Educational trusts and societies face unique accounting challenges that regular school management systems don't address. Fund-based accounting — tracking restricted vs unrestricted funds — is a legal requirement that many schools struggle with.
Why Fund-Based Accounting Matters
When a school trust receives a donation earmarked for a specific purpose (building a library, scholarships for underprivileged students), that money cannot be used for general operations. This is a restricted fund.
Mixing restricted and unrestricted funds is not just bad practice — it's a compliance violation that can jeopardize your trust's registration.
The Challenges
Multiple Fund Sources A typical trust manages: tuition fees (unrestricted), government grants (restricted by purpose), CSR donations (restricted by donor), endowment income (restricted by terms), and more.
Audit Requirements CA auditors need fund utilization certificates, donor-wise expense reports, and balance sheets that show restricted and unrestricted balances separately.
Inter-Fund Transfers Sometimes unrestricted funds need to supplement restricted fund activities. These transfers must be properly documented and authorized.
How EduBold Handles This
EduBold's finance module is built with fund-based accounting from the ground up:
- Every income and expense entry is tagged to a specific fund
- The system prevents spending restricted funds on unauthorized purposes
- Fund utilization reports are generated automatically
- Donor-wise expense tracking provides transparency for CSR contributors
- All data syncs to Tally for final accounts preparation
Best Practices
- Set up fund codes at the beginning of the financial year
- Train all staff who process expenses to tag funds correctly
- Generate monthly fund utilization reports for board review
- Keep restricted fund bank accounts separate where possible
Fund-based accounting isn't optional for educational trusts. With the right system, it doesn't have to be painful either.
