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ToolkitLCC Program Information

Managing Funds

Since Local Cultural Councils administer public dollars, councils must ensure that all funds can be accounted for at any time. Managing council finances is a year-round process. It is important that each council establishes a good working relationship with their municipality to guarantee that grantees are paid in a timely manner, money is handled in compliance with Mass Cultural Council guidelines, and all funds are tracked and documented appropriately.


All funds from Mass Cultural Council, any other funds or donations to the LCC, and any interest earned thereon should be deposited in a revolving account kept separate and apart from all other monies and administered by the local city or town treasurer. Separate checkbooks and non-municipal accounts are not allowed. Councils are entitled to interest on their accounts and to regular account balance reports from their municipalities.

Four musicians performing on an outdoor stage The council treasurer or another member should visit the municipal treasurer or accountant at least once or twice a year to establish or maintain a working relationship. During each visit, you should review reimbursement and direct grant procedures and periodic accounting reports to verify balance and interest earned and any other important information that will help the council conduct its business.

Keep bills and receipts of all administrative expenses to submit to the municipal treasurer when requesting reimbursement for expenses incurred by council members. Municipalities determine the process for administrative reimbursement.

It is important for the treasurer to keep a copy of all approval letters to keep track of grantee deadlines for reimbursement and direct grants. Grant recipients have one year from the date on their approval notification to request reimbursement or a direct grant.

Always keep a record of which payments have been processed and when the paperwork was submitted to the town. See the "Financial Best Practices" section for good strategies for tracking payments.

For more detailed information about managing council funds, review the LCC Program Guidelines .

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Encumbered Money

Encumbered funds are state funds that have been promised to a grantee but which have not yet been reimbursed or paid as a direct grant. Grant recipients have one year after notification of an award to request reimbursement or payment. Grantees' funds are considered encumbered until the end of that time period. Councils should keep track of which grantees have and have not requested reimbursement or direct grant throughout the year.

A council may approve a reasonable extension at its own discretion. If a grantee does not request reimbursement, direct grant or an extension by the end of the year, then the money becomes unencumbered. Read more about extensions and modifications.

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Unencumbered Money

Unencumbered funds are unspent state funds from prior fiscal years. An LCC may not accumulate unused state funds at the local level. Any unencumbered money must be regranted in the next available funding cycle. Unencumbered funds accrue for various reasons, typically because previously approved projects were completed for less than the amount awarded, were not completed at all, or simply did not request reimbursement. Administrative funds left over from previous years should also be considered unencumbered money and must be regranted during the following grant cycle.

In summary, if the original source of the funds was Mass Cultural Council, the LCC must use Mass Cultural Council's process and timeline for redistributing these funds.

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Administrative Funds

LCCs may spend up to five percent of their state allocation each funding cycle for administrative expenses. Any locally raised money or interest earned from state funds may be used for administrative expenses without being subject to a percentage limit. Councils may not accumulate unspent administrative funds on the local level from year to year. Any unspent administrative funds from a prior grant cycle should be treated as unencumbered money and should be regranted during the following grant cycle.

LCC members cannot receive compensation, but can receive reimbursement for expenses. Together the LCC and the local municipality should determine specific policies and procedures for reimbursing members for expenses. While LCCs may use administrative funds to purchase refreshments for public events, such as grantee receptions, LCCs cannot use administrative funds to purchase food for standard LCC meetings, such as grant cycle voting meetings.

Examples of administrative expenses can include:

  • Printing
  • Postage
  • Telephone
  • Photocopying
  • Publicity
  • Banners
  • Membership fees to cultural associations
  • Stationery
  • Grantee receptions
  • Clerical or staffing assistance
  • Gas/tolls/parking costs to attend MCC events
  • Sign language interpreters
  • Web site creation/maintenance
  • Subscription to email services
  • Subscription to online survey providers
  • Refreshments for public council events

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Locally Raised Money and Interest

Outdoor gazebo at night title= Locally raised funds and any interest earned from state funds can be distributed at the discretion of the LCC at any time during the year, as long as the funds go to support the arts, humanities or sciences. Mass Cultural Council also recommends that locally raised funds distributed or spent by the LCC meet the other substantive requirements set forth in the state and local eligibility criteria; however, unlike state funds, prior Mass Cultural Council approval for expenditure of local funds is not required.

Because LCCs are considered government agencies, all monies, including those raised locally, must be deposited in and maintained in the town or city account designated for the council. Donated or earned monies should be tracked so the council knows the ongoing total of state and locally raised funds. Separate checkbooks or non-municipal accounts are not permissible.

For more detailed information on managing locally raised funds, review the LCC Program Guidelines.

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Financial Reporting

Because LCCs are responsible for granting out state funds, it is extremely important that council funds are tracked and managed correctly. Every year, Mass Cultural Council requires that each municipality and LCC submits an LCC Account Form, a summary financial report which must be completed before the council's grant cycle voting meeting in order to fulfill the annual reporting requirement stated in M.G.L. Chapter 10 Section 58 .

Completion of the LCC Account Form ensures that all LCCs have a clear and current accounting from their municipality before any local grant decisions are made. It also ensures that unencumbered balances from previous years are put to use in each community. Mass Cultural Council has also engaged the services of an accountant with expertise in municipal finances to make periodic site visits to LCCs. The goal of these site visits is to provide practical, on-the-ground support and technical assistance when and where it is needed.


  • Mass Cultural Council sends the LCC Account Form to municipal fiscal officer via email in September.
  • Council prepares account information and meets with municipal fiscal officer by October 31 to sign off on LCC Account Form.
  • Council and municipality use the meeting to work out any discrepancies between their accounting and sign off on the LCC Account Form.
  • Council inputs LCC Account Form information via the online Annual Report to Mass Cultural Council by November 16.
  • Council makes decisions at grant cycle voting meeting regarding administrative funds and any locally raised money or interest for the grant cycle.
  • Council calculates remaining amount available for granting and grants out the total amount.
  • Council submits remaining financial information and grant decisions to Mass Cultural Council by the statewide reporting deadline on February 16.


Mass Cultural Council forwards the LCC Account Form to municipal fiscal officer (this may be the city/town treasurer, auditor or accountant) via email.

  • The municipal fiscal officer will report on one year of the council's account activity based on the state fiscal year (from July 1 of the previous year through June 30 of the current year).

The council should meet with their municipal fiscal officer by October 31.

  • Council should prepare financial records for the meeting:
    • Determine what grant reimbursement requests are outstanding (encumbered funds), and which grants did not or will not submit reimbursement requests (unencumbered funds).
    • Determine total expenditures from the past fiscal year.
    • Determine the amount of locally raised funds and/or interest remaining in the council account (if applicable).
    • Determine what the account balance should have been at the end of the fiscal year (June 30).
    • Councils may find the Grant Tracking Worksheet, Ledger Template, and Municipal Meeting Prep Sheet useful when making these determinations.
  • Council and municipality use the meeting to work out any discrepancies between their accounting and sign off on the LCC Account Form.
  • Council keeps the signed LCC Account Form for use in the Annual Report to Mass Cultural Council and for their records.

November - February
By November 16 the council must submit their information as provided by their municipal fiscal officer in the LCC Account Form to Mass Cultural Council through the online office.

Before the grant cycle voting meeting, the council should determine their available remaining balance. Using the Voting Meeting Calculation Sheet, the council should account for any changes since receiving the LCC Account Form as well as any funds that are still being held for grantees (encumbered funds) and submit it to Mass Cultural Council via Section 2 of the Annual Report by November 16.

At the voting meeting, the council should also make decisions regarding administrative funds, Council Programs, and any locally raised money or interest for the grant cycle that it wishes to set aside. Once these decisions have been made, the council should determine their amount available for granting. The amount available for granting must equal the total amount of grants awarded during the voting meeting.


The following resources are available to help councils complete the financial reporting process and manage their funds successfully throughout the year. Read more about Financial Best Practices below.

  • Ledger Template: to track income and expenditures throughout the year
  • Grant Tracking Worksheet: to track encumbered and unencumbered funds
  • Municipal Meeting Prep Sheet: to prepare financial information for the council meeting with municipal fiscal officer
  • Voting Meeting Calculation Sheet: to determine the final amount available to grant during grant cycle voting meeting
  • LCC Account Form Tutorial: Learn more about what the LCC Account Form is, how to get the completed form, and how to submit it to Mass Cultural Council.
  • Step 2 Tutorial: Learn how to complete Step 2 of the Annual Report to Mass Cultural Council and calculate your amount available for granting. This video will walk you through the process step-by-step.

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Financial Best Practices

Every council and municipality will potentially face a unique set of challenges in managing their cultural council funds.

Councils that practice good financial management tend to use the following practices:

  • Receive regular reports about account activity from their municipality
  • Establish clear processes with the municipality for reimbursements and tracking and spending different types of funds
  • Track all account expenditures and revenue throughout the year
  • Track all approved grants, reimbursement requests, and unencumbered funds effectively

Receiving Regular Reports on Account Activity

Local Cultural Councils are entitled to regular financial reports from their municipality. Municipalities will provide the council with the LCC Account Form annually as part of the financial reporting process. In addition, Mass Cultural Council encourages municipalities to provide account statements to LCCs monthly, quarterly, or as needed. If a council would like more regular reports on their account activity, they should schedule a meeting with their municipal fiscal officer to discuss the information the council would like and how frequently the council should receive reports. Once a schedule is in place, the municipal officer can mail or email the reports directly to the council's treasurer.

Establishing Clear Financial Processes

In order to avoid unnecessary delays and frustration, it is important for LCCs to work with their municipality to establish clear processes for paying grantees, depositing and spending locally raised funds, and reimbursing council members for administrative expenses. LCC funds may be spent as the LCC directs but may be accessed only by the process used by the municipal treasurer and/or accountant's office for the expenditure of public funds.

The LCC's treasurer or another member should meet with the municipal fiscal officer to decide on processes that work best for both the municipality and the LCC. It may be helpful to provide them a copy of the Municipal Guide to Local Cultural Councils (PDF) in advance of the meeting so they can learn about the program and their role in it. At the meeting, the municipal officer should help the council understand the city or town's process and time frame for financial disbursements. Other issues to discuss may include:

  • When and how often the municipality can cut checks
  • When and how often the council should submit completed reimbursement forms
  • How to track and spend administrative funds
  • If the council has locally raised money or plans to raise funds, discuss what the council plans to use them for and if they are to be spent on a project, when and how council members will be reimbursed for project expenses

Tracking Revenues and Expenditures

A council's revenues and expenditures should be tracked by both the municipal officer and the council itself. The LCC should review any municipal accounting reports to compare revenue and expenditure records, verify account balance and interest earned, and any other important information that will help all parties carry out financial activities effectively.

Municipal Tracking:

If a council raises local funds or wishes to use interest earned towards a council originated project, it is especially important for the LCC and the municipality to establish a way to track different kinds of funds within the council's account. The LCC program statute (M.G.L. c.10, s.58) states that municipalities shall establish "a revolving account which shall be kept separate and apart from all other monies" for the LCC "in which shall be deposited all receipts from the state arts lottery fund...and any other receipts or donations to the local or regional cultural council authorized by law" and that "all such funds, including interest earned thereon, may be expended at the direction of the local or regional cultural council, without further appropriation."

Municipal treasurers and accountants should follow their normal procedures for setting up and tracking revolving fund activity and are encouraged to call Mass Cultural Council or their Department of Revenue (DOR) Bureau of Accounts field representative if they have questions. According to DOR, the statute directs that all revenue be credited to the LCC account, including gifts and interest, which would otherwise be segregated. Expenditures from the LCC revolving fund must be approved through the local warrant process.

Ultimately, a system must be in place that allows the municipal treasurers, accountants and the LCC to track the revolving fund account balance and activity, allocate interest, and to track the receipt and expenditure of different types of LCC funds separately (state funds, locally raised funds and interest). This does not mean that the treasurer is obligated to establish an entirely separate bank account but they are responsible for tracking the council's revolving fund balance and activity separately from other funds. To satisfy Mass Cultural Council reporting requirements, we encourage the LCC to meet with the treasurer and accountant or auditor to determine how, working together, these recordkeeping goals might best be accomplished.

Council Tracking:

One of the best strategies for managing council funds correctly is for the council to keep an ongoing ledger of all incoming revenue and outgoing expenditures throughout the year. Having a good system in place ensures that the council can easily monitor their account activity.

Many councils find that Microsoft Excel is a great tool for tracking funds. If you have a good template set up, inputting and calculating information can be streamlined and user-friendly. In addition, Excel spreadsheets can easily be sent electronically to the town treasurer, other council members, or even to the council's Mass Cultural Council staff contact if you have questions.

If your council distributes all available funds (state, local and interest) through the state grant cycle, you can use a basic ledger to track all revenue and expenditures throughout the year:

  • View a Sample Ledger
  • Download the Ledger Template to start your own: this template is already set up to do basic revenue/expenditure calculations for you!

If your council uses locally raised funds and interest for council activities outside of the state grant cycle, you might consider tracking state and local funds through separate ledgers, or one ledger that tracks the funds separately:

Tracking grants, reimbursements, and unencumbered funds

It is primarily the council's responsibility to keep track of approved grants, the amount awarded, the amount reimbursed, and ultimately the amount that becomes unencumbered if a project does not request payment or does not use the full grant award. There is no way for a municipal fiscal officer to know if funds have become unencumbered unless the council keeps them informed. To do this, the council should send them a list of their approved grants each year, and then either update the municipal fiscal officer regularly, or at least once a year at the required meeting each September.

In order to track grants a council should keep track of:

  • The date the funds will become unencumbered (1 year from the date on the approval letter)
  • The original grant amount vs. the amount requested for reimbursement
  • Projects that do not happen
  • Projects that receive extensions

To track this information the council can use an Excel spreadsheet.

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