CHARITY ACCOUNTING PROBLEMS

[Seacook]

Hi,
Many thanks for the comments.
I was already thinking along similar lines and have been playing with 
the following set up.
The basic scheme is straightforward. Donations come in as income, are 
contra-ed to Accounts Receivable in the usual way and the monies 
received into the bank account.
I have set up a new top level Virtual Accounts (under Assets but it 
could equally be under Liabilities as it stands in isolation) with both 
Beneficiary and Donor accounts, contra-ed to a virtual Contra Account in 
the same hierarchy.  This eliminates any problems with moving money 
between the virtual accounts but allows for a complete record.
Also in the hierarchy of virtual accounts are monthly  Transfer Accounts 
which allow me to specify how much and whose account is being 
(virtually) debited for Supplies to Beneficiaries.  The bills are, of 
course, paid with real money out of the Charity's bank or cash accounts.
So far, I haven't encountered any problems, apart from having to write 
in the donations from the real bank account to the Donor Accounts and 
split the beneficiary payments back to the Beneficiary accounts.
A couple of questions do occur to me.
Is there any mileage in creating another top level category specifically 
for virtual accounts which would be ignored by Balance Sheet and Profit 
& Loss accounts?
and
Can it be made possible to copy and paste the credits and debits between 
the real and the virtual accounts?
Philip Allum

On 2/15/2017 8:59 PM, 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.
>>
>> Donations and payments are identifiable either by invoice or receipt 
>> numbers.
>>
>> Is there any simple way to incorporate these accounts without 
>> creating an imbalance and to track the movement of funds into and out 
>> of the virtual accounts and then to translate these into actual 
>> income and expenditure through the charity's bank without 
>> complicating the reconciliation of the bank account with a number of 
>> balancing virtual transactions?
>>
>> Philip Allum
>> Kelab Amal Langkawi 
>
> Interesting problem. There are some of us here who do the bookkeeping 
> for charities and so who might be able to come up with ideas for this. 
> But first, you will have to tell us ALL of the different ways you will 
> be required to produce reports, because with double entry bookkeeping, 
> THAT is the usual problem << since you are allowed just ONE hierarchy 
> of accounts, other groupings for reports present more or less problems.
>
> In addition to be able to do "donor accounting" (how much did we get 
> by donor) and "beneficiary accounting" (how much did we spend by 
> beneficiary) what are all the other "else's". I think I might be 
> seeing.... << guessing how your organization works >>
> 1) For every donor, how much of what this person donated has been used 
> for which beneficiaries and how much still undedicated/available.
> 2) For every beneficiary, how much allocated for this person's benefit 
> and of that, how much still unused/available.
>
> BUT (a very big but) are you ALSO going to be required to report on 
> things like "for what sorts of expenses" (how much in total/all 
> bene's, for food, clothing, educational expenses, etc. )
>
> The matter of reconciling the bank book, etc. should not be an issue. 
> Especially with a large number of small transactions you do NOT want 
> to make that difficult.
>
> One thing to keep in mind, if the set of books that can do all of what 
> is required ends up too complicated, solutions might be possible using 
> multiple sets of books each structured to make one sort of reporting 
> easier. The maximum "cost" associated with solutions doing that is 
> multiple data entry < though that MIGHT be separate people jobs >
>
> Also keep in mind that reports need not necessarily come DIRECTLY out 
> of gnucash (but could possibly be a report exported from gnucash into 
> a spreadsheet for further manipulation toward the final report desired.
>
> Michael D Novack
>
>
>
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