OK, I can help with this << I am the Treasurer of 501(c)3's
How should I make entries for club project funds. I am the treasurer
for a
small 501(c)(3). Our income is mainly memberships (dues), cash
donations,
and an annual swap meet like event.
I am using three Asset accounts. Checking, Savings, and Petty cash.
I've been asked to track the funding(?) for the clubs main project, HAM
radio repeaters. We paid for them out of checking. Some of it before I
became treasurer. We are now needing to enhance those systems so we've
asked for donations specifically for this purpose - a Repeater fund.
You are asking about "restricted funds" << donations reserved to a
specific purpose >>
There are a couple ways you can do this, mainly depending on how formal
the restriction.
a) Liability method (the old fashioned formal way) ---- as the donations
earmarked for come in, debit cash (checking) and credit a liability
account "repeater fund"
At the same time you create that account, create an income account
"donations used for repeaters". Note that those donations aren't really
the club's until used for that specific purpose << theoretically, were
it decided to cancel the repeater project they would have to be returned
or at least "released" by each donor >>
So, when you buy repeaters that is a normal transaction crediting
checking and debiting EITHER a fixed asset account "repeaters" << to be
depreciated >> or an expense account "repeaters" << the amount is less
than the organization has chosen for fixed assets --- a non-profit has a
lot of freedom here >> AND you enter another transaction releasing
that amount, debit "repeater fund" and crediting "donations used for
repeaters". You could do that in a single both sides split transaction
but if new to gnucash I don't suggest that.
b) Less formally you could partition the checking account. But this
makes more work reconciling the checkbook. You would move funds back
from this partition to the main checking account as funds used for
repeaters.
c) If, as you say, you are certain that repeaters will be bought and the
amount purchased will be more than the special donations, you could just
create an income account "repeater donations". When you prepare the
reports for the board, annotate to indicate that the amount spent on
repeaters was more than this amount << so used for the restricted purpose >>
Note that the method chosen would/should depend somewhat on time. I
would tend to the more formal solution if we were talking about
restricted funds raised over time for a well in the future project << I
think you can seen that the "c" method would not be good for "donations
received over several years to reroof the club house".
Michael D Novack
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