Managing Cash for Grants

Managing Cash for Grants

If you only have a few Grants or Funds, you can make manual General Ledger Journal entries to move cash into the G/L checking accounts (an intra-Fund transfer from the pooled asset accounts) whenever Grants are made. When you post the Grant vouchers from the Accounts Payable module, each paying Funds’ G/L Grants expense account is automatically debited and the Grants payable account is credited. The appropriate debits and credits are set up as default values in the Fund class record. G/L Journal entries are made to credit the G/L pooled asset account and debit the G/L checking account (a debit and credit must be made for each Fund). Finally, the checks are printed, and the G/L Grants payable account is debited, and the G/L checking account is credited.

NOTE: The A/P Items Posting report can serve as a source document to move cash in preparation for the payment. Refer to Posting A/P Items in the Accounts Payable module for more information.

When many Grants and/or Funds are involved, the Automatic Cash Entries utility can simplify intra-Fund cash transfer for Grant making. The routine assumes that the organization wants to maintain relatively small balances in the G/L checking accounts.

Instead of moving cash into each Grant making Fund’s G/L checking account before the checks are printed, the checks are cut before the cash is moved. Credit entries are automatically made to the G/L checking accounts -- resulting in a credit balance. Then, when you run the utility, you are prompted for the natural account number of the G/L account(s) to debit (for example, the G/L checking accounts), and to credit (for example, the pooled asset accounts). You can then enter a minimum balance that you want to return each G/L checking account balance to (for example, $0.00). Along with the journal entries, a report is generated which includes the total transfer amount you need to make at the bank. Refer to Running Automatic Cash Entries for more information.

This process is also useful for organizations that move their entire Spending Policy amount to a Grants holding account, from which dollars must be moved to cover Grants in the checking account.

NOTE: If the checking account also serves as a holding account for dollars on the way in, you can run this utility twice – once to bring Funds with a debit balance to zero, and once for Funds with a credit balance.

Managing Cash via Asset Rebalancing

The Asset Rebalancing module is an integrated part of the General Ledger module that makes the Fund-level journal entries that are required to maintain a preset asset allocation among multiple accounts. The asset balance is set up as a percentage assigned to each asset account, totaling 100%. You can set the percentage globally for all Funds, for groups of Funds as defined by an Asset Strategy code, or on a Fund-by-Fund basis.

Along with helping the organization to maintain an investment ratio, Asset Rebalancing also assists in cash management. You can set the checking account to 0%, so that rebalancing moves dollars into or out of checking as needed by individual Funds. Some organizations use an offset Fund, which adsorbs the periodic rebalancing until it is expedient to buy or sell investments (which then rebalances the offset Fund).

NOTE: Refer to Using Asset Rebalancing for more information.