The bank statement shows one number. The grant for new nets, the subscriptions paid in April and the sponsored walk money all sit in the same account, so it is easy to spend the wrong pot without noticing. Most treasurers only find out at the AGM, or when an examiner asks why the reserves look odd.
The problem: a grant for new nets sits in the same bank balance as subscriptions
Imagine a village cricket club that receives a £2,400 grant from a local trust for replacement nets. The money lands in the club's only current account, which already holds subscriptions, bar takings and a small float for the kitchen. In June the committee asks for a balance. The bank says £6,100. The honest answer is that £2,400 of that is not free to spend, because the trust gave it for one purpose, and the club still owes the nets supplier.
If the cash book does not show that split, the treasurer is left trying to remember it. That is where mistakes happen. A grant gets used to cover a bar delivery, and the nets invoice gets paid from subscriptions a few months later.
What restricted and unrestricted mean in plain terms
A restricted fund is money that a donor, funder or grant-maker has tied to a particular purpose. The trust's letter or grant agreement sets the purpose, and sometimes a time limit or a condition about how the money is reported. Restricted money has to be spent on what it was given for, and you should be able to show that.
Unrestricted funds are everything else. Membership subscriptions, bar income and general fundraising usually fall here unless a donor has asked for them to go somewhere specific. The committee can decide how unrestricted money is used, within the constitution and the rules of your organisation.
The words sound formal, but the idea is simple: one pot has strings attached, and the other does not. Your cash book needs to know which is which.
One point to check early is whether a gift really is restricted. A donation for "the club" with no conditions is usually unrestricted. A donation for "new nets" is restricted. If you are unsure, read the letter or ask the funder, and note the answer in the minutes.
Recording the money in, and spending it against the right fund
The practical step is to give each fund its own line in the cash book. Record the grant as money in against the restricted fund, not against general income. When the nets invoice is paid, record the payment as money out from that same fund. The bank balance will still be one figure, but the fund balance tells you how much of it is spoken for.
Keep the paperwork with the entry. For the nets, that means the grant letter or agreement, the supplier's invoice and the bank statement line. Note the date the grant was received and any conditions, such as a requirement to send photos or a short report at the end. Funders often ask for this, and it is far easier to gather as you go than to reconstruct it a year later.
Do not move money between funds without a reason on the record. If the nets come in £300 under budget, the question is what happens to the leftover. Some grants allow it to be used for similar purposes, and some require it to be returned. Check the grant terms and record the committee's decision.
On the free plan in Vasker, a starter cash book holds one fund. That is enough if the only money you track is general income. Once you have a grant with conditions, you need a second fund, and that is where the Standard plan comes in. Standard is £59 a year and adds multiple funds, along with full books, members and reports. If you want to try the layout first, you can create your free account and set up the cash book before deciding.
Showing fund balances to the committee
Committees tend to ask one question: how much money do we have? A single bank balance does not answer it. Show the figures in a short table, one row per fund, with the opening balance, money in, money out and closing balance. Put the restricted funds at the top so they are not mistaken for reserves.
For the nets example, the committee report might show:
- General fund: £3,700
- Nets grant (restricted): £400 remaining, with the balance of the grant committed to the invoice
The total still reconciles to the bank, but the committee can see that only £3,700 is general money. That changes the conversation about the bar refurbishment proposal.
Keep the report plain. A few lines of explanation, the table and a note of any grant conditions are enough. Committees do not need every transaction. They need to know what they can spend and what they must not.
Why year-end figures and the examiner both ask about this
At the end of the financial year, the restricted funds come up in two places: the income and expenditure figures and the independent examiner's review. Many small charities need an examination rather than a full audit, depending on their income and the rules that apply to them. The examiner will want to see that restricted income has been spent on its purpose and that the balances carried forward are right.
If the nets grant was recorded as general income, the year-end report will show it as unrestricted money. That can make the reserves look larger than they are, and it can make the spending on nets look like it came from subscriptions. Neither helps when the examiner asks for the grant letter.
A clean fund structure also makes the year-end easier to prepare. Each fund's opening and closing balance should match the previous year's report. If they do not, find out why before the examiner does. Vasker's year-end tools, including the income and expenditure report with prior-year comparison, are built on the same fund lines, so the figures match the cash book. The examiner still needs your records, and the report is only as good as the entries behind it.
Check Charity Commission, OSCR or CCNI guidance for your organisation
This article is general information for volunteer treasurers. It is not legal, tax or accounting advice. The rules on restricted funds, reporting and examination depend on your organisation's type and where it is based. In England and Wales, check Charity Commission guidance. In Scotland, check OSCR. In Northern Ireland, check CCNI. If you are a sports club or other organisation that is not a registered charity, check the rules that apply to your constitution and any grant terms you have signed.
For Gift Aid and Gift Aid Small Donations Scheme (GASDS) questions, check current HMRC guidance, as those rules sit separately from restricted fund accounting. Keep your grant letters, bank statements and fund records for at least six years, in line with HMRC expectations for Gift Aid records.
When you are unsure, ask the funder, your examiner or the regulator's helpline before you spend the money. A short question at the start is much easier than explaining a mistake at the AGM.