[GNC] Non-profit accounts - reporting of restricted funds and of future commitments

[Mike or Penny Novack]

First of all, in theory appropriate spreadsheets obviously COULD be 
used. Remember,in the old days there was just pen and ink on paper. 
Still legal, and so would be spreadsheets with columns just like the old 
style accounting paper had. I do NOT recommend this because:
     1) You would need to be experienced with old fashioned pen and ink 
on paper bookkeeping. I could do it, because I learned back when that 
was all that there was.
     2) It was error prone, especially in the posting process 
(transcription errors). Not easy to find/correct unless you know all the 
tricks.

A modern system like gnucash is essentially "autoposting" (post directly 
into the ledger, the journal is virtual) and the computer will not make 
arithmetic mistakes. Also, it can easily produce the usual reports.

I am a retired senior systems and business analyst and treasurer of some 
501(c)3's  << US tax exempt non-profits). You have permission to email 
me directly and we would exchange questions back and forth till it is 
clear how your books should be set up. To start:

1) What is your jurisdiction? Do you know the line items needed for the 
reports to gov't etc.?
2) You have choices how to handle restricted funds. For example, 
something long term like a "building fund" you would probably want to 
handle as a liability. Short term restricted donations << likely/certain 
able to use for intended purpose within the accounting period maybe less 
formally. Frequency of transactions going OUT from the restriction many 
also play a roll. IN ANY CASE --- you will almost certainly be entering 
two transactions for each << one for the actual money; one to reflect 
removal of restriction << could be done with a single two way split 
transaction but leave that till experienced.
3) Do you have fixed assets? I was thinking not until I saw 
"building".If so, your organizations needs to decide on a de minimis 
amount << even though for something long lasting, too minor to treat as 
a fixed asset) and the time period over which fixed assets are depreciated.

Michael D Novack




On 7/20/2019 9:07 AM, Christopher Lam wrote:
> On Sat, 20 Jul 2019 at 12:28, Michael Hendry <hendry.michael at gmail.com>
> wrote:
>
>> Assets/Current Assets/Charity/Charity Current
>> Assets/Current Assets/Charity/Charity Savings
>>
>> I’d like to be able to report on both accounts as if they were a single
>> account (the spreadsheet simply treated these as a single account and
>> ignored the transfers between the accounts) but a request for a report on
>> the parent (Assets/Current Assets/Charity) in a Balance Sheet report gives
>> a zero result.
>>
> Are you using the default Balance Sheet? You'll need to choose, from
> Display / Parent account balances or Parent balance subtotals, a suitable
> choice. Hint: don't choose subtotals in both.
>
>
>> B. Some charitable receipts are earmarked as they are received - e.g.
>>
>> Income/Earmarked Funds/Polio Plus
>> Income/Earmarked Funds/Water Account
>>
>> and I’d like a similar composite report on the children of
>> Income/Earmarked Funds, preferably on the same report as in A. above, to
>> guide members on what is actually available for them to spend.
>>
> Is this the best way of recording earmarked funds? I'd imagine recording
> from the donor, wish #polioplus in description, would be more suitable?
> Anyway, Transaction Report, originating from Earmarked Funds account,
> select children.
>
>
>> C. Sometimes a decision is made to commit funds already collected but in a
>> situation where the money won’t be spent immediately - e.g. a building
>> project.
>>
>> This is obviously similar to the Earmarked Funds in B., but I’m not sure
>> how best to handle it.
>>
>> I could create a transaction between the Charity Current Account with
>> today’s date and Expenses/Charity/Committed Funds as the destination
>> account.
>>
> This is similar to budgeting? If this internal allocation of funds isn't to
> be used anywhere else, would an asset account were created as a child of
> Asset/CurrentAssets/Charity called 'Restricted Funds', and transferred to
> Asset/EarmarkedFunds/Projects be better, and check the parent-account
> balance to determine 'unallocated funds' ? I don't know. What *could* be
> implemented, is the concept of 'virtual transactions' whereby the balances
> are counted separately from the real-life transactions
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There is no possibility of social justice on a dead planet except the equality of the grave.