Funders are checking three things. Can you deliver the activity for the money you have asked for. Will the organisation still be going at the end of the funded period. Can you account for every pound afterwards.

The documents that usually get requested

• A project budget showing income and expenditure under named headings for the funded activity.
• A twelve month cashflow forecast, often on the funder’s own downloadable sheet.
• Your last set of filed accounts, or forecasts and a business plan if you are newly formed.
• A short note on your reserves and what other income you have.

Use their sheet when they give you one

If the application pack includes a cashflow template, fill in that file. Assessors read dozens of bids and look at the same cells each time. Submitting your own layout makes them hunt, and a tired assessor who cannot find your staff costs marks you down on financial management rather than asking.

Where the funder gives you no template, build your own and keep it simple: one tab for the budget, one for the twelve month cashflow, one for assumptions. Export it to PDF for the bid and keep the live spreadsheet for yourself.

Before you type a number, write down the funder’s financial year, their reporting dates and their payment schedule. Those three facts shape the whole sheet.

The budget is a list of cost headings with a figure against each, totalling the amount you are asking for plus anything you are putting in yourself.

Headings that cover most CIC projects

• Staff costs: gross pay, employer National Insurance, employer pension contributions, and cover for holiday and sickness.
• Freelance and sessional costs: tutors, facilitators, interpreters, with a day rate and a number of days.
• Delivery costs: venue hire, materials, equipment, transport, refreshments.
• Participant costs: expenses, childcare, accessibility support.
• Overheads: a fair share of rent, insurance, software, bookkeeping and payroll.
• Monitoring and evaluation: the cost of producing the reports the funder has asked for.

Show your working

A line that reads “Sessional staff 12,000” invites a question. A line that reads “Sessional tutor, 2 days a week for 40 weeks at a stated day rate” answers it. Funders rarely argue with arithmetic they can follow.

VAT

If your CIC is not VAT registered, budget every cost at the gross figure you will actually pay, VAT included. If you are registered and can recover the VAT, budget net and say so in the assumptions. Getting this wrong by a fifth on materials is the quickest way to run short in month nine.

Once the headings are set, copy them across to the cashflow tab before you spread any figures.

The cashflow forecast takes the same budget headings and spreads them across twelve columns, one per month, then adds a running bank balance. It is the part of the pack assessors look at hardest, because it shows whether the project can actually be delivered in the order you have described.

The rows you need

Timing is the whole point

Put grant instalments in the month the funder says they pay, not the month you sign. Many funders pay in arrears or hold back a final instalment until the end report is accepted. Payroll leaves on the same date every month, PAYE goes out by the 22nd, and a venue invoiced in March may be paid in April. If the closing balance goes negative in any month, say what you will do about it on the assumptions tab rather than hoping nobody scrolls.

Build the sheet with formulas, so when one figure changes the whole year updates. Lock the total cell and check it still matches the amount you are requesting.

The assumptions tab is a page of short written notes explaining where each figure came from. It takes twenty minutes and it is the difference between a budget an assessor trusts and one they query.

What to write down

• Pay rates used, and whether you have allowed for an increase part way through the year.
• Quotes obtained: supplier name, date, figure.
• Participant numbers and the cost per participant.
• The basis for apportioning overheads, for example a percentage of rent based on room use.
• Confirmed income against applied for income, with dates.
• Your VAT position.

It protects you later

Twelve months on, the person who built the spreadsheet may have moved on and the funder is asking why line four came in over budget. A dated assumptions page answers that in one email. Without it, somebody spends a day reverse engineering their own sheet.

Funders also read the assumptions page as evidence of the clear budgeting process the council prospectuses ask about. You are showing the method, not the finished number.

Save the version you submitted, date the filename, and never overwrite it. Your reporting later compares actual spend against the submitted budget, so you need that exact file intact.

Money in the bank and income for the year are different things, and this is where CIC accounts most often go wrong.

The rule in short

You recognise a grant once you have met the conditions attached to it and receipt is reasonably assured. A three year grant paid up front in year one does not become three years of income in year one. The unspent portion sits on the balance sheet as deferred income until you deliver the activity it pays for.

Which standard applies

Older articles still quote SSAP 4, which was replaced when FRS 102 came in. Government grants now sit in Section 24 of FRS 102, and you choose between the performance model and the accrual model. Revenue grants are matched to the costs they fund. A capital grant for equipment is spread over the useful life of the asset, alongside the depreciation charge. Grants from charitable trusts and lottery distributors follow the same logic: recognise when you are entitled and the amount can be measured.

Clawback and tax

If you breach the grant conditions the funder can ask for some or all of the money back, and where that looks likely it has to be provided for in the accounts. Tax does not follow the accounting treatment automatically either. Some grants are taxable income for corporation tax with the matching spend deductible, others are outside the scope. Check the funding agreement and ask before you file.

Set your restricted funds up as separate tracking categories in your bookkeeping now, and read our restricted and unrestricted funds guide next.

A community interest company follows the Companies Acts and the CIC Regulations, and funders know it. Several of the questions on a funding form exist because of those rules.

The asset lock

Your constitution contains statutory clauses locking assets to the community purpose. Assets cannot be transferred out at less than market value except to another asset locked body, and if the CIC is wound up any surplus is preserved for the community. Funders treat this as a reason to trust you with restricted money, so say it plainly in the bid.

Directors’ pay and the CIC34

Directors’ remuneration has to be transparent. Every year you file a community interest company report, form CIC34, which goes on public record at Companies House and covers what you did for the community, who you consulted, any assets transferred below market value and what directors were paid. An assessor can and does look it up. If your budget includes director salaries, the figures should sit comfortably next to what you have already published.

Shares and surplus

A CIC limited by shares is subject to a dividend cap, with at least 65% of surplus profits kept for the community purpose and up to 35% payable to shareholders. A CIC limited by guarantee has no dividends at all. You can also ring fence funding received so it is clearly used for the purpose it was given for.

Our CIC accounts and CIC34 filing guide walks through the annual filing itself.