Connect Every Payroll Dollar to the Right Fund, Grant, and Program
Unity automates the allocation of payroll costs across your funds, grants, and programs — so your functional expense report is always accurate, your grant budgets stay in sync, and Form 990 preparation doesn't require a month of manual work.
Salary Allocation Is Your Biggest Compliance Risk. It Doesn't Have to Be.
How It Works
How Payroll Flows Through Unity
Payroll is complicated for nonprofits in ways that most accounting software doesn't acknowledge. A program director might spend 60% of her time on a federal grant, 25% on an unrestricted program, and 15% on general management. Each allocation carries different compliance requirements, different budget implications, and different implications for Form 990 reporting. Getting it wrong isn't just an accounting inconvenience — it can trigger audit findings, jeopardize grant compliance, and create IRS exposure.
Unity manages this complexity through a structured payroll allocation system. For each employee, you define an allocation profile that specifies how their compensation should be distributed across funds, grants, and functional expense categories. When payroll runs, Unity automatically calculates the allocation, generates the journal entries for each fund and grant, and posts them to the ledger — with the payroll documentation attached as supporting evidence.
For federally funded positions, Unity supports the time-and-effort documentation requirements that federal grants demand. Employees can record their time against specific grants and programs through a streamlined interface, and those records become the supporting documentation for the payroll allocation — satisfying auditors and program officers without creating a separate documentation burden.
The functional expense classification that emerges from this process feeds directly into Unity's Statement of Functional Expenses and into the Form 990 Part IX schedule. There is no separate categorization step at year-end, no reconciliation between payroll records and the 990, and no guesswork about whether program, management, and fundraising expenses are accurately reported. The data is already organized exactly as the IRS expects it.
For organizations that receive indirect cost reimbursement, Unity applies your negotiated indirect cost rate automatically as payroll and direct costs are recorded — generating the recovery entries and tracking the cumulative indirect cost claim against your grant ceilings in real time.
Payroll Allocation Questions
Yes. Unity's allocation profiles support any distribution of an employee's compensation across multiple grants, programs, and functional categories. Allocation percentages can be set as fixed splits, adjusted by pay period, or driven by time-and-effort records. Every allocation posts to the appropriate grant budget and fund ledger automatically, with the support documentation attached.
Unity includes a time-and-effort module that allows employees to record their time against specific grants and programs each pay period. These records serve as the supporting documentation that federal grant regulations require for payroll allocations. They're stored directly in the system and linked to the corresponding payroll journal entries, so auditors and program officers can verify compliance without a separate documentation request.
Yes. Because every expense — including payroll — is classified by functional category (program services, management and general, fundraising) at the transaction level, Unity can generate a Statement of Functional Expenses and the data required for Form 990 Part IX at any time. There is no year-end categorization exercise. The classification is already complete in the ledger.
Unity applies your negotiated indirect cost rate automatically as direct costs are incurred, generating the indirect cost recovery entries and tracking the cumulative recovery against each grant's indirect cost ceiling. You can see at any time how much indirect cost you've recovered, how much budget remains, and whether you're on track to claim your full allowable indirect costs before the grant closes.