Public sector funding bodies often require that grants should be fully spent by the end of the financial year i.e. 31 March. The basis for this is in the Government Accounting Manual. This requires unspent departmental funds in government to be surrendered at the end of the financial year. Combined with the prohibition on paying grants in advance of need, many funders extend the public sector rule on year end to grant recipients. So they require evidence that the expenditure has been incurred. In fact, there is an exemption to the strict rule for small voluntary organisations. The Manual does allow grants to be paid in advance of the expenditure being incurred when this is necessary, for example to fund salaries and working capital. Consequently, there should be no requirement to spend all grant funding before 31 March if you have agreed a payment schedule that permits payments in advance.

A similar exemption applies to contracts with charities and voluntary sector organisations so that it is permitted to make advance payments.

Hence, it should be acceptable to have an element of advance funding in hand at the end of the financial year (31 March) providing the funding agreement allows for this.