Case study · Non-profit

Proving where a restricted donation actually went

An international charity with country offices needed to show each donor exactly how their restricted funding was spent. Standard ERP tracks money by department, not by the promise attached to it. We modelled funds, grants and programmes inside Business Central.

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Engagement · Implementation & rollout

Fund accounting across country offices, in one Business Central tenant.

Sector: Non-profit
Solution: Fund & grant accounting
Platform: Dynamics 365 Business Central
Engagement model: Dedicated product team
Scope: Implementation, extension, rollout
Entities: Multiple country offices
Currency: Multi-currency consolidation
Reporting: Donor and statutory

Outcomes

What changed once funds were modelled properly

A charity is judged on stewardship. The reporting is not administrative overhead — it is the product.

75% Faster donor reporting
Grant reports are produced from the ledger against the fund dimensions rather than assembled from country spreadsheets and reconciled by a finance lead.

Measured from period end to report issued
100% Of spend traceable to its fund
Every transaction carries the fund, grant and programme it belongs to, so a restricted donation can be followed from receipt to the invoice it paid.

By design: mandatory fund dimensions on posting
0 Restricted balances reconstructed by hand
Restricted and unrestricted positions are ledger balances rather than a quarterly calculation somebody maintains separately.

By design: restricted status held on the fund

Context

The situation before the implementation

Why fund accounting breaks a commercial ERP.

The organisation

An international charity running programmes through country offices, funded by a mix of unrestricted giving and grants with conditions attached.

The starting point

Each country office ran its own accounting, consolidated into a spreadsheet at head office. Fund balances were calculated periodically rather than held.

The trigger

A restricted donation carries a promise: spend this on that. Proving it was kept, to a donor or a regulator, required a finance lead to reconstruct the position from several systems.

What they wanted

One Business Central tenant across the country offices, with funds, grants and programmes held as dimensions so donor reporting is a report rather than a project.

Constraints

Restricted funds cannot be spent against the wrong purpose, even accidentally · country offices work in local currency and report in the functional one · statutory formats differ per country · the finance teams are small and not ERP specialists.

System

What it runs at today

The implementation as it runs today.

3 Fund dimensions
Fund, grant and programme, mandatory on every posting
2 Fund classes
Restricted and unrestricted, held rather than calculated
1 Consolidated tenant
Country offices in one Business Central environment
0 Spreadsheet consolidations
Consolidation runs inside the system

The engineering problem

Four problems with charity money in a commercial ledger

A business ledger answers "what did we spend". A charity ledger has to answer "whose money was it, and were we allowed to".

Restriction is a property of the money, not the cost centre

Commercial ERP organises spend by department. A charity has to organise it by the promise attached to the income, and the two cut across each other entirely.

What we did

Fund, grant and programme held as mandatory dimensions on every transaction, so the question "whose money paid for this" is always answerable.
You have to be stopped from spending the wrong fund

Reporting a breach after the period closes is too late. Spending restricted money on the wrong purpose is a governance failure, not a reclassification.

What we did

Validation at posting: a cost coded to a programme the fund does not permit is rejected at entry rather than found at audit.
Donor reports and statutory accounts are different shapes

A grant report follows the donor's categories and period; statutory accounts follow the jurisdiction's. Producing one from the other by hand is where the time goes.

What we did

Both built from the same dimensioned ledger, so the donor report and the statutory return reconcile to each other by construction.
Country offices are small teams, not ERP departments

A system that needs a specialist to operate will be worked around. The people entering transactions in a country office have other jobs.

What we did

Posting simplified so the fund dimensions are derived from the programme wherever possible, leaving the fewest fields a person has to get right.

Architecture

How it fits together

Simplified — the shape of the system rather than every service in it.

Dimensions
- Fund
- Grant
- Programme
- Country
The analytical structure that makes fund accounting possible, enforced at posting rather than corrected later.
Validation
- Fund–programme rules
- Restriction checks
- Posting blocks
Rules that prevent a restricted fund being spent against a purpose it does not cover.
Consolidation
- Multi-entity
- Multi-currency
- Intercompany
Country offices consolidated inside Business Central, in the functional currency, without a spreadsheet stage.
Reporting
- Donor reports
- Statutory formats
- Fund balances
Both reporting shapes derived from the same ledger, so they cannot disagree.

Everything here is standard Business Central dimensions and posting rules used deliberately. The value was in the modelling, not in code — which is usually true of fund accounting.

Solutions

What the implementation covers

Fund accounting done with Business Central's own tools, used deliberately.

Fund and grant register

Funds with restriction, purpose, period and reporting category.
Posting validation

Fund–programme rules that refuse an impermissible cost at entry.
Dimension model

Fund, grant, programme and country, mandatory on every transaction.
Multi-entity consolidation

Country offices consolidated in-system, in the functional currency.
Donor reporting

Grant reports against the donor's categories and period.
Statutory reporting

Country formats derived from the same ledger.

Key capabilities

What it does day to day

Six capabilities across the funding cycle.

Capability	Runs	Refresh	What it does
Fund register	Finance	Continuous	Funds with their restriction, purpose and reporting period
Grant tracking	Finance	Per grant	Grant terms, budget and spend against the programme it funds
Posting validation	Automatic	Per transaction	A cost that breaches a fund restriction is refused at entry
Multi-currency	Automatic	Continuous	Country offices post locally and consolidate in the functional currency
Donor reporting	Scheduled	Per grant period	Built from the ledger against the donor's own categories
Statutory reporting	Scheduled	Per year	Country-specific formats from the same dimensioned data

Integrations

How the moving parts plug in

Income arrives with a promise attached, and every cost is checked against it.

Income

Unrestricted givingSpendable on any purpose
Restricted grantsWith conditions and periods
Country fundingIn local currency

Fund layer

Fund dimensionsMandatory at posting
Restriction rulesEnforced, not reported
ConsolidationMulti-entity, multi-currency

Reporting

Donor reports
Statutory accounts
Fund balances

Because the donor report and the statutory accounts are both derived from the same dimensioned ledger, the charity never has to explain why two numbers for the same period differ.

Security & data

What protects the charity and its donors

Fund accounting is a governance control as much as an accounting one.

Restriction enforcement

A posting that would spend a restricted fund against an impermissible purpose is blocked at entry.
Full traceability

Every transaction carries its fund, grant and programme, so any pound can be followed from donor to supplier invoice.
Segregation by country

Country offices see and post to their own entity, with consolidation handled centrally.
Standard audit trail

Business Central's own posting history, unmodified, which is the trail auditors already know how to follow.

The brief

Charity money comes with conditions a business ledger cannot express

A commercial ERP is built around cost centres and profit. A charity is built around stewardship: money arrives with a purpose attached, and the organisation has to prove it honoured that purpose.

Those are different data models, and trying to express the second in the first is why so many charities end up consolidating in Excel.

Funds, grants and programmes as mandatory dimensions
Restriction enforced at posting, not reported at audit
Country offices consolidated inside the system
Donor and statutory reporting from one ledger

What the implementation had to respect

01Small country finance teams who are not ERP specialists
02Local currency posting with functional-currency consolidation
03Statutory formats that differ per jurisdiction
04Donor reporting periods that do not align with the financial year

Process

The modelling was the project

Almost none of this was code. It was deciding what a fund is, and then being disciplined about it.

Stage 1
Defining the fund model

Working through restriction types, reporting categories and how programmes relate to grants — with the finance lead and a trustee in the room.
Stage 2
Dimension design

Deciding which dimensions are mandatory and which are derived, so country teams have the fewest fields to get right.
Stage 3
Validation rules

Capturing which funds may pay for which programmes, and agreeing that the system would refuse rather than warn.
Stage 4
Country rollout

One office at a time, each with its local currency and statutory format, consolidating from the first month.
Stage 5
Reporting parity

Donor and statutory reports run against a historical period and checked against the previously published figures.

Technology

Standard Business Central, modelled carefully

The capability came from configuration and a small extension, not from a bespoke system.

Business Central

Dimensions
Multi-entity
Multi-currency
Consolidation

Fund layer

Fund register
Grant terms
Restriction rules

Validation

Posting checks
Fund–programme rules

Reporting

Donor formats
Statutory formats
Fund balances

Business impact

What changed for the charity

Three things the finance team and the fundraisers noticed.

Breaches prevented, not discovered

The system refuses the posting rather than flagging it at audit, which is the difference between a control and a report.
Reporting that does not consume a quarter

Donor reports come from the ledger, so period end stops being a month of reconstruction.
Confidence when asking for more

Being able to show exactly how the last grant was spent is the strongest argument for the next one.

The result

A charity that can answer the donor's question from the ledger

Funds, grants and programmes are dimensions on every transaction. Restricted money cannot be spent against the wrong purpose, because the posting is refused.

Donor reports and statutory accounts are two views of one ledger, produced in days rather than reconstructed over a quarter.

Fund, grant and programme mandatory on every posting
Restriction enforced at entry rather than found at audit
Country offices consolidated inside Business Central
Donor and statutory reporting that reconcile by construction

Talk about a project like this

What we would repeat in the non-profit sector

01Model the fund before configuring anything
02Refuse the posting; a warning will be clicked through
03Derive dimensions wherever possible — small teams cannot carry them
04Prove the reports against a period already published

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Proving where a restricted donation actually went

Restriction is a property of the money, not the cost centre

You have to be stopped from spending the wrong fund

Donor reports and statutory accounts are different shapes

Country offices are small teams, not ERP departments

Dimensions

Validation

Consolidation

Reporting

Fund and grant register

Posting validation

Dimension model

Multi-entity consolidation

Donor reporting

Statutory reporting

Restriction enforcement

Full traceability

Segregation by country

Standard audit trail

Charity money comes with conditions a business ledger cannot express

Defining the fund model

Dimension design

Validation rules

Country rollout

Reporting parity

Business Central

Fund layer

Validation

Reporting

Breaches prevented, not discovered

Reporting that does not consume a quarter

Confidence when asking for more

A charity that can answer the donor's question from the ledger

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