What is an Interfund Transfer?

The term Interfund is used to describe transactions in which assets move between two funds within the organization. If one funds awards grant dollars to another, the transaction is a grant expense to the giving fund, and a gift revenue to the recipient fund, but from the organization standpoint it can best be thought of as a transfer.

Money moving between two funds that might both be in FIMS, but are not in the same tax entity should not be processed as an Interfund. If each side of the entry is showing up in two different 990 reports, then the transactions should be processed as regular gifts and grants.