[GNC] Using GnuCash with charity restricted and unrestricted funds, advice wanted

[Michael or Penny Novack]

You did NOT have to have separate books!

In ONE set of books you can have as many "bank accounts" in the ledger 
ans you have bank accounts. Just give them different names so that you 
can tell them apart. We may have some difficulties with cross pond 
differences in language. Thus your "current account" means what I would 
call a "checking account" and you must not confuse "current account" 
with the asset category "current assets" << all accounts containing 
immediately available funds >>

Thus:
Assets
      Current assets
            Current account
            Savings account << where you are keeping restricted funds >>

OK, now your donations are all being deposited into the checking account 
even though some of those donations are restricted. You are asking how 
to deal with that? Under income you could have:
Income
       unrestricted donations
       untransferred restricted donations
       restricted donations

When you make a deposit into the checking account of a bunch of 
donations (of both sorts) you use the top two. Hint: easiest to have an 
asset under current assets "undeposited cash" and as donations come in 
they go there credited to either unrestricted donations or 
untransferred. Now your actual bank deposit is an easy transaction, just 
undeposited to checking. Later, when you transfer from the "checking 
account" to the "savings account" <note> you would ALSO be transferring 
between "untransferred restricted donations" to "restricted donations". 
NOTE -- your reference to "building society" manes a different bank? 
Still that way your side of the pond?

As for your question about statements, almost all gnucash reports allow 
you to SELECT which accounts are to be included. You'd be able to 
produce statements for just the unrestricted funds, just the restricted, 
both together, etc.

Do note that while you can't use restricted funds for other than their 
intended purpose THE REVERSE IS NOT TRUE <<well, that would depend on 
your organizational bylaws but would be most unusual >> That's why you 
would want to use restricted funds for their intended purpose first 
(before using any non-restricted funds for that purpose). You want to 
clear the restriction.

Michael D Novack

PS --- The usual caveat, I'm not "licensed" to give accounting help. For 
what it's worth, I've been Treasurer for a number of non-profits.

PPS -- if you are following this, but your organization does not have 
that second bank account, you could track the restriction using a 
liability.






On 5/25/2024 4:13 PM, Chris Green wrote:
> I am the treasurer of a very small parish church council in the UK.
>
> We have to present separate accounts for restricted and unrestricted
> accounts, this is a legal requirement and also required by our diocese.
>
> At the moment restricted funds are, basically, building funds and are
> kept in an interest paying savings account.  The unrestricted funds
> are kept in a bank current account.
>
> My problem is that many donations to the restricted account (e.g.
> donations that the donor has specifically said must be for repairs of
> the church roof) go into the bank current account and have to be
> transferred from there to the building society account.
>
> For the last couple of years I have separate GnuCash data for the
> current account and the building society account, this has worked
> reasonably well.  However we are now moving into a period of getting
> the roof repaired and much more money will have to move via the
> current account.
>
> So, how should I deal with this using GnuCash?  I can see that I could
> separate accounts into two hierarchies (in a single database) -
> restricted and unrestricted with expenses and income for each, etc.
> However is it then possible to present separate end of year statements
> for them?  This would simplify incoming donations which are all to a
> single bank account.
>
> Or are there other strategies which work better for this sort of
> situation?
>
> I emphasise that this is a small church, annual income is only of the
> order of £5000 and we have no full-time or paid employees.  So the
> solution has to be simple and manageable by part-time,
> non-professional people.
>

-- 
There is no possibility of social justice on a dead planet except the equality of the grave.