[GNC] New user - anyone else using GnuCash for PCC (church) accounts? Advice?

[John Angelico]

On Sat, 29 Aug 2020 at 19:42, Chris Green <cl at isbd.net> wrote:

> On Wed, Aug 26, 2020 at 12:16:43PM +0100, Michael Hendry wrote:
> > On 26 Aug 2020, at 11:21, Chris Green <cl at isbd.net> wrote:
> > >
> > > I have just taken over as treasurer of a (very) small church Parochial
> > > Church Council.  The existing accounts are all wholly manual and I
> > > want to move to some level of computerisation.
> > >
> > > I am a long time Linux user and was, before I retired, a Software
> > > Engineer so the 'techie' side of things shouldn't be a big issue. I
> > > can install GnuCash OK and get it running etc.
> > >
> > > I used to run my own small Ltd. company so basic accounting methods,
> > > VAT, etc. are not beyond me either.
> > >
> > > What I want is more on the 'how to run a small PCC accounts with
> GnuCash'
> > > sort of thing.  There are some quirks to PCC accounts (I think!):-
> > >
> > >    How does one deal with 'unrestricted' and 'restricted' accounts?
> > >    Can one set up 'types' of accounts in GnuCash?
> > >
> > >    Is GnuCash overkill for this?  Total cash assets are only a few
> > >    thousand pounds and annual turnover is probably down in the
> > >    hundreds now.
> > >
> > >    Is there anyone else using GnuCash for this?
> > >
> > > Thank you for any/all help that anyone can offer.
> > >
> > > --
> > > Chris Green
> >
> > Hi, Chris, welcome to the GnuCash community.
> >
> > I’ve been using GC for my personal accounts for 10 years, a small local
> > charity for 6 and recently became Treasurer of the local Rotary Club
> (which
> > has separate charity and club accounts).
> >
> Well it sounds as if you know the ins and outs then! :-)
>
>
> > I was advised on this forum that I could represent restricted funds as
> > Liabilities, but the accountant who certifies the first-mentioned
> charity’s
> > accounts advised that this is not acceptable in the UK - which is where
> > I’m assuming you’re based. It’s necessary to keep a separate account of
> > receipt and payment of restricted funds, which can then be detailed on
> > the annual report.
> >
> Yes, I'm in the UK.  I'm unfamiliar with 'restricted' and
> 'unrestricted', I don't really know what they mean.  It *seems* to be
> that 'restricted' funds/donations are monies received for specific
> causes (in our case nearly always church repairs and maintenance)
> whereas 'unrestricted' are monies recieved in the regular Sunday
> collection etc. used to pay outgoings such as vicar's expenses, CofE
> central admin/costs, electricity bills and such.
>
>
I'm in Australia and have been involved with church and other non-profit
charities, bodies and community organizations for a while too.

I am likewise unfamiliar with those terms although the concept is clear.
Funds are collected or donated for specific purposes, and must be used only
for those purposes. Unrestricted probably means open plate offerings
collected every Sunday for normal expenses, or given without any
stipulations.


> We seem to keep the 'restricted' funds in a deposit account and
> 'unrestricted' in a current account but I suspect the differentiation
> is just 'how it happened' rather than any specific intent.
>

The same applies to a more strict "trust fund" concept (eg. donations and
bequests). In Australia the Tax Office allows donors a deduction for funds
given to specially designated recipients. The recipients are required to
treat the funds separately, so they are kept in a separate account with the
bank, and drawn upon only for the specific purposes permitted. Donors are
sent a receipt which is evidence to support their claim for a deduction in
their annual tax returns. Recipients are required to report donations above
a threshold value to the Tax Office annually.



> I'm assuming that my basic book-keeping will be:-
>
>     Create an 'assets' account for the current (unrestricted) account
>     and another 'assets' account for the deposit (restricted) account.
>

Yes, in the same way that you would have an account for all assets. Your
accounting setup is meant to reflect the real world situation. Thus if you
have separate bank accounts you would have separate accounts and do
separate reconciliations for them.



>     Create 'liabilities' accounts for outgoings (vicar's expenses,
>     electricity bill, repairs, etc.) which will be either restricted
>     or unrestricted.
>

Not liabilities unless you plan on accrual accounting. Even if you did go
that way, you would still need expenditure accounts for those outgoings.


>
>     Create accounts for income - but what are these called?  Again
>     they need to be 'restricted' or 'unrestricted'
>

Yes, for a church it may be Weekly Collection, Special Collection,
Donations, Bequests and then marked restricted as necessary.

For a theatre production company (I have been treasurer of a Gilbert &
Sullivan company here :-) ), we have Member Subscriptions, Theatre ticket
Income, Programme Sales, Donations. So the income account names identify
those amounts you wish to know about to track progress through the year.
And expenditure required to put a show on (theatre hire, programme costs,
lighting, orchestra, set construction).

To whom do you report monthly progress with the accounts? In my church that
body is called the Board of Management and is responsible for care and
maintenance of property, managing funds, paying the minister, etc. on
behalf of the congregation. It reports annually to them on its stewardship
of the assets entrusted to it. We are required to report centrally to the
denominational office in a standard format but locally we can also report
more freely according to what's important to the congregation.




> Is there a way in GnuCash to group accounts such that it will only
> allow transactions between the same groups (i.e. either restricted or
> unrestricted)?
>

I haven't got that far with GC as yet.

Hope this helps.
Regards,
John Angelico
Melbourne