in the standard accounts, so that restricted grants stand out as additions rather than the other way round.

Two cautions. Match the expense accounts to the funder's budget lines, not to every possible cost; a grant with dozens of accounts is hard to post to correctly, and a mis-posting is worse than a broader account. And when a grant ends and its balances are cleared, switch its accounts off rather than reusing them for the next grant, so the history stays clean.

Moving a shared cost into a fund

Some costs serve several programmes at once: office rent, the finance officer's salary, the audit fee, internet. Funders often allow a share of these to be charged to their grant, provided the basis is fair and documented.

Post such costs first to shared, general accounts. Then, monthly, move each grant's share into its own accounts with a manual journal:

Agree the basis for each shared cost with your accountant: floor space for rent, time records for salaries, or the basis the grant agreement sets.
Work out each grant's share for the month on a short schedule.
Post a manual journal: debit each grant's expense account with its share, credit the shared account with the total moved.
Put the schedule's reference in the journal's description and file the schedule.

Achekam refuses a journal that does not balance or is dated in a closed month. A posted journal is corrected only by reversal: if a share was wrong, reverse the journal and post a corrected one, and the ledger shows both. That trail is exactly what a funder's auditor will want when testing an allocation.

Reading one fund's balance

The trial balance shows each account for all time, for a period or at a date, and says whether debits equal credits. Because each grant has its own accounts, reading one fund means reading its accounts:

for a period, such as the funder's reporting quarter, to see income received and spending by budget line;
at a date, such as the funder's year end, to see the unspent balance or liability remaining.

Management accounts add up an income statement for a chosen period, beside the period before, and a balance sheet at period end, exportable as PDF or CSV. And you can set a budget per account and period and compare it with actual figures, so loading each grant's budget against its own expense accounts gives a budget comparison for that grant alone; tracking grant spending against the budget explains the comparison in detail.

If your financial year does not start in January, choose your own period dates rather than relying on the year-to-date preset; see year-to-date figures for a non-January financial year.

A naming checklist before the first grant arrives

Naming is what makes a chart with many funds readable. Agree a convention once, and apply it to every grant:

Start with the fund. Begin each account name with a short, unique fund name, such as "Literacy Fdn – Salaries", so a fund's accounts sit together in any list.
Include the period for time-limited grants. "Literacy Fdn 2026" avoids confusion when the same funder renews.
Use the funder's own budget line words. If the agreement says "Community mobilisation", so should the account.
Name liabilities clearly. "Literacy Fdn – Received in advance" leaves no doubt.
Keep a register. A one-page list of every fund, its accounts, the agreement date and the person responsible.
Decide who may add accounts. One person, usually the finance lead, so the convention survives.

Which reporting framework your organisation follows affects how restricted funds are presented in the annual financial statements. In Kenya, for example, ICPAK has issued a technical advisory on adopting the International Non-Profit Accounting Standard, explaining why IFRS and IPSAS do not fully meet non-profits' reporting needs. Wherever you are, ask your accountant which framework applies to you before designing the chart.

For grants paid before they are spent, the liability account and its monthly release are covered in grant money received before it is spent.

Draft your fund register this week, with an account list for your largest grant, and review it with your accountant before the next tranche arrives.

General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.