useoffunds

Use of funds is a term used in finance, accounting, and grant management to describe how money will be spent. It complements 'sources of funds,' which identifies where money comes from.

In loan or project finance, the Use of Funds statement lists the permitted uses and the timing of disbursements, often by category (construction, equipment, working capital, fees, contingencies). It is used to ensure funds are drawn and spent in accordance with the agreement and to provide monitoring and reporting to lenders.

In grants and nonprofit contexts, the Use of Funds outlines allowable costs, restrictions, and reporting requirements; it ensures alignment with program goals and sponsor expectations. It helps ensure that funds are applied to approved activities and measured against budgeted outcomes.

In corporate accounting and budgeting, "uses of funds" can refer to cash outflows or the planned expenditures funded by a given pool of money (for example a budget line item or debt proceeds) and is often shown alongside sources of funds. This framing supports transparency and internal control over cash management and capital allocation.

Typical elements include the fund's purpose, eligible costs, restrictions or compliance requirements, timeframe, and a mechanism for reporting and reconciliation. Clear use-of-funds disclosures help prevent misallocation, establish accountability, and support audit and compliance processes.

Example: a construction loan might allocate disbursements to site acquisition, contractor payments, contingency, and fees, with reporting that funds were used per the approved budget.