Reimbursements and Funder-Paid Costs

Reimbursements and Funder-Paid Costs

Sometimes a funder intends to pay for a specific cost related to a project such as travel to their event, a training program, an airline ticket, etc. These are considered revenues to your project and a sponsorship admin cost will be assessed. In these instances, per Generally Accepted Accounting Principles (GAAP), the expenses will be posted to the appropriate expense account (i.e. 6051 Travel / Meals, 6012 Training / Professional Development, etc.). The funds received from the funder in support of your expenses will be entered as revenue per GAAP and will be subject to the SGF administrative cost.

Even when a funder describes a payment received by us as a “reimbursement,” accounting rules require that the funds be recorded as revenue when received by Social Good Fund.

How to Distinguish Revenue From a True Reimbursement

There are many grants that support specific expenses; however, those are not considered reimbursements. For example, a grant that is given to support payroll, or travel, is not a reimbursement of expenses but rather revenue that is used to carry out your charitable mission.

The funds that SGF holds in the fund identified for a project are intended exclusively for use towards that project’s charitable mission. Please do not agree to make purchases using project funds on behalf of other parties, including funders.

Practical Examples

• If a donor provides funds to support project travel, the project is the beneficiary of that travel. The funds are therefore recorded as revenue, even if intended to cover a specific expense.

• If the project paid for travel or costs incurred for another organization’s benefit, and the funder later repaid the project for those costs, that repayment could be considered a true reimbursement,but should be avoided under our policies

Avoiding SGF Administrative Costs on Specific Expenses

If a project or funder wishes to avoid the sponsorship admin cost related to a specific expense, the funder should purchase that item directly. For example, if a funder purchased an airline ticket directly from an airline for a Social Good Fund project staff member, the funder would pay the airline and neither the expense nor any associated revenue would go through Social Good Fund’s financials, and thus no sponsorship admin cost would be charged.