Dividing Funds for Missions

[Chadwick]

Hi!

I need to take 11% of the Undesignated Tithes and divide into 4 categories for separate missions endeavors. One for 4%, 3%, 2%, and 2%. The funds in each category are accumulated until distribution (monthly or quarterly). What is the best way to set this up? Will this way allow us to quickly and easily know how much $$ we have for each category? I have a separate FUND (02) for missions fund.

Thanks you.

[JohnDMeyers]

The easiest way that I know of is to use the Automatic transfers in the Contribution Funds. You can assign the percentages to come out of the main "Undesignated Tithes" amount.

I'll just make up some numbers and lead you through an example:

Contribution Fund 110 Undesignated Tithes
DB 01-1110-000 General Checking
CR 01-4015-000 General Income
(Note 11% will be taken out of the $amount assigned to Fund 110 because of the automatic transfers below)

Contribution Fund 125 Missions (4%)
DB 01-1110-000 General Checking
CR 01-4415-000 Missions (4%)
AUTOMATIC TRANSFER
Receives 4% of Fund 110

Contribution Fund 126 Missions (3%)
DB 01-1110-000 General Checking
CR 01-4416-000 Missions (3%)
AUTOMATIC TRANSFER
Receives 3% of Fund 110

Contribution Fund 127 Missions (2%)
DB 01-1110-000 General Checking
CR 01-4417-000 Missions (2%)
AUTOMATIC TRANSFER
Receives 2% of Fund 110

Contribution Fund 128 Missions (2%)
DB 01-1110-000 General Checking
CR 01-4418-000 Missions (2%)
AUTOMATIC TRANSFER
Receives 2% of Fund 110

If you put $1000 in Fund 110, AFTER posting in Contributions and posting in Fund Accounting:
The income amounts will be in:
01-4050-000 (89%) $890.00
01-4415-000 (4%) $40.00
01-4416-000 (3%) $30.00
01-4417-000 (2%) $20.00
01-4418-000 (2%) $20.00

Note that if you ran a Contribution Fund report, you would see that $1000 was assigned to Fund 110, and nothing in Funds 125, 126, 127,128. It's only in Fund Accounting that the percentages will be assigned.

[Chadwick]

John, Thank you for your response and detailed examples. This helps tremendously. If I may ask follow-up questions to ensure I set it up right initially.

First, is it best to manage these types of funds in the same fund 01-General Fund or should I set up an 02- Missions fund. Or, does it matter?

Second, after I set up the income accounts, where will the income account close to? Separate equity accounts or just to unrestricted net assets?

Third, where will I look to see the balance in these funds so I know how much to distribute to the missions?

Thank you.
I am a church planter, not an accountant, so I am relying on our expertise. May God bless you for your help in this way.

Chad

[JohnDMeyers]

First, is it best to manage these types of funds in the same fund 01-General Fund or should I set up an 02- Missions fund. Or, does it matter?

Chad,

It doesn't matter from an accounting stand point. It's probably better to have a separate Missions Fund. Just setup the fund and use 02- prefixes on all the Fund Account account numbers instead of 01-

Second, after I set up the income accounts, where will the income account close to? Separate equity accounts or just to unrestricted net assets?

Undesignated tithes will all close to unrestricted net assets.

Third, where will I look to see the balance in these funds so I know how much to distribute to the missions?

I would set up four expense accounts that parallel the four income accounts. There is no automatic way to match us income balances and expenses balances. You have to look at the income at the top of the "Income and Expense" report, and match it up with the expense at the bottom of the "Income and Expense" report.

Having parallel expense accounts will help "match up" the amounts quickly.

Having a separate Missions Fund will help, because you will have fewer accounts overall
(we just had a discussion on this forum about setting up accounts in a separate fund)
http://powerchurch.com/forum/viewtopic.php?f=3&t=4166

And you may want to create a group account:

MISSIONS SPECIAL INCOME <--Group account
02-4415-000 Missions #1
02-4416-000 Missions #2
02-4417-000 Missions #3
02-4418-000 Missions #4

MISSIONS SPECIAL EXPENSES <--Group account
02-5015-000 Missions #1
02-5016-000 Missions #2
02-5017-000 Missions #3
02-5018-000 Missions #4

[Jeff]

If you have parallel income & expense accounts you can create a sub-account for each. ie.

MISSIONS SPECIAL INCOME <--Group account
02-4415-501 Missions #1
02-4416-502 Missions #2
02-4417-503 Missions #3
02-4418-504 Missions #4

MISSIONS SPECIAL EXPENSES <--Group account
02-5015-501 Missions #1
02-5016-502 Missions #2
02-5017-503 Missions #3
02-5018-504 Missions #4

You can then use the sub-account report to match income & expense accounts.

Another possibility you could create a board designated equity accounts under you unrestricted equity account. The process would be similar to donor restrictions, the equity account would just be in the unrestricted section of your equity accounts.

Accounting wise this money is considered unrestricted because your board made the designation and not the donor. What your board designates, it can un-designate.

[Chadwick]

GREAT! Thank you. One last question before I proceed in this part.

When doing automatic transfers on the contribution side from an 01 to 02 fund, do I have to add in the transfer from 01 to 02 using the 9000 accounts? In other words, in your example using just the 01 Fund, you suggested the autotransfer could look like this:

Contribution Fund 125 Missions (4%)
DB 01-1110-000 General Checking
CR 01-4415-000 Missions (4%)
AUTOMATIC TRANSFER
Receives 4% of Fund 110

Can I debit 01-1100-000 General Checking and CR 02-4415-000 Missions (45) or do I include the transfer accounts (9000)?

[JohnDMeyers]

One transaction always has to debit and credit accounts in the same fund. If you debit an account in 01 and credit an account in 02, you will mess up your balance sheet (your assets won't equal the sum of liabilities and equity).

(Side note: If your assets don't equal your liabilities plus equity in any fund, always check to see if a "split" transaction was made).

Remember that 01-1110-000 and 02-1110-000 are really the SAME checking account. The fact that they share the same major account number (1110) means they are the same physical bank account.

So, you could receive $1000 in Fund 110, which could be tied to (Fund Accounting) Fund 01, and then do an automatic transfer to (Fund Accounting) Fund 02 like this:

Contribution Fund 110 Undesignated Tithes
DB 01-1110-000 General Checking
CR 01-4015-000 General Income

Contribution Fund 125 Missions (4%)
DB 02-1110-000 General Checking
CR 02-4415-501 Missions (4%)
AUTOMATIC TRANSFER
Receives 4% of Fund 110

After posting in Contributions and Fund Accounting, you will have the following:
01-1110-000 $960
01-4015-000 $960
02-1110-000 $40
02-4415-501 $40

and your bank account will receive a deposit of $1000, and that will be represented by the sum of 01-1110-000 and 02-1110-000

[Chadwick]

Great. You have more than adequately answered my questions and have given confidence to proceed. Thank you very much.

Grace to You,
Chadwick