Non-profit / charity / fund accounting, example help, please

[Dale Alspach]

The only case I am aware of where funds given are a liability occurs when
you receive funds that are actually to be spent by someone else or on
behalf of someone else. 

I work with an affiliate of Habitat for Humanity.
We operate in some ways like a bank holding mortgages. We collect money
from homeowners to pay for insurance and taxes but it is not our money. It
is on our books for a while in an escrow account as an asset and as a
liability. 

In the US organizations, driven by IRS requirements, often use fund accounting.
Basically there are three sets of expense accounts: program, management and
fundraising. Program expense are the expenditures directly for doing
whatever it is the organization's charitable purpose is. Management is
organizational overhead, e.g., paid officers, some insurance costs, audit
fees. Fundraising is naturally the cost of mailings, events that raise
money, etc.

Dale