Unrestricted Net Assets Questions

[ngaham]

Why would you place the unrestricted net assets account into a fund that is for temporarily restricted? I was watching the training videos and noticed they placed unrestricted net assets into the Missions fund.

[NeilZ]

Why would you place the unrestricted net assets account into a fund that is for temporarily restricted? I was watching the training videos and noticed they placed unrestricted net assets into the Missions fund.

A few reasons:

1. Not all Missions Income Accounts are 'temp restricted'.
2. Most Expense accounts close to the unrestricted net assets.
3. Accounting funds are NOT temp restricted, accounts under the funds CAN be. Don't confuse the two things.

When you release funds from a restricted account, you're actually releasing it into the unrestricted net asset bucket. You can see this when you run an Inc&Exp report and you'll see a few headers that are under the RELEASE FROM RESTRICTIONS header. The weird thing when first looking at it is that the amounts cancel out so the subtotal under that header is usually zero. Its showing that the funds are moving from one type of net asset to the other.

[ngaham]

Why would you place the unrestricted net assets account into a fund that is for temporarily restricted? I was watching the training videos and noticed they placed unrestricted net assets into the Missions fund.

A few reasons:

1. Not all Missions Income Accounts are 'temp restricted'.
2. Most Expense accounts close to the unrestricted net assets.
3. Accounting funds are NOT temp restricted, accounts under the funds CAN be. Don't confuse the two things.

When you release funds from a restricted account, you're actually releasing it into the unrestricted net asset bucket. You can see this when you run an Inc&Exp report and you'll see a few headers that are under the RELEASE FROM RESTRICTIONS header. The weird thing when first looking at it is that the amounts cancel out so the subtotal under that header is usually zero. Its showing that the funds are moving from one type of net asset to the other.

Ok. So if the fund uses temporarily restricted income, there it isn't necessary to have that, right?

[ngaham]

Why would you place the unrestricted net assets account into a fund that is for temporarily restricted? I was watching the training videos and noticed they placed unrestricted net assets into the Missions fund.

A few reasons:

1. Not all Missions Income Accounts are 'temp restricted'.
2. Most Expense accounts close to the unrestricted net assets.
3. Accounting funds are NOT temp restricted, accounts under the funds CAN be. Don't confuse the two things.

When you release funds from a restricted account, you're actually releasing it into the unrestricted net asset bucket. You can see this when you run an Inc&Exp report and you'll see a few headers that are under the RELEASE FROM RESTRICTIONS header. The weird thing when first looking at it is that the amounts cancel out so the subtotal under that header is usually zero. Its showing that the funds are moving from one type of net asset to the other.

On a side note, would you willing to take a glance at our chart of Accounts I compiled and see if anything looks odd to you? I think I've got a decent handle on this stuff, it would help to have someone knowledgeable look at it.

[NeilZ]

Why would you place the unrestricted net assets account into a fund that is for temporarily restricted? I was watching the training videos and noticed they placed unrestricted net assets into the Missions fund.

A few reasons:

1. Not all Missions Income Accounts are 'temp restricted'.
2. Most Expense accounts close to the unrestricted net assets.
3. Accounting funds are NOT temp restricted, accounts under the funds CAN be. Don't confuse the two things.

When you release funds from a restricted account, you're actually releasing it into the unrestricted net asset bucket. You can see this when you run an Inc&Exp report and you'll see a few headers that are under the RELEASE FROM RESTRICTIONS header. The weird thing when first looking at it is that the amounts cancel out so the subtotal under that header is usually zero. Its showing that the funds are moving from one type of net asset to the other.

Ok. So if the fund uses temporarily restricted income, there it isn't necessary to have that, right?

YES IT IS ... as I mentioned about. EXPENSE accounts close to the unrestricted net assets. Everytime you issue money from the Mission Fund, you are going to CREDIT the checking account and DEBIT the EXPENSE. You will also then RELEASE the temporarily restricted funds (from whatever donor restriction you have setup to temporarily restrict the income) which moves the funds out of the Restricted NET ASSETS to the UNRESTRICTED Net Assets. You have to RELEASE the funds, because this is how the system tracks usage of the funds, and creates an audit trail of releases.

As a test to see how the system sets up a Donor Restriction, I created one on my test setup.

The 'wizard' walks you through the setup of any type of donor restrictions, whether permanent or temporary. The first thing it does ias ask for a Net Assets account. You can either use an existing account or create one. I created one.

The next step was creating the INCOME account, again I created one so I can test to see what happens. Next was the Release Account, and finally I also created the optional EXPENSE account. This is optional as you can use any expense account that is setup to use donor restricted funds (along with unrestricted funds).

The INCOME account was setup to close to the new Restricted Net Assets account I created, as did the Release Account. However, the EXPENSE account I created using the Maintain List of Donor Restrictions closed to the UNRESTRICTED net assets account.

[NeilZ]

Why would you place the unrestricted net assets account into a fund that is for temporarily restricted? I was watching the training videos and noticed they placed unrestricted net assets into the Missions fund.

A few reasons:

1. Not all Missions Income Accounts are 'temp restricted'.
2. Most Expense accounts close to the unrestricted net assets.
3. Accounting funds are NOT temp restricted, accounts under the funds CAN be. Don't confuse the two things.

When you release funds from a restricted account, you're actually releasing it into the unrestricted net asset bucket. You can see this when you run an Inc&Exp report and you'll see a few headers that are under the RELEASE FROM RESTRICTIONS header. The weird thing when first looking at it is that the amounts cancel out so the subtotal under that header is usually zero. Its showing that the funds are moving from one type of net asset to the other.

On a side note, would you willing to take a glance at our chart of Accounts I compiled and see if anything looks odd to you? I think I've got a decent handle on this stuff, it would help to have someone knowledgeable look at it.

FWIW .. I'm only knowledgeable as I'm self-taught through many errors, and looking at other answers on these forums. My usual disclaimer is this:

I am not an accountant, my advice is based on personal experience and common sense. Always take a backup of the Accounting files using the Powerchurch Backup Utility prior to making any changes to your system so you have a baseline you can restore to.
In complicated issues, I always recommend seeking out an accountant with experience in church finance.