Your money is tangled. Some of it came in free to use however the mission needs, and some came in for one specific thing, and right now it is all sitting in the same account looking like one pile.
So you cannot say how much is truly yours to spend, you may be quietly using money that was promised to a purpose, and every funder report is a guess. This guide sorts your money by its strings, sets up a way to track each restriction from the day it arrives to the day it is properly spent, teaches you to calculate your true available cash, and shows you how to honor and report restrictions correctly. It is the work of separating what is truly yours to spend from what is held in trust for a purpose, and keeping them separate. It is not full fund accounting instruction, and it is not a substitute for your accountant on the technical treatment; where the accounting gets genuinely complex, this guide sends you to one. Use this if you cannot cleanly say how much of your money is free versus spoken for, or if the diagnostic flagged that a restriction may already have been spent. A hard note before you start: if you already know that money given for one purpose has been spent on another, treat this as urgent and get a nonprofit accountant involved as you work, because that is a legal matter and not only a tidiness one.
You cannot manage a distinction you have not drawn. Go through your funding source by source and mark each as free to use, held for a specific purpose, or held with the original gift to be kept intact. For each restricted one, name exactly what it was given for and by when it must be used, and where a restriction is unclear, go back to the award letter, the gift agreement, or the funder to confirm rather than guessing.
Open the Fund Classification Map →A one-time sort drifts back into a tangle within a year unless there is a way to track each restriction going forward. Set up a simple register that records, for each restricted source, what came in, what has been spent against its purpose, and what remains, so you can always show a funder exactly where their money went. Then decide how every new restricted gift or grant gets logged into the register the moment it arrives, so the tangle never rebuilds.
Open the Restriction Tracking Register →This is the number the whole guide exists to produce: how much of your cash is genuinely free to spend, once the spoken-for money is set aside. Take your total cash, subtract the restricted balances that must be preserved for their purposes, and see what is genuinely free. Then put this number, not your raw bank balance, into your dashboard and your cash forecast, because it is your real spending power.
If you are holding less unrestricted money than the restricted balances you are supposed to be preserving, then you have almost certainly spent restricted money on operations already. Stop, and route to a nonprofit accountant now, because this is a legal and reporting matter, not something to quietly correct. Keep working this guide with that professional alongside you. This is a route, not a stop, and it is the most serious edge in this pathway.
Sorting and tracking mean little if restrictions are not actually honored when money is spent and reported cleanly to the funders who set them. Establish how spending gets charged against the right restricted source, how a restriction is marked satisfied and released once its purpose is fully met, and how you produce the honest accounting each funder is owed: what came in, what it was spent on, what remains.
Open the Restricted-Fund Release and Reporting Guide →The moment a restriction may have been broken, money given for one purpose spent on another, that is a nonprofit accountant's and possibly an attorney's matter, not a worksheet's, and this guide sends you there without hesitation. And the technical accounting treatment of restricted funds, especially endowments and funds held permanently, deserves an accountant's judgment for anything beyond the straightforward. The guide gives you the management discipline and the honest numbers; it does not replace the professional who signs off on the treatment, and it will tell you when you have reached that line.
You can say, as a number, how much of your money is truly free to spend. Your restricted money is tracked from arrival to use, not guessed at. And you could hand any funder an honest account of where their money went without a scramble.
Most leaders move from here to Manage Cash Flow, now run on true available cash, or to Build Financial Resilience and Reserves, which can only be built from unrestricted money. The detailed reporting rules of a specific grant live in the grants work, and of a specific award in public and institutional awards; this guide is the financial accounting those reports rest on. If you came in through a crisis and have steadied, the whole-organization check-up is the honest next look once this is done.