Grants Management ManualChapter 11 - Record KeepingGrants List, Audited Financials and Other Year-End Activities for U.S. Entities

Grants List, Audited Financials and Other Year-End Activities for U.S. Entities

While audited financials are technically separate from filing of the tax return, financial information is a significant component of the tax return data. A key grant-related element of the audited financials is calculation of the “grants payable” amount, which is liability on the entity’s balance sheet. It consists of all accrued grant amounts that are unpaid, and accumulates from prior years. For amounts accrued for grants that extend beyond the year following the fiscal year, there is a calculation for “net present value” which discounts the value of future payables based on a conservative inflation rate and investment return – usually 5%. Another GM-related element that feeds into the financial statements is the “grants receivable” amount, which is the sum of unpaid commitments from any 3rd party funding sources.

Additional grant information feeds into the tax returns for OSI-NY and FPOS. Most significant is production of the grants list, which includes name, address, purpose, grantee organizational tax status, amount awarded and amount paid for any grants accrued or paid during the fiscal year. The accounting controller is responsible for reconciling the NetSuite and Foundation Connect accrued and paid amounts, and engages GM staff in review of discrepancies. GM is responsible for reviewing the text fields and refers to a style manual (see box below) in making corrections.

Grants List Manual of Style for US grantees

 Suite and Floor should be capitalized and follow on the same line as the street address, separated by a comma and should use the numeral for the number (e.g., 4th Floor and not Fourth Floor)

 Post Office Boxes should look be: P.O. Box ### (e.g., no space between . and O, space between . and Box)

 For Washington DC addresses: no periods in the direction part of the street address (e.g., NW) and do not separate it with a comma (e.g., for the full effect: 1600 Pennsylvania Avenue NW, Oval Office Suite)

Some addresses to refer to:

American Bar Association Fund for Justice and Education 740 15th Street NW, 9th Floor Washington, DC 20005-1009

Accountability Project, Inc. P.O. Box 426, Church Street Station New York, NY 10007

American Pain Foundation 111 South Calvert Street, Suite 2700 Arlington, VA 22314-1767

 Street, Avenue, Boulevard, etc. should be spelled in full (no abbreviations)

Expenditure Responsibility Statement for 990-PF Tax Return for U.S. Private Foundations

The Expenditure Responsibility statement is a separate attachment to the tax return that lists all grants to organizations other than public charities that were awarded or paid in the current tax year, or grants awarded in prior tax years that have not had the full amount of their grant accounted for in a prior ER statement. The ER statement indicates whether these grantees have submitted reports on their activity for the fiscal year and the amount those reports showed as expended during the period. Those grants continue to be listed until they are reported as fully expended. The 990-PF return includes a few questions related to program related investments and expenditure responsibility grant making.

Year-end GM Activities and Responsibilities

As part of planning for year-end, GM coordinates with Finance to announce cut-off dates for the processing of grants and payments. The cut-off for getting a grant accrued and paid is usually the second week of November, and includes the caveat that lobbying or other issues can impact the ability to pay the grant. The deadline for getting a grant payment out is usually the first week in December. Grants officers have discretion with Accounting to process payments up to the close of the office for the winter break, but it is important to manage program expectations and have them make a case for the urgency of the payment. These deadlines are usually communicated to all staff in an email in September and followed up by grants officers to ensure adequate planning by programs. For grants referred to FOSI and OSI-AF, year-end dates extend into early January, but we do not communicate those dates to programs based at US offices to avoid any confusion.

Most of the year-end work related to producing financials and tax returns takes place between December and March, when the books are closed and draft financials are produced for the arrival of our auditors.

Specific Year-End Activities for NY-based Individual Grant Programs

In New York, for scholarship programs that accrue estimated rather than fixed amounts, the finance department produces a list of variances that require add-on or reverse accruals. For grants that have been cancelled during the year, either rescinded or the grant letter not countersigned, there is a concerted effort to reverse those accruals during the same year in order to avoid having to report them on the tax return and thus subject them to record retention requirements. Accounting usually reviews the check register to determine whether any checks sent to grantees haven’t been cashed and should be cancelled and reissued prior to year-end.

Once the payment submission deadline passes, grants officers who work with individual grant programs that involve 1042 tax liability need to remind program counterparts not to release any more grantee payments until January. The calculation of 1042 tax is based on the accumulation of paid amounts over the fiscal year and those calculations will be incorrect if payments originate in one fiscal year and are paid in another. Upon our return in January, Systems needs to reset the 1042 calculation mechanism.


Joe Behaylo

Cross-reference to Chapter 10 on use of Financial Closed status.

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