Donations in Kind

[xroads_natalie]

When a member gives a gift or service to the church instead of a monetary contribution, I use the Contributions Module to record the contribution to the Fund Number set up for "Donations in Kind." This then posts to an Income Account. For example, our Webmaster pays for our website fees, then submits a receipt for the amount as a donation. It's included on his Contribution Statement. No problems so far.

Then in Fund Accounting, the Income Account is credited, and balanced by debit to an Expense Account. I think that I'm doing this wrong. Because most contribution funds credit the income account and debit an asset, namely the bank account.

example:
01 1120 checking Account db 1000.00
01-4110 Numbered envelopes cr 1000.00

But for Donations in Kind, what has been done historically looks like this:
01-7100 Web service db 100.00
01-4630 Donations in Kind cr 100.00

But then Income and Expense Statement shows a hit to the budget (for Administration, in this case) that didn't really occur. It appears that the church is spending money, but it is not. However, there isn't really an asset account that applies, either.

Any advice for a bookkeeper who dropped accounting?

Thanks,

Natalie

[JohnDMeyers]

I wouldn't show it as an expense.

What is really happening is the church is receiving a "service-in-kind" (I just made up that term), namely, a web-hosting service, which would be a type of asset.

You may want to check with a CPA. Un-reimbursed expenses may or may not be considered tax deductable.

That being said, you are certainly free to receive them.

I would create a GROUP account somewhere around 01-1910-000 called NON-TANGIBLE ASSETS
and a detail account for 01-1912-000 Web Hosting or something like that, and use that for the DB account.

[xroads_natalie]

Thanks, that makes perfect sense.

Would you create a smiliar "tangible asset" group for donations of things like communion elements, pot luck supplies, nursery curtains, Sunday School supplies? Or would those be expenses?

We are blessed to have lots of folks who pay for things out of pocket, and rather than be reimbursed, ask that it be a donation to the church. I'm hoping to skip the step of writing them a check, then accepting the same check back signed over to the church.

I am so grateful to have the counsel of more experienced accountants and PC users!

Natalie

[JohnDMeyers]

If there are a lot of items, I would look for an accountant to advise you.

Here's an idea. There may be other ways to do this.

Set up a GROUP ACCOUNT in assets. 01-1910-000 for example, level 4.

Set up as many detail asset, sub-accounts as necessary, level 6, such as 01-1910-101, 01-1910-102, etc. for each service or gift-in-kind.

Do the same with your income account. GROUP 01-4610-000, GIFTS IN KIND, level 4, and detail subaccounts for each income item.

If someone waves the reimbursement with no cash changing hands, DB 01-1910-1xx and CR 01-4610-1xx. If someone returns a check, DB 01-1110-000 checking and CR 01-4610-1xx.

I think that will work. Either way, check into the tax deduction rules with an accountant.