Frequently Asked Questions

Restricted funds are donations or grants that donors specify must be used for particular purposes—like funding a specific program or capital project. Unrestricted funds give your organization flexibility to allocate them where they’re needed most. Under CPA Canada standards, you need to track and report these separately on your financial statements so donors and regulators can see how funds were used.

Even small organizations benefit from fund accounting basics. Once you have more than one restricted funding source, tracking becomes essential—you need to know exactly how grant money was spent versus donor gifts. It takes maybe 2-3 hours to set up a simple system, and it protects you if funders ask for proof of compliance.

CPA Canada publishes the Not-for-Profit Accounting Handbook (based on PSAS standards) that sets the baseline for how Canadian non-profits should report financially. Your auditors will expect compliance with these standards, and major donors often require it. Even if you’re not audited, following CPA guidance builds credibility with government grant funders and the public.

You’ll want to record the donor’s name, donation amount, date received, and any restrictions or intent the donor specified—even verbal ones. Keep donation receipts, emails mentioning fund use, and any pledge agreements. A simple spreadsheet works, but a proper database prevents duplicate receipts and makes year-end reporting much faster. Canada Revenue Agency expects clean records if you’re issuing charitable receipts.

This depends on your grant agreement—some funders require quarterly reports, others annual. Most government grants expect at least annual reporting showing how funds were spent against the approved budget. We recommend tracking spending monthly internally so you’re never scrambling to gather numbers at reporting time. Transparency builds trust and leads to renewal funding.