If your proposal is accepted, you will be asked to sign a detailed contract called the Grant Agreement. One of the most common questions about the accounting of charities I have, and one problem that arises in many charitable reviews, is whether any income will be collected in terms of grant or contract. Subsidies are usually paid in several tranches over the life of the project. Once you have signed the grant contract, you will receive a pre-financing that can be followed by one or more interim payments. You will receive the last payment after the project is completed. (Donations or gifts are outside the VAT framework, as nothing is given in return – but beware of service level agreements) My colleague Andrew Walls recently blogged about whether income was a subsidy or a VAT tax. But what about accounting treatment? Does it make a difference if the income is a subsidy or a contract fee? (However, the contract may be essentially the same as for the use of surpluses made by the charity under a contract, so that income could be considered limited) So how are grants and contracts distinguished? Well, there are no strict and fast rules – each agreement and income level will have specific characteristics, and each should be considered on an individual basis. The table below shows some important and general things that you need to pay attention to: intermediate and final payments are contingent on project results. It is important to report on the progress of your project in accordance with the reference schedule of the grant agreement.
In principle, the allocation of funds for each grant is as follows: 80% is paid when the grant agreement is signed between the two parties; the balance is paid on the basis of the actual expenses incurred and after the presentation and adoption of the final annual reports on the implementation of financial aid by the Council of Europe. signing a grant agreement and how payments are made. At first I asked if it makes a difference, whether income is a grant or a contract, and in my next blog, I`ll look at some detailed examples that show that it can make a difference and that the numbers can be significant.