Pro or Cons of using 1 fund account for the whole church

[MarkAndrew]

I'm wondering what would be the pros and cons of using only 1 fund account for everything in the church. We currently have 16 fund accounts. We are thinking this would be better managed if everything was under one fund. Some of the fund accounts have little or no activity. Other are always carring a negative balance and have to be adjusted fron the General fund.

I noticed that the sample chart of accounts has only 1 fund for everything.

Apprecaite any input. Thanks, Mark

[NeilZ]

I'm wondering what would be the pros and cons of using only 1 fund account for everything in the church. We currently have 16 fund accounts. We are thinking this would be better managed if everything was under one fund. Some of the fund accounts have little or no activity. Other are always carring a negative balance and have to be adjusted fron the General fund.

I noticed that the sample chart of accounts has only 1 fund for everything.

Apprecaite any input. Thanks, Mark

Could you give us a list of your Funds ??

At our last church, we had funds for Operating, Building Funds, and anything else with a separate checking or savings account.

[Matt]

I assume that when you say you have 16 fund accounts you mean you have 16 accounting funds. If so, and if these are set up primarily to track designated monies, I believe it would be much easier for you to account for these using one accounting fund (i.e. General) by setting up restricted accounts within that fund. Accounting funds should ordinarily only be set up for major activities/operations that require a separate Balance Sheet and Income and Expense Statement to be produced. An example would be a church that also operates a Christian School. In that situation the church would want to set up two accounting funds--a General Fund for the church and a School fund for the Christian school.

[Svenska]

I'm wondering what would be the pros and cons of using only 1 fund account for everything in the church. We currently have 16 fund accounts.

I noticed that the sample chart of accounts has only 1 fund for everything.

Apprecaite any input. Thanks, Mark

I keep returning to the two responses posted and still remain uncertain how to proceed.

We are a small remnant of what at one time was a large congregation. We have a large facility, a number of restricted funds and considerable assets. Being small in attendance, the pool of abilities to be drawn from is a concern. Can we anticipate 1, 2 or 3 years in the future having some one in our congregation capable of learning our accounting system? Our treasurer has some practical accounting experience; I have a background in accounting going back many years including churches, government, small business and major corporations. Both of us are in our mid- to late seventies and who can say what may happen in the next 2, 3 or 5 years?

This leads me to worry about running one major fund account with several funding sources or setting up several fund accounts based on funding sources, or something in between. Which would be easier for the person with little or no background in bookkeeping to learn? The current accounting system has been used by 2 or 3 relatively untrained and inexperienced people. In use since early 2007, it is chaotic and each year grows more so. Charts of Accounts were badly set up and new COA lines were added seemingly without any amount of thought. Credits get posted to natural debits, debits to natural credits, new restricted receipts accrue to income accounts rather than as liabilities; a separate set of paper books are being kept in order to keep track of actual fund activities and balances.

We recently purchased version 11 but it is not yet installed. Having worked with the demo version and read through the published material, I’m confident that we can get the system set up but our treasurer and I are still hesitant regarding the specifics of one or more fund accounts and fund sources.

I’ll outline our situation as it has been set up lo these many years:
1. Program Funds Checking Account:
a.Operating funds – supplies, payroll, maintenance, church program and department expenses (Worship, SS, etc.)
b.Pass through funds – budgeted contributions to Presbytery, Synod and General Assembly, denomination stated missions, Session stated missions, payroll taxes, etc.
2. Program Funds Savings Account:
a.Repository for short term liabilities and prior year pledges.
b.Any non-designated or non-restricted funds above current needs.
3. Special Funds Checking Account:
a.Restricted funds
1)Short term restricted funds
a)Memorial Funds. There are 35-40 memorializations of which only a few have a stated purpose other than “In Memory Of…”. The bulk of these funds are in the checking account.
b)Building maintenance funds – 2 which are restricted.
c)Fifteen other funds restricted in use running from Art & Education to Piano Tuning. A few of these are due to specific bequests or endowments. The bulk of these funds are invested as long term restricted funds.
2)Long term restricted funds
a)Certificates of Deposit. Currently four. One is an endowment fund and the remaining three hold assets of the building funds and the other 15 restricted funds.
b)Financial institution investments – money market, mutual funds, etc. Currently four. One is an endowment fund and the remaining three hold assets of the other 15 restricted funds and Program Fund reserves.

So what is the opinion of the community of PowerChurch users? One basic fund account with three bank funds, eight money instruments and a bunch of restricted funds? A Program Fund (01) supported by a checking and savings account and a Designated Fund (02) with its checking account, CDs and investments? More separate fund accounts for CDs (03) and investments (04)?

If I correctly understand what I’ve read about PowerChurch, regardless of one major fund or several funds, we can generate individual or consolidated reports for each fund type.

Any suggestions, comments, redirection to other sites, etc. will be greatly appreciated. I certainly appreciate your taking the time to read through this missive.

[wms7328]

It's difficult to offer any specific recommendations without seeing your detailed COA for each of the 16 accounting funds. I can say from my experience over the last 10 years with church finances, having that many different accounting funds is way too complex. Since each fund has a separate COA, keeping all those funds coordinated to point that any consolidated report would be meaningful would be very difficult.

Our church currently is about 600 members with a lot of different activities. I currently use 4 accounting funds, 2 bank accounts and investiments in CD's. My accounting funds are as follows:

01- General Operating Fund- used for all church operations and payroll. Very few restricted funds in this account, usually we don't accept designated contributions unless they are for an expense that is already planned.

02- Building Capital Fund- used primarily for new buildings. Contributions are specifically for building funds and all building construction expenses, loan payments are from this account.

03- Memorial Fund- in the past we used this fund for memorials that were given in someone's memory. However, we are currently phasing this fund out. Version 11 allows you to capture the contribution as a memorial by using Memorial as a designation for the money. This allows you to capture the info in contributions but apply the money to one of your other accounts.

04- Cemetery Fund- Account for maintenance of our church cemetery. Separate bank account.

[JohnDMeyers]

The CDs and bank accounts can be handled with one account (not accounting fund) per bank account.

We have a single church with four sites. One site has a homeschool enrichment program. All sites have their own missions fund. We also have a for-profit golf course.

Fund 01 - Site 1 General Fund
Fund 02 - Site 1 Missions Fund
Fund 03 - Site 1 Homeschool Enrichment

Fund 07 - Site 2 General Fund
Fund 08 - Site 2 Missions Fund
Fund 09 - Site 2 College Outreach

Fund 13 - Site 3 General Fund
Fund 14 - Site 3 Missions Fund

Fund 17 - Site 4 General Fund
Fund 18 - Site 4 Missions Fund

Fund 30 - Golf Course

As you can see, we left room between site funds for more funds at each site.

[Jeff]

A setup that we see often regarding the number of funds is:

01 - Operating Fund - For budgeted operating accounts
02 - Restricted Fund - Handles all donor restricted amounts.
03 - Plant, Property, and Equipment - Capital assets such as buildings also has long-term liabilities for these assets.

Advantages of setting things up this way is that the 01 funds just has information about the current budget. Restricted money is held in fund 02 and it is easier to see what is available to pay current needs.

Disadvantages is that if there is a mortgage, the long term portion should be in Fund 03 with the asset. Will need a journal entry to transfer the current portion of the mortgage from Fund 03 to Fund 01 at least yearly.

[Svenska]

My thanks to members of the PowerChurch community and staff. Your replies have provided us with a number of options to consider which have helped to clarify our thinking. Especially helpful were replies that gave us a sense of the size and complexity of your situation to which we can compare our own.

My original concept to initialize the program as 01 Operating Funds and then later set up 02 Restricted Funds into which we would incorporate all banking and transaction accounts pertaining to all restricted funds is, I believe, our solution. Having no mortgage or current plans for any major capital expenses we won’t need a third account as has been suggested but it is a procedural point we will note in our financial operating manual if needed in the future.

We feel further encouraged to establish an 02 account with the addition of the Designated Contributions feature in v11. We have, as mentioned before, a large memorial fund, partly due to our own columbarium, and 16 other restricted funds all of which we need to track income, expenses and ending balance for each fund and each memorial contribution.

I have hopes that we can do away with our spreadsheets with this new feature. Software in use now does not even support tracking pledges unless you resort to treating each pledge as a vendor and creating an invoice for the total pledged, so that is another set of paper documents that can become history.