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Part 3 of 7 · Restricted fund tracker series ~5 min read

Charging a cost to the right fund

The usual coding question is which project a cost belongs to, and a restricted grant asks a harder one: whether this particular fund is allowed to pay for it, on this date, under this budget line. The answer has to be written down at the time, because at year end nobody will remember why the laptop went on the youth grant.

Key takeaways

  • Project and fund are different questions. Code to the fund, with the project alongside.
  • Four tests: inside the period, an eligible category, room on the line, evidence attached.
  • A cost that fails goes where it is allowed, never to whichever grant has room.
  • Every posting stores the rule version it passed and the reason it was proposed.
  • Year-end journals moving costs to wherever there is room are the symptom this removes.

Four tests before a grant pays

A cost tested against a grant's rules before it is chargedA vertical chain inside an AWS account container, entered from a box on the left labelled A cost, meaning an invoice or a payroll line. Inside the grant period, meaning incurred between the start and end dates, with a side exit reading no: Not this grant, however much room the line has. An eligible category, meaning one the agreement says it will pay for, with a side exit reading no: Unrestricted, or a grant that does allow it. Room on the line, within the budget line or its movement limit, with a side exit reading no: Ask first, for a variation or a trustee decision. Evidence attached, meaning the invoice, payslip or timesheet, with a side exit reading no: Hold, charged when the evidence arrives. The final step is Charged to the grant, with the rule version and the reason. A note says the second exit matters most, because a cost goes where it is allowed rather than where there is room, and unrestricted funds always allow it.AWS ACCOUNTA costan invoice or apayroll lineInside the grant period?incurred between thestart and end datesNot this granthowever much roomthe line hasnoAn eligible category?one the agreementsays it will pay forUnrestrictedor a grant thatdoes allow itnoRoom on the line?within the budget lineor its movement limitAsk firsta variation, or atrustee decisionnoEvidence attached?invoice, payslipor timesheetHoldcharged when theevidence arrivesnoCharged to the grantwith the rule versionand the reasonThe second exit matters most. A cost goes where it is allowed, not where there is room, and unrestricted funds always allow it.
Fig 1. Four tests and a posting. The order is deliberate: a cost outside the period fails before anybody asks whether its category fits.
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The model proposes, the rules decide

An invoice is read once, when it arrives. The model returns the supplier, the date the cost was incurred, the amount, a description of what was bought, and a proposed fund and cost category with a one-sentence reason. That proposal is where its job ends. Whether the youth grant may pay for a minibus hire in February is a question with a definite answer once the rules exist, and it is answered in code.

The split matters because the two halves fail differently. A model reading an invoice will occasionally pick a slightly wrong category, and the person approving it will usually catch that. A model deciding eligibility would occasionally approve a cost the agreement excludes, with a fluent reason attached, and nobody would notice until the funder did.

The date that counts is the date the cost was incurred

Not the invoice date, and not the date it was paid. A deposit paid in March for a residential trip in May is a cost of May, and if the grant period ended in April it is not a cost of that grant, however early the invoice arrived. This test catches the familiar year-end move of paying for next year’s activity early to use up this year’s money, which is one of the first things a funder’s finance team looks for.

How the year’s restricted spend reached its funds

Restricted spend grouped by how it was coded to a fundThree vertical bars showing the year's restricted spend grouped by how it reached its fund. Coded direct accounts for two hundred and ninety-four thousand eight hundred and seventy-five pounds. Shared and allocated accounts for forty-one thousand three hundred and eighty pounds. Moved at year end accounts for eleven thousand six hundred and sixty-five pounds. A note says the third bar should not exist, because it is costs moved between grants in the last fortnight of the year to wherever a budget line still had room.£0£100000£200000£300000£400000~£294875Coded direct~£41380Shared, allocated~£11665Moved at year endRestricted spend in the year, by how it reached its fundThe third bar should not exist. It is costs moved between grants in the last fortnight of the year, to wherever a budget line still had room.
Fig 2. The same £347,920, grouped by how each cost reached the fund it now sits in. Only the first two routes can explain themselves.

The year-end journal is the symptom

Anyone who has closed a charity’s year has seen the journal: a list of costs moved between grants in the final fortnight, each with the narrative reallocation. In this charity it came to £11,665. Some of those moves corrected genuine miscoding. Some moved costs onto grants that had room, so that an underspend looked smaller. Nobody could say which were which, because the reason for the original coding had never been written down.

When each posting stores the rule it passed and the reason it was proposed, a move is a new posting with a reason of its own, and the old one is marked as moved rather than overwritten. A correction reads as a correction. A move made to fill a budget line reads as exactly that, and it tends not to get made.

What a posting holds

  • Fund and budget line. The grant, the line within it, and the project alongside.
  • Category. From the grant’s own list of eligible costs.
  • Incurred on. The date that decides the period test.
  • Rule version. Which version of the grant’s rules this cost passed.
  • Reason. One sentence, proposed by the model and approved by a person.
  • Evidence. The invoice, the payslip or the timesheet it rests on.
  • State. proposed, charged, held or moved — and if moved, to what and why.

Payroll is parsed, and it is most of the money

Staff costs are the largest line on almost every small grant, and they arrive as a payroll export rather than as invoices. The export has a fixed layout and is parsed, not read by a model. Each person’s gross pay, employer’s National Insurance and employer pension contribution becomes a cost, charged according to the person’s contract or, where their work spans several grants, according to the basis the next post is about.

What payroll never contains is the answer to which grant somebody’s hours belonged to. For a person funded wholly by one grant that does not matter. For the project worker split across three grants it is the entire question, and it is where £28,640 of this charity’s year was divided up by a formula nobody had looked at in two years.

The next post is the shared costs: the worker, the rent and the finance time, and the difference between a percentage and a basis.

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