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

[Michael or Penny Novack]

On 5/26/2024 1:37 PM, Michael Hendry wrote:
> Hi, Michael,
>
> We’ve corresponded about this in the past.
>
> I was keen to keep track of restricted funds within GC in a way which 
> would make unspent restricted income persist as restricted funds 
> beyond the year end, and you suggested the use of a Liability account 
> for this purpose,
>
> Unfortunately, the accountant who examines our accounts before 
> submission to OSCR (the Scottish Charities Regulator) advised that 
> this isn’t an acceptable way to handle restricted funds in the UK.
>
> The problem with using the income accounts (as below) for the various 
> types of Income, is that the money not spent (in our case on bursaries 
> for musicians who wouldn’t otherwise be able to attend our courses) 
> doesn’t persist in the that account after the year end the way a 
> liability would. A collection at the final-day concert which is 
> advertised as being destined for use as bursaries won’t be spent until 
> the next year’s course.

STOP!   The way you keep confusing "income accounts" with the funds that 
came in as that income indicates to me that you are still struggling 
with the fundamental concepts of double entry bookkeeping.

The money itself (the funds) would be in an account(s) of type asset. If 
a transaction in which money coming in is being recorded the debit side 
would be that asset account and the credit side likely an account of 
type income << was that the contents of a donations jar, cookie sales, 
whatever >> If the transaction is where money is going out, the debit 
side likely some expense and the credit side where the money came from 
(the account against which the check written, etc.

You are asking about tracking restricted funds, making sure they are 
only used for the designated purpose. Note that if you had separate bank 
accounts, it would be perfectly clear. What is being discussed is how 
when you DON'T have actually separate accounts you can mimic that. If 
your accountant says not done with liabilities, follow his/her advice as 
to what accounts to use. I just described for somebody else partitioning 
a single (actual) bank account so that it would have a number of 
separate accounts in the books << the liabilities method was NOT 
partitioning the actual bank account -- equivalent in terms of total 
debits and credits >>

Look, I am here. I am NOT going to be able to find a text book covering 
"accounting for non-profits in Scotland". If you are not being told by 
your accountant, you need to look that up for yourself, what accounts 
you'd need, what the workflow of transactions would look like, etc. THEN 
we can tell you how to do that using gnucash as opposed to say pen and 
ink on paper.

Michael D Novack