CHARITY ACCOUNTING PROBLEMS

[Mike or Penny Novack]

On 2/15/2017 7:59 AM, Mike or Penny Novack wrote:
> On 2/14/2017 11:21 PM, Seacook wrote:
>> Hello,
>> I am not an accountant but I have been pushed, kicking and screaming, 
>> into the position of Treasurer in a small, very successful charity. 
>> Much of the charity's success is due to the transparent way in which 
>> we administer donated funds through dedicated donor accounts and how 
>> they are then credited to specific beneficiary accounts. These 
>> accounts, some 180 of them, are of necessity 'virtual' but are 
>> crucial to accurate allocation of funds for beneficiary expenses 
>> which are overwhelmingly paid to suppliers, often in cash, rather 
>> than directly to the beneficiaries themselves.  For example, we pay 
>> school costs directly to the schools. 
I want to ask a question of both SeaCook and the group.

This is an interesting problem, and while tackling it in a way TOTALLY 
open to the group would be in some ways instructive, the particular 
organizational structure/process of this charity is so very different, 
unlikely to be a useful example in detail*.

SeaCook, besides like yourself doing "treasurer" for 501(c)3's these 
days, before retiring I was a very senior sort of systems and business 
analyst for one of the world's largest "financials". So having the 
"clients" (some department of the company) have me while wearing the 
business" hat help design the system one of the things I did (and then 
later, switching to the "systems" hat, design the implementation). In 
other words, first the WHAT and then the HOW.

That is very much NOT telling the clients what to do. The clients know 
the answer (it is their business) but that isn't the same thing as 
knowing what they know. Recognizing "that's right" is MUCH easier than 
figuring out what's right (and especially what and where are all those 
nasty exceptions). What the business analyst does is having heard the 
client (loosely) describe the what their system must do is to ask 
questions, until the answers refine that description (leaving no holes 
or exceptions).

a) SeaCook, would you like me to help you come up with a "system" for 
your organization?
b) Everyone else, (if SeaCook wants this) at what level of observation 
should that be?
      In the real world I came from, that "design" (of the BUSINESS 
model of the system) might be 20% of the total project time, spent in 
seemingly endless meetings << I should perhaps need to point out that 
the sport of questions usually not the sort that could be answered on 
the spot -- more like, "can you get back to me on that before the next 
meeting?" >>
       I am not at all sure would be useful for folks to watch the 
details of that (since those details would NOT be the same for a 
different charity). What I propose is that we would keep this open (on 
the forum) as SeaCook gives the initial "loose" description and then he 
and I (and whoever else would want to take part in the "meetings") go 
offline for those and then we come back to "open" with the formally 
defined system. Because it is only at THAT point we would begin 
discussing "OK, now how do we use gnucash to implement that".

What say all?

Michael D Novack, FLMI

* Normally, restricted funds, dedicated funds are the EXCEPTION to 
normal processing. Having the bookkeeping system set up so that the 
restricted funds need additional processing not an undue burden. But for 
THIS organization it looks to me that not only would it be the 
non-restricted that would be the rare exception, but that the number of 
individual restricted funds is huge.

HOWEVER --- if there are other folks out there who feel that they would 
have/should have this sort of structure, speak up, because that would be 
an argument for keeping the whole thing "public" << while the PARTICULAR 
questions/answers would be different than for your organization, the 
SORT of questions/answers would make more sense >>