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Transfer - Restricted / Unrestricted Funds

Payroll paid from general funds but partial working hours are for a project with restricted fund

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I'm running finance for a small charity and we've received a grant for a project which is a restricted fund. We have paid the employee who has spent a portion of his working hours for the project, but the payroll was paid from our general funds acocunt as the restricted fund has not arrived. May I ask whether I can post a manual journal of inter-funds transfer and make an actual bank transfer? Thanks very much.

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By lionofludesch
23rd Oct 2019 18:41

Sort of.

You need to work out exactly what was spent on the restricted project and charge that amount to the restricted fund.

If the unrestricted fund has already paid the wages, of course they should be reimbursed.

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By WhichTyler
23rd Oct 2019 23:12

Just dr restricted expenditure with the relevant proportion of costs, and cr unrestricted expenditure. You might then be showing a deficit on the restricted fund, but that's not s problem if you have a reasonable prospect of receiving restricted income in the future

You don't need to move any money (apart from paying the worker in the first place): that's the wonder of accounting!

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By paul.benny
24th Oct 2019 08:21

Agree with previous posts. Unless the restricted fund has conditions which specifically require it, you don't need to have a separate bank account.

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