What Is Grant Acquittal? A Guide for Not-for-Profit Boards

In the context of not-for-profit governance and fundraising, acquittal refers to the process of demonstrating that funds received from an external source have been spent appropriately and in accordance with the terms of the funding agreement.

This term is most commonly used when an organisation has received a grant from a government agency, a private foundation, or a charitable trust. The funder provides money for a specific purpose, and the organisation must account for how that money was used.

Acquittal goes beyond administration. It is a core part of a not-for-profit’s accountability to its funders and to the public. Organisations that acquit their grants properly demonstrate that they can be trusted with external funds, which directly affects their ability to secure future funding.

The acquittal process

The acquittal process begins when the funding agreement is signed, not when the report is due. From the moment funds are received, the organisation should be tracking how the money is spent and collecting the evidence needed for the final report.

The process typically involves:

1. Setting up financial tracking. Create a separate cost centre or account code for the grant so that all expenditure can be clearly identified and separated from general operating costs.

2. Collecting documentation as you go. Keep receipts, invoices, pay slips, contracts, and any other financial records that relate to the funded project. Gathering these at the end is far harder than collecting them in real time.

3. Tracking outcomes and outputs. Most funders want to know what the money achieved, not just what it was spent on. Record participant numbers, service delivery data, survey results, photographs, and case studies throughout the project.

4. Preparing the acquittal report. At the end of the project, or at intervals specified in the funding agreement, compile a report that brings together the financial evidence and the outcome data.

5. Submitting the report. Submit the report to the funder by the deadline specified in the agreement. Late acquittals are a common reason for organisations being flagged by funders.

What an acquittal report should include

Acquittal reports vary depending on the funder’s requirements, but most cover four areas.

Financial information is the foundation. This includes a detailed breakdown of how the funds were spent, supported by receipts, invoices, and bank statements. Some funders require a Statutory Declaration confirming the accuracy of the financial information. If any funds were unspent, the report should explain why and what will happen to the remaining amount.

Data and statistics provide a snapshot of the project’s impact. How many people were served? How many sessions were delivered? What measurable outcomes were achieved? Funders use this data to assess whether the project delivered what was promised.

Qualitative information adds context that numbers alone cannot provide. Participant testimonials, case studies, staff observations, and stories of change help the funder understand the real-world impact of their investment.

Project documentation may include photographs, promotional materials, media coverage, training resources developed, or any other evidence that the project was delivered as described in the funding application.

The board’s role in acquittal

The board of directors is ultimately accountable for the proper use of all funds received by the organisation, including grants. While the CEO and finance team handle the operational work of tracking expenditure and preparing reports, the board should satisfy itself that:

• Grant funds are being tracked separately and spent in accordance with funding agreements
• Acquittal reports are submitted on time and are accurate
• Any conditions attached to the funding are being met
• The organisation has adequate systems and processes for grant management

Boards should receive regular reports on the status of grants, including any risks of underspend, overspend, or late acquittal. Grant management should be a standing item on the finance committee’s agenda.

What happens when acquittal goes wrong

Failure to properly acquit grant funding can have serious consequences. Funders may require repayment of some or all of the grant. The organisation may be excluded from future funding rounds. In serious cases involving misuse of funds, the Australian Charities and Not-for-profits Commission (ACNC) or relevant state regulators may investigate the organisation’s conduct.

Even less severe outcomes can damage the organisation. A reputation for late or incomplete acquittals makes it harder to secure competitive grants. Program officers at funding bodies talk to each other, and a poor track record follows an organisation.

Acquittal example

Consider a not-for-profit environmental conservation organisation that receives a government grant to fund a tree-planting project. The funds are earmarked for purchasing saplings, hiring planting crews, and five years of ongoing maintenance.

To acquit these funds, the organisation tracks all expenditure: invoices for saplings, pay slips for crews, receipts for equipment hire. At the agreed reporting intervals, it provides the government agency with a detailed financial report showing exactly how the funds were used, supported by documentation.

The organisation also provides evidence of the project’s progress: photographs of planted areas, data on the number of trees planted and survival rates, and feedback from community volunteers involved in the project.

If the agency is satisfied that the funds were used appropriately and in accordance with the funding agreement, the funds are considered acquitted — and the organisation has a track record to point to next time it applies for funding.

Additional Resources

DSS — Financial Reporting Requirements for Grants

CPA Australia — Not-for-profit Grants in Australia (PDF)

The Funding Conundrum

What Boards and CEOs Need to Know About the Future of Philanthropy and Fundraising

Fundraising Fundamentals for Board Members

Board Fundraising Check-Up

Related Terms

Governance

Accountability

Minutes

Audit Report