Fund Accounting

Many non-profits, in particular a fiscal sponsor, use some form of fund accounting to handle accounting tracking of income and expenses for specific projects, or funds.

In fiscal sponsors, these funds are typically classified by auditors and/or accountants as "temporarily restricted assets", and spending of the assets are governed by a fiscal sponsorship agreement (see examples below).

Fund Report

The "fund report" is a shorthand name for a Temporarily Restricted Net Assets Report. This report shows the temporarily restricted income, expenses and assets. (An example of such a report can be found on page 6 of Conservancy's FY 2011 Audited Financial statement.)

Subset of the Books

Ultimately, any account system that truly supports fiscal sponsorship must provide all functions, reports, editing, interaction and viewing to allow a user to view a "subset" of the books that are specific to any given fund. In essence, the books of a fiscal sponsoring org are proper superset of all the books of its projects.

Thus, an individual project contributor wants to: - View the books for that project as an independent set, unencumbered by transactions for other projects.

The non-profit administrators want to:

- View the entire set of books for the organization, treating all income, expenses, and assets as belonging to the entire org, and only seeing the differences treating the project funds merely as "temporarily restricted assets".

- Be able to perform operations that span the entire books, such as reconciling bank accounts that are contain funds temporarily restricted for different projects.

Other Resources

Examples of Fiscal Sponsorship Agreements

More about fiscal sponsors from the National Council of Non-Profits.