Setting up gnucash for charity with project

[Wm]

Wed, 29 Oct 2014 18:14:55 <015c01cff3a4$3e28a170$ba79e450$@lineone.net>
Chris Brittain <chrisbrittain at lineone.net>

>Thanks Dale
>The funders vary a little in how they operate. Most have already received
>from my predecessor invoice by invoice supported claims and have paid out a
>percentage retrospectively at to a maximum agreed. Unfortunately the trail
>of this is difficult to follow as they sent the evidence, normally a folder
>of receipted invoices,  to a number of the funders in turn. Others just
>required evidence of completion before paying out. There has been mingling
>of funds with each funder offering either a fixed amount, or most likely a
>15% -50% proportion which can be crossed matched with each other and our
>reserves.

I think there is always going to be some spreadsheet / off-account work
because of the nature of things here in the UK.  i.e. you know an
expense can be applied against Restricted funds and was meant to have
been but which one was it?  This isn't cheating, you know all expenses
that day were against Restricted funds but someone didn't fill in the
time so you don't know if it applied to the morning or afternoon
session, aaargh!

>This will probably be a one off at this level (£250K) but there are
>regularly smaller donations (£1-2K) for a specific purpose but the accounts
>have not previously recorded these as restricted funds (UK usage not sure if
>it is the same in USA) but I will in future be recording these as such to
>meet accountancy requirements.

My understanding is that the mixing of the Restricted and Unrestricted
funds in the UK is likely to cause VERY BAD THINGS TO HAPPEN maybe it is
different elsewhere.

Incoming restricted funds tend not to be the fund accounting problem, it
is the allocation of outgoings that makes fund accounting different.

>The board just want basic management accounts showing overall P&L and cash
>flow, but previously they had project funding figures and day-to -day cash
>flow separately with no apparent linkage between them.

Hmmmn, I think Gnucash can do the project stuff depending on number
active at a time.  At a guess I'd say the equivalent in business terms
would be cost centres and I'd say 1000 would be way too many to manage
efficiently and concurrently with GnuCash.  A dozen?  easy.  As usual
the detail is in-between and numbers of.

> My
>aim is to produce full management accounts monthly and also be able to
>prepare annual accounts to UK Charity SORP standards.

I'm prepared to work with you on a template for that, you'll need a CoA
for a balance sheet ...

>I will have the services of a professional accountant to perform
>a full audit but financial constraints mean that I will have to do all the
>background work.

That sounds similar to what I say below

>The setup of a subaccount on the banking side sounds good but perhaps I
>would have to "tweak"  one of the standard reports to get the monthly report
>I want.

Leave the reports for now, they'll come of themselves.

Time passes in that I wrote the bit below before the bit above.

Mike's parallel posting has reminded me that I have a GnuCash CoA that I
set up for a UK based charity that had Restricted and Unrestricted
funds, the accounting work on the CoA was done by the charity's
experienced accountant / treasurer.  I offered him a number of views
e.g.

Expenses
        Restricted
        Unrestricted
Income
        ...

vs

Restricted
        Expense
        Income

Unrestricted
        ...

etc but "get your CoA right and you're [variable %] there" is what
accountants say and we ended up with these bits that are different from
an ordinary ltd co

Both Restricted and Unrestricted funds appear under Equity rather than
Liabilities as Mike mentions but I think that may depend on whether they
are funds promised or funds received (i.e. is the money at bank ready to
spend or on promise when called).  Maybe it is Equity either way?

Anyway ...

RestrictedExpenses
RestrictedIncome

UnrestrictedExpenses
UnrestrictedIncome

(sensibly abbreviated) are all top level trees.  You do *NOT* mix your
Restricted and Unrestricted Expenses and Income or something terrible
happens :)

Depending on your donors / funders be prepared for minutiae of Expenses
detail

e.g. we recorded tea / coffee money to charity clients on a daily per
session basis (summed up per session / day and each transaction was
recorded on a till) as those were expenses from restricted funds and it
depended on which funder was using the facilities that day or part day.

The idea is odd if you're coming from a business POV but in fund
accounting every expense down to the penny must be allocated to a
restricted fund if possible.

Before anyone says I'm bad, some restricted funds can be very limiting.
There is a fund I am aware of here in the UK that attempts to gather
left over legacies and similar just to see if *anyone* can make use of
them.

HTH a bit, can't let you or anyone have the actual CoA structure, of
course

-- 
Wm...