So you've finally secured your first grant (or first couple of grants)! Congratulations! You've received that glorious check in the mail, hopefully used the money for various items within your budget, and your project has gone swimmingly, if you aren't already anticipating it...
So what now?
As much as this is free money, dear friends, there are still some things you need to tie up before you go about your merry way, armed with this newfound knowledge...
Grant reports and tax returns.
Firstly, you need to tie up the loose ends with your donators/collaborators/funders/grant organization/whoever gave you the money. They'll want to know exactly how you spent it. Which means you need to keep a record of your expenses, and the exact dates of your project, and proof that you actually followed their guidelines. For example, your local cultural council may require proof of credit along with the grant report (meaning proof that you credited them as funders in your program/credit section, like you will see in a lot of theater playbills) as well as proof that your project took place. So you may need to submit photographic evidence of programs, of people at your event/play/whatever took place, and also PDFs of receipts that show you actually spent money on things for the project, as well as the total amount your project cost. (It's more efficient to keep track of things as they come up, but if someone can be designated bookkeeper and you'd prefer that, you do you.)
And make sure things add up. If there are any discrepancies, you may be ordered to pay the grant back, which can't be fun for anyone. (Some projects like concerts or theatrical productions may have made a profit from selling tickets, donations, merch, etc. that is more than what the grant was, and so can easily repay anything. Still, be very meticulous with reporting that you followed the guidelines and used the grant for its intended purpose.)
And then secondly, as you can tell from the image above, you are legally required to report any money you receive to IRS in your tax return. Doesn't matter if you won the money in a game show, got paid through a contract, or it's your share of the profit from your project and none of these are through an actual employer. Your benefactor is legally required to mail you a tax document of your grant receipt. Typically these are 1099s, which are used to report money not from an employer (any money I make through this website will be reported to me in a 1099 that I get from my financial institution of choice, for example, since Wix doesn't employ me directly, and I can then use that to report the income on my tax return).
This grant will count as income. And usually, you pay tax on income. But since you used the grant to cover expenses related to your proejct, any business expenses (any project expenses are a business expense) will cancel out any taxes you owe on the grant, provided you used the whole thing. This is where you have to be extremely careful with making sure things add up, lest you end up paying extra taxes or get audited because things don't make sense in your tax return. Using a program like TurboTax or H&R Block would help since they walk you through the whole tax return document and specifically show you the things you need that would apply for your grant and any other income or expenses.
Yeah, I know it's a lot.
Sounds scary?
Well, don't be too overwhelmed. This is the easy part, as opposed to all the knowledge you had to implement from previous posts in order to secure the grant. Filing taxes is never easy, but if you've been filing your taxes for quite a while already, just think of this as one more thing to add. One more bit of income. One more thing that likely made you profit on the side.
And when you've done it once, doing it again will be a piece of cake.
And another note: hold on your 1099s and any other tax documents you receive. Just in case you have to refer to them again later (which may be the case if you use the same grant provider and they want you to report how much they gave you before).
Well, that's all for this series on grant writing, grant funding and grant proposals! Unless there's more you'd like to know about...in which case, fill out this survey below that I designed for fellow creatives and people who want to know how my own projects can impact them!
Stay educated,
Alexia
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