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Experienced Member

How to record grant income

We received a grant in which the grant holder pays for some expenses on our behalf and we also pay an "in-kind" portion.  All of the expenses - whether paid by our nonprofit or by the grant holder - need to be also recorded as "Grant Income" according to our auditor.  The auditor's notes, "During the year, the Organization received income and fixed assets as a beneficiary of a grant.  The income and corresponding asset were not recorded in the general ledger.  We believe that this practice can result in the financial statements being materially misstated.  We therefore recommend that the income and corresponding asset or expense be recorded when money has been paid on the grant."  I understand the "why", I am just unsure how I go about recording it in QB.  

1 Comment
QuickBooks Team

Re: How to record grant income

Hello there, amy21.


I'm glad you came here for support. It's my pleasure to help you record a donation in QuickBooks Desktop. Let's first setup a new item for the donation.


Let me walk you through how below:

  1. Go to Lists.
  2. Click Item List.
  3. Click the Item drop-down arrow at the bottom of the list and select New.
  4. Click the Type drop-down arrow and choose Service.
  5. Click the Account drop-down arrow and choose the corresponding account.
  6. Choose a name that matches the corresponding account; for example, a Donation item associated with the Grants income account.

Once done, you can now record donations in QuickBooks by using a sales receipt.


Here's how:

  1. Go to Customers.
  2. Click Enter Sales Receipt.
  3. Click the Customer:Job drop-down arrow and choose the donor/grant.
  4. Enter the amount of the donation that is being applied to the fund or project (class), as specified by the donor.
  5. If Deposit To appears at the bottom of the form, click the Deposit To drop-down arrow and choose the checking account to which you want to make the deposit.
  6. Click Save&Close.

In case you want to track donations, you can definitely run a few of the following reports in QuickBooks Desktop.

  • Budget vs. Actual by Donors/Grants.
  • Donor/Grants Report.
  • Donor Contribution Summary.
  • Budget vs. Actual by Programs/Projects.

You may also want to check out this article to learn more about customizing reports in QuickBooks: Customize reports in QuickBooks Desktop.


That should keep you on the right track. Let me know if you have follow-up questions about customer recording donations and I'd be glad to clear things up for you.