How to Track Grants in QuickBooks Online Using the Projects Feature

If your nonprofit gets money from grants, you need to know where every dollar goes. Funders want proof. Your board wants answers. And your auditor? They want a paper trail.

The good news is that QuickBooks Online has a tool built right in that makes grant tracking for nonprofits simple. It is called the Projects feature.

In this post, I will walk you through how to set it up and use it step by step. No fancy software. No extra cost. Just QuickBooks Online doing what it was made to do.

Why Use the Projects Feature for Grant Tracking?

Most nonprofits try to track grants using spreadsheets or just hope for the best at year end. That never works. Here is why the Projects feature is better for nonprofit grant tracking:

• You can see income and spending for each grant in one place

• You can pull a report any time to show a funder exactly how their money was used

• It keeps your grant money separate from your other money

• It saves you hours at audit time

• It works inside QuickBooks Online so there is nothing new to learn

Quick tip: Before you start, make sure your QuickBooks Online plan includes the Projects feature. It is available on QBO Plus and above. If you are on Simple Start or Essentials, you will need to upgrade first.

Step by Step: How to Set Up Grant Tracking in QuickBooks Online

Step 1: Turn on the Projects Feature

First things first. You need to turn on the Projects feature if it is not already on.

• Go to the Gear icon in the top right corner

• Click Account and Settings

• Click the Advanced tab on the left side

• Find the section called Projects

• Turn the toggle On

• Click Save then Done

That is it. Projects is now ready to use.

Step 2: Create a New Project for Each Grant

Each grant you get should have its own Project in QuickBooks Online. Think of each Project as a folder for that grant.

• Click Projects in the left menu bar

• Click the green New project button

• In the Project name box, type the name of the grant. Example: "Smith Foundation Grant 2025"

• In the Customer field, type the name of the funder. If they are not already in QuickBooks Online, you can add them right there

• Add notes in the Notes field so you remember details about the grant

• Click Save

Do this for every grant your nonprofit has. One Project per grant keeps things clean and easy to report on.

Step 3: Record the Grant Money Coming In

When you get the grant money, you need to record it and tie it to the right Project.

• Click New in the top left corner

• Select Invoice or Sales Receipt depending on how your nonprofit records income

• In the Customer field, choose the funder you added in Step 2

• In the Project field (it shows up after you pick the customer), select the right grant project

• Fill in the amount of the grant

• Use your grant income account in the Account column

• Click Save and close

Step 4: Assign Expenses to the Right Grant Project

This is where most nonprofits mess up. When you spend grant money, you have to tag that expense to the right Project. Here is how:

• Click New then choose Expense or Bill

• Fill in who you paid and the amount

• In the Customer/Project column on the expense line, click the dropdown and choose the right grant project

• Make sure the box that says Billable is checked if the funder needs to see this cost

• Click Save and close

You can do this for bills, expenses, checks, and even payroll if your payroll is tied to a grant.

Step 5: Pull a Report to See How the Grant Is Going

At any time you can pull up a report to see exactly where the grant money stands. This is perfect for funder reports and board meetings.

• Click Projects in the left menu

• Click on the grant project you want to look at

• You will see a summary of all income and expenses tied to that grant

• Click Run report to get a full Profit and Loss report just for that grant

• Click the Transactions tab to see every single transaction linked to that grant

You can print this report or export it to PDF and send it straight to your funder. It is that easy.

Step 6: Close Out the Project When the Grant Is Done

When you have used all the grant money and the grant period is over, it is time to close the Project.

• Go to Projects in the left menu

• Find the grant project and click on it

• Click the Edit button or the three dot menu

• Change the status to Completed

• The project will move out of your active list but you can still pull reports on it any time

Closing it out keeps your Projects list clean and easy to manage.

Pro Tip: Name Your Projects the Right Way

Name your Projects in a way that is easy to find later. A good format is: Funder Name plus Grant Purpose plus Year. For example, "Jones Family Foundation Operating Grant 2025." This makes searching way easier when you have many grants.

What Makes This Work for Nonprofit Grant Tracking

The reason the Projects feature works so well for grant tracking is that it shows you a clear picture of each grant all by itself. You are not digging through thousands of transactions trying to figure out what belongs where. Everything is already sorted for you.

Good grant tracking for nonprofits means you can answer these questions any time someone asks:

• How much of this grant have we spent?

• How much do we have left?

• What did we spend it on?

• Did we use it the way the funder said we should?

With QuickBooks Online Projects set up the right way, you can answer all of those questions in under five minutes.

Need Help Setting This Up?

If you want someone to set this up for your nonprofit the right way, I am here to help. At Revamp Your Finances LLC, we help nonprofits get their books in order so they can focus on their mission.

Contact me today:

• Call or text: 317-983-3980

• Email: markus@revampfinances.com