Tracking Donor Grants: Budget vs Actual for Nepali NGOs

Every donor grant has a simple promise behind it: the money will be spent on the agreed lines, in the agreed period and with proper evidence. Tracking budget against actual spending, month by month, is how a Nepali NGO keeps that promise and avoids unpleasant surprises when the donor report is due. This article sets out a method that works in spreadsheets and is easier in a system.

Step 1: Set up the grant properly

Before any expense is entered, record the basics of the grant agreement.

Item	Why it matters
Donor and grant reference	Used to code every transaction
Start and end dates	Expenses outside the period are usually ineligible
Currency and exchange rule	Decides how foreign funds are converted
Budget lines and amounts	The base for monitoring
Flexibility rule	How far you may move money between lines without approval
Reporting dates and format	Plan the work backwards from them
Eligible and ineligible costs	Prevents disallowed spending

Read the agreement with the programme lead and the finance lead together. Many problems come from one team knowing a rule that the other never heard.

Step 2: Code each transaction

Every voucher needs at least three codes: the project or grant, the budget line and the activity. Consistent coding makes the report almost automatic. Decide the coding scheme once and write it in a short guide for all staff. Use the same words in the budget and in the voucher so that nothing has to be translated at reporting time. Where an expense is shared between grants, such as rent or a vehicle, use a documented allocation method agreed with the donors where required, and apply it the same way each month.

Step 3: Review budget against actual every month

Do not wait for the quarterly report. At month-end, produce a simple table for each grant:

• Annual or total budget by line.
• Spent so far.
• Committed but not yet paid, such as signed contracts.
• Balance remaining.
• Percentage of the budget used compared with the percentage of time elapsed.

A line that is 80% spent after 40% of the time needs a conversation now, not at the end. Likewise a line that is almost untouched suggests delayed activities, which the programme team should know about.

Step 4: Control advances and settlements

Advances to staff and partners are a common source of audit trouble. Keep a register with the person, purpose, amount, date and due date for settlement. Settle each advance against bills, return any unspent balance and record the closure. Review overdue advances at every month-end. Do not issue a second advance to someone with an unsettled one unless management approves in writing.

Step 5: Handle currency and exchange rates

If the donor funds in foreign currency and you spend in NPR, agree with the donor on how the rate is chosen: the rate at receipt, a monthly rate or a weighted average. Record the rate used for each conversion. Exchange differences must be reported according to the donor's rules and your auditor's advice. A system that stores both currencies on each transaction helps, since you can report in whichever currency is requested.

Step 6: Keep evidence together

Each voucher should have the supporting bills, approvals, quotations where needed, and for payments of some kinds, tax documents. Scan these and attach them to the voucher so they cannot be separated. When the donor or auditor asks for a sample, you retrieve the file in seconds instead of searching boxes.

Step 7: Prepare the report from the books

When the financial report is due, it should be a view of data already in the system. Choose the period, select the grant and export. Reconcile the report total with the bank book and with the previous report. Document any differences. Agree the narrative with the programme team so the financial and narrative reports tell the same story.

Common failures and fixes

Failure	Fix
Expense charged to wrong grant	Mandatory coding and a second-person check
Overspent line found at year-end	Monthly budget versus actual review
Unsettled advances	Advance register with ageing
Missing bills at audit	Attach scans to each voucher at entry
Different numbers in different reports	One source of data

How a system helps

In NGO and INGO Management Software the grant, budget, vouchers and reports are linked. A voucher cannot be saved without a project and line, the dashboard shows each line's balance, and exports match donor layouts. If your accounting needs go beyond projects, see accounting software for Nepal. Software supports your control, but the controls themselves, such as approvals and segregation of duties, come from your own policy.

Next step

Take your biggest grant and compute the percentage spent and the percentage of time elapsed for each budget line. If the exercise takes more than an hour, message WebsNP on WhatsApp at +977 9846280400 and we will show how the same view appears automatically in a demo.

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