[GNC] Non-profit loan/grant tracking

[Michael or Penny Novack]

On 7/21/2020 9:18 AM, Joshua Ginsberg wrote:

>
> We have a single bank account. This year we received a cash loan and a
> grant. Both of them require us to track what expenses the funds
> specifically went to pay for. I'm unclear of how to best set this up in
> GnuCash.
>
> For grants that don't require tracking, we just co-mingle the funds in our
> bank account general funds, but this grant's funds will be actually in our
> bank account but expenses using those specific funds needs to be tracked.
> For loans that don't require tracking, I know to create a liability account
> for the loan and begin it with a transaction between the loan and the bank
> account.
>
> But it feels like I need some other account to track the remaining balance
> on the funds from the loan/grant.

I can tell you how I did this (bookkeeping for non-profits)

Let's take the grant first. You create a liability for this and an 
income account "grant income". This latter is used when the money 
becomes yours (has been used for an expense authorized by the terms of 
the grant).

When you get the grant, debit the bank account and credit the liability. 
That grant money is not yours yet even though in your bank account. The 
organizations hasn't "earned" it yet.

The transactions recording qualified expenses now become more 
complicated. You debit the expense AND the liability (cancelling that 
much) and you credit the bank account (check used for that expense) AND 
"grant income" (that much now "earned")

For me to tell you how to handle the loan you'll need to supply more 
details. But if this is a loan where the amounts used for the specified 
purpose are forgiven (one of the possibilities)  it's just like that 
grant. Otherwise you need to explain in what sense the loan is 
associated to specific expenses.

Michael D Novack