Recording a non-cash gift of equipment, etc.

[KenL]

We have been using PC+8.5, recently upgraded to v. 9, since the beginning of the year. We have divided acctg responsibilities with someone else responsible for recording individual contributions and making deposits and with myself responsible for paying the bills and recording the income and expenses of the church as a body. Initially, I set up PC+ so that we began using it at the very beginning of the year and what few assets that we possessed as a young church were entered during the initial process of setting up PC+. Now, however we have received some non-cash contributions of office equipment and wall units to separate meeting areas of the location where we currently worship. Since I maintain a business in the forprofit sector, I am not totally familiar with non-profit acctg procedures. What I would like to know is this: after debiting the asset account (1840-Equipment or 1850-Furniture), do I credit the 3001-Fund Balance acct (I am assuming that the Fund Balance acct functions like a Capital acct)? Also, do I set this up in a separate fund called Non-Cash Conributions?

[Randy B]

You appear to be correct on your accounting entry to add the asset to your balance sheet. You may though want to establish a capitalization policy like the church will only capitalize and depreciate assets exceeding $2,500 or whatever amount you select. On setting up a another fund non-cash contributions, you would do this in your contributions module but do not supply any debit or credit account numbers. If these items are donated new, you could use a receipt from the donor as the value. If they are used, you need some type of method of assigning a value.

[Sandra Michalscheck]

Randy,

I found your post interesting concerning setting up a fund for noncash gifts, without using cash debits or credits.

I would have one question on it though. That is, if you are going to print out giving statements to the individual donators with it. I was advised by the CPA who assists me on such things NOT to assign values to USED item donations. A non-cash giving receipt is issued to the donator listing the items donated, but not assigning a value to it--the way Salvation Army, etc., does. The donator is then responsible for tax-assigning a value for his 1040 for himself. If we, as churches, assign a value on these things we can become responsible for obtaining appraisals on the items. New things with an accompanying receipt are not a problem, however.

Therefore, I have had to do non-cash contributions on a form outside the regular church accounting system in the past for receipts issued for used items.

Sandra

[Randy B]

Sandra:

You raise some good points. First, with respect to the debits and credits, that comment was made with respect to the general ledger. There is an article on the PowerChurch site on how to do this and this is what I was referencing. PowerChurch has the capability to handle these transactions. My experience in non cash donations has been they are few and far in between. The situations I have encountered is someone will be doing some maintenance work and give the receipt for the items they used. Instead of cutting a check back to them since the items are non-material in the overall financial picture of the church ($20 or less), I just ask if they want credit on the contribution statement since they indicate they will just turn around and endorse the check to the church.