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

[Wm]

Sat, 29 Nov 2014 09:17:01 
<20141129151701.110B64C2F13 at pelczynski.math.okstate.edu>  Dale Alspach 
<alspach at math.okstate.edu>

>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.

Yup, fairly common if you are spending someone else's money and they 
expect you to say what you did with it afterwards, that is where the 
fund accounting kicks in.

>I work with an affiliate of Habitat for Humanity.

I had a look, that is the sort of org I think gnc could be serving 
better reporting wise.

>We operate in some ways like a bank holding mortgages.

I'm not sure I understand that.  Isn't a mortgage a holding against a 
physical asset?  It is possible I've overloaded your "in some ways", if 
that is the case, apols.

>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.

Looks like you've got the accounting bit right but some people make 
mistakes and that is what I think other people need general help with.

How do you report spending / distribution to your trustees?

The escrow account interests me as a use example.  In practice do you 
mean that the managers need permission from the trustees in order to 
spend money and a transfer of funds occurs between "not available to 
spend" and "available to spend" ?

>In the US organizations, driven by IRS requirements, often use fund accounting.

You make that sound like a bad thing rather than a sensible form of 
accounting and reporting.

>Basically there are three sets of expense accounts: program, management and
>fundraising.

me nods, but notices those are *your* orgs definitions and another org 
might have a different set

>Program expense are the expenditures directly for doing
>whatever it is the organization's charitable purpose is.

yup, we call them something else

> Management is
>organizational overhead, e.g., paid officers, some insurance costs, audit
>fees.

yup, we have them too

> Fundraising is naturally the cost of mailings, events that raise
>money, etc.

yup, do you match that expenditure against revenue?  it seems to me this 
is where fund accounting might kick in for your org

-- 
Wm...