Grants are generally tax exempt and do not have to be re-paid but they may come with conditions. Commonly these might include:
- to be spent on a particular activity
- to be spent within a particular timescale
- to achieve particular results or outcomes
- any underspend to be paid back to the funder
Failure to meet any specified conditions may lead to the funder asking for its money back. However, if there are good reasons for this, and the group keep the funder informed, conditions can often be re-negotiated to enable the funding to be used in a different way – as long as the overall purpose is similar to that originally intended. This isn’t unusual as, inevitably, considerable time can pass between the original application for a grant and the awarding of the funding. So, it is always advisable to discuss this option with a funder.
Grants with these types of conditions are generally categorised as ‘restricted income’, and shown as this in the accounts.
Grants from the public sector will almost always have conditions, and sometimes these may be quite demanding. It is very important that groups understand the implications of any conditions, and are happy that they will be able to meet them. If there are concerns here, talk to the funder and see if you can re-negotiate. Mistakes here can be costly if you’ve spent the money, but not met the conditions fully, you could be liable to re-pay part or the entire grant.
Grants from other sources will vary more widely. Sometimes, a grant from a charitable trust or a company may have very few conditions – and occasionally it may have no conditions beyond that the funding is used to benefit the work of the organisation or group. The latter type of income is categorised as ‘un-restricted income’ and is shown as this in the organisation’s accounts.
