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

[Edward Bainton]

The issue UK charity funds accounting presents is that the funds represent
a “third dimension” beyond Dr/Cr: every account, and every category, must
be subdivided into as many restricted funds as the organisation has
(strictly n + 1, since there is almost invariably an unrestricted fund,
too).

If there really are only two funds, per OP’s parish council query, then
mirroring the chart of accounts so every account exists in two versions may
be feasible. But restricted funds have a habit of multiplying like rabbits,
and can appear when least expected, so this is not a future-proof solution.

To me the currency tag workaround seems an efficient solution (if a
somewhat inelegant one). Anyone have lived experience of it?


Sent from my mobile device with apologies for brevity.


On Sun, 26 May 2024 at 19:48, Michael or Penny Novack <
stepbystepfarm at comcast.net> wrote:

> 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
>
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