What is a donor financial report?
A donor financial report tells a funder how its money was spent in a period, set against the approved budget. Most reports show the budget, actual spending, the variance and a short narrative. Many also ask for a cash balance, or a list of transactions.
Formats differ widely. Some donors give a template, some accept your own, and some ask for specific forms. This article gives a method that works with most of them.
How do you start?
Before you open the ledger, gather the rules:
- The agreement. Note the budget, allowed costs and any limits on moving money between lines.
- The template. Note the lines, the currency and the rounding.
- The period and deadline. Note the cut-off date and the due date.
- Past reports. Check last period’s closing figures so the opening balance matches.
If anything is unclear, ask the donor early. A question in week one costs less than a rejected report in week six.
Why close and reconcile first?
A report built on an open period will change. Before you pull figures:
- Post all invoices and claims for the period.
- Reconcile the bank to the books.
- Clear or explain suspense items and wrong codes.
- Close the period so figures stop moving.
Our guides on monthly bank reconciliation and the month-end closing checklist cover these steps.
How do you build the report?
- Pull actuals for the grant and period from the ledger, by budget line.
- Map to the donor’s lines. If your chart of accounts is more detailed, group accounts to match the template. Keep a simple mapping table.
- Add the budget from the approved agreement or the latest approved revision.
- Calculate the variance for each line: budget minus actual, and as a percentage.
- Check the totals against the ledger. If they differ, find out why before going on.
- Add commitments if the donor wants them, shown separately from actuals.
A small layout many donors accept:
| Budget line | Budget | Actual | Variance | Variance % |
|---|---|---|---|---|
| Personnel | 60,000 | 28,000 | 32,000 | 53% |
| Travel | 8,000 | 6,500 | 1,500 | 19% |
| Equipment | 12,000 | 12,400 | -400 | -3% |
The numbers are for illustration only.
How do you explain variances?
Set a tolerance, for example any line more than 10% from plan, and explain only those lines. Keep each explanation short and factual: what happened, why, and what will change. For example: “Personnel is below plan because two posts were filled in month four. Both are now filled.”
Do not write “no variance” when there is one, and do not leave a large one unexplained. If you need to move money between lines beyond the agreement’s limit, request approval first. See how to run a budget vs actual review for the method.
Who should check it?
A second person, who did not prepare it, should check four things:
- Totals agree with the ledger.
- Opening balances match the last report.
- Costs fall within the period and the allowed types.
- The narrative matches the numbers.
Keep the checker’s name and date with the file.
What should you keep?
Keep the report as sent, the ledger extract behind it, the mapping table, the check sign-off and the donor’s reply. If the donor or an auditor later asks about a figure, you can trace it in minutes.
How do you handle common problems?
A few situations come up in almost every reporting cycle:
- A cost fits two lines. Pick the line that matches the agreement’s definition, note your reasoning and use the same choice next period.
- A cost belongs to the next period. Leave it out and report it next time. Do not move dates to fit.
- A partner report is late. Report what you hold, mark the partner figure as pending and say when it will follow. Check whether the donor accepts this.
- The ledger has a mistake. Correct it with a reversal and a new entry before the report, and keep a note of the change.
Plan your calendar backwards from the due date. Allow time for closing, for the second-person check and for questions from program staff. Teams that start on the due date usually send a report with errors in it.
Where EMPOBase fits
EMPOBase’s Finance module gives you Budget vs Actual per grant, Grant Finance, Restricted Funds with commitments, a Reporting Calendar and Financial Statements. Because each ledger line carries its project, grant and budget line, actuals by grant come straight from the postings. These tools support your reporting work. They do not establish donor or statutory compliance, and they do not replace a donor’s own template, so you still map and check the figures. See the documentation.