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

[Michael Hendry]

> On 29 Aug 2020, at 10:39, 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 seem to have got away with it so far, with the help of charity-friendly accountants and especially this forum!

> 
> 
>> 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.

The use of a Liability account to record unspent restricted funds was attractive to me, because it emphasised that (in this case) we had received money specifically for bursaries which hadn’t been applied for within the same financial year, and the “Liability” to pay them would be carried forward into the next and subsequent financial years. I think the reason we couldn’t present such accounts to OSCR (the charity regulator in Scotland) is that our accounts are recorded on a cash (rather than accrual) basis. OSCR requires a specific section on restricted funds in the annual report.

> 
> 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.

That works if you are meticulous in putting the ear-marked donations into a specific bank account, but gets more complex if you have several different destinations for restricted funds.

A number of GnuCash users use child accounts of their bank accounts to assist with budgeting - the “Envelope” method. In this scenario the parent is the bank account, which has children called (let’s say) “Available Cash”, “Gas Budget”, “Electricity Budget”, “Motoring Budget”, “Holiday Budget” etc. Regular pay-day transfers of budgeted amounts are made from “Available Cash” are made into the relevant sibling accounts, and when relevant expenditure is made, it is charged to the relevant account. If you search the archive you’ll find discussion of this method.

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

Seductive, but I think invalid for the same reason as the use of a Liability account for bursaries.

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

I don’t think there’s any great advantage in labelling them in this way, as they don’t survive the year end (the way Liabilities would).
But you could have "Income:Donation:Church Roof”, "Income:Donation:Memorial Bench” and “Income:Donation:General” and make sure to keep a separate note of the cumulative income and expenditure for these at the year end.

> 
> 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 don’t believe so.

My advice would be to go for a very simple chart of accounts and deal with restricted funds and budgeting externally, either on paper or on a spreadsheet. I have discovered from bitter experience that it is possible to overthink these things…

Regards,

Michael