Good morning,
Can someone help me out with this?
We have a member who makes a substantial contribution each year. However, using the word "pledge" complicates matters with their personal fund that they give from. On our statements it shows pledge contribution. I could easily rectify that for 2010 by simply not entering a pledge for them, and putting any contributions into PC+ as a non-pledge contribution.
However: they would like to give in advance for 2010, via a stock gift, this week. How can we hold the funds in advance for 2010 without designating it as an advance pledge? Can a liability account be used for this purpose, and then come 2010 I can enter it under their name as a non-pledge contribution?
Thanks in advance!
Angie
Help! Making a Contribution; doesn't want a pledge recorded
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Jeff
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Re: Help! Making a Contribution; doesn't want a pledge recorded
There are several issue that will need to be dealt with.
First is how you acknowledge or substantiating the gift to the contributor. Since this money was given in 2009, it needs to be shown on their 2009 contribution statement. The gift in stock does complicate things, so you will need to check on the specifics about stock gifts and what the church needs to give the donor in return so they don't lose the deduction for the gift. For example, there might be a requirement that you not assign a value to the gift in your receipt. You would then just need to write them a letter saying thank you for your gift of 100 shares of XYZ corp. Then it is up to the contributor to determine the value to claim as a charitable deduction.
Second issue is how to apply the contribution to the pledge. There are 2 ways to do this.
First is if you can assign a dollar value, just enter the contribution like normal, but you can then apply the contribution to the 2010 pledge instead of any existing 2009 pledge. To do this when you enter the contribution just click the pledge lookup button and select the correct pledge. This will show the contribution in 2009 but will effect their 2010 pledge.
Second if you are not assigning a value to the pledge, you will change the pledge start balance for the contribution. On the maintain pledges screen, you will enter an amount in the pledge start balance field. This will reduce the amount left on the total pledge. This method will not make any entries over in accounting.
Third issue is recording the gift in accounting. And there are several issues other issues here as well.
Since this amount is to pay a 2010 pledge, some people consider this deferred income. In this case you would credit a liability account and debit an asset account. When 2010 comes around you will recognize the income. To do this you would debit the liability account and credit an income account.
If you do not consider this deferred income, then you would credit an income account and debit an asset account.
If you do not have on already, you will need setup up a new asset account for your brokerage account.
The next accounting issue is the value of the stock may change by the time you sell the stock. So you may have a gain or loss on selling the stock. This would be either income to expense to the church.
So a complete example for accounting entries would be:
When stock is received
Deferred Income (liability account) Credit for value of stock when received
Stock Brokerage account (asset account) Debit for value of stock when received
When stock is sold
Stock Brokerage account (asset account) Credit for value of stock when received
Checking account (asset account) debit for amount received from sale of stock
If received more cash than stock value when received:
Credit income account for gain on stock
If received less cash than stock value when received:
Debit expense account for loss on stock
So you can see there are several complicated issues here and I cannot stress enough that you get the help of someone local who can spend the time to learn what you are trying to accomplish.
First is how you acknowledge or substantiating the gift to the contributor. Since this money was given in 2009, it needs to be shown on their 2009 contribution statement. The gift in stock does complicate things, so you will need to check on the specifics about stock gifts and what the church needs to give the donor in return so they don't lose the deduction for the gift. For example, there might be a requirement that you not assign a value to the gift in your receipt. You would then just need to write them a letter saying thank you for your gift of 100 shares of XYZ corp. Then it is up to the contributor to determine the value to claim as a charitable deduction.
Second issue is how to apply the contribution to the pledge. There are 2 ways to do this.
First is if you can assign a dollar value, just enter the contribution like normal, but you can then apply the contribution to the 2010 pledge instead of any existing 2009 pledge. To do this when you enter the contribution just click the pledge lookup button and select the correct pledge. This will show the contribution in 2009 but will effect their 2010 pledge.
Second if you are not assigning a value to the pledge, you will change the pledge start balance for the contribution. On the maintain pledges screen, you will enter an amount in the pledge start balance field. This will reduce the amount left on the total pledge. This method will not make any entries over in accounting.
Third issue is recording the gift in accounting. And there are several issues other issues here as well.
Since this amount is to pay a 2010 pledge, some people consider this deferred income. In this case you would credit a liability account and debit an asset account. When 2010 comes around you will recognize the income. To do this you would debit the liability account and credit an income account.
If you do not consider this deferred income, then you would credit an income account and debit an asset account.
If you do not have on already, you will need setup up a new asset account for your brokerage account.
The next accounting issue is the value of the stock may change by the time you sell the stock. So you may have a gain or loss on selling the stock. This would be either income to expense to the church.
So a complete example for accounting entries would be:
When stock is received
Deferred Income (liability account) Credit for value of stock when received
Stock Brokerage account (asset account) Debit for value of stock when received
When stock is sold
Stock Brokerage account (asset account) Credit for value of stock when received
Checking account (asset account) debit for amount received from sale of stock
If received more cash than stock value when received:
Credit income account for gain on stock
If received less cash than stock value when received:
Debit expense account for loss on stock
So you can see there are several complicated issues here and I cannot stress enough that you get the help of someone local who can spend the time to learn what you are trying to accomplish.
Re: Help! Making a Contribution; doesn't want a pledge recorded
Thanks for your very informative response.
we actually receive quite a few stock gifts so I'm used to handling them; however, your entry procedure is different from mine and, I think, more correct. I've had trouble the last couple of months getting our investment account to reconcile and it's because of stock sales. If I use your procedure I should be able to get things square.
The main issue here is not using the word "pledge". It would definitely be deferred income, but I don't want to enter a 2010 pledge for him in the "Maintain Pledges" module like I do when other people make advanced pledges. I want his contribution statement to say "non-pledge". I think I have it figured out, but I do have a call in to our Auditors just to run it past them and make sure.
Thank you again for taking the time to write such a great, detailed response. I really appreciate it.
we actually receive quite a few stock gifts so I'm used to handling them; however, your entry procedure is different from mine and, I think, more correct. I've had trouble the last couple of months getting our investment account to reconcile and it's because of stock sales. If I use your procedure I should be able to get things square.
The main issue here is not using the word "pledge". It would definitely be deferred income, but I don't want to enter a 2010 pledge for him in the "Maintain Pledges" module like I do when other people make advanced pledges. I want his contribution statement to say "non-pledge". I think I have it figured out, but I do have a call in to our Auditors just to run it past them and make sure.
Thank you again for taking the time to write such a great, detailed response. I really appreciate it.