Appendix: Understanding Our Accounting Method: How Revenue and Expenses Affect Your Project Fund

As your fiscal sponsor, Social Good Fund prepares project-level financial statements that are designed to be accurate, compliant, and protective of cash. To do this, we use a mixed accrual accounting method. This approach combines cash-based revenue recognition with accrual-based expense recognition.

The goal is to ensure that your project fund balance reflects real, available resources, while also accurately capturing the true costs of operating your project.

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Why This Accounting Approach Matters

This mixed accrual method helps ensure that:

• Project fund balances reflect actual cash available to spend

• Expenses are recorded in the appropriate fiscal period

• Financial statements are consistent, auditable, and compliant

• Donations that are tax-deductible for donors are properly distinguished from earned income and other payments where the donor received something in return

If you notice timing differences in your financial statements—such as credit card encumbrances affecting available funds, three payrolls in a month, sponsorship admin costs shifting mid-month, PTO expenses posting at month-end, or revenue not appearing until cash is received—these accounting principles are typically the reason.