Separate Income and Expense reporting

[Pastor Drew]

We are revamping our chart of accounts and seeking to streamline some of our reporting, and have various designated funds with their own non-budgeted expenses (food pantry, health ministry, flowers, etc).

Unfortunately our former director of finance co-mingled general and designated funds and used up all of our designated gifts for general expenses and so we are in need of rebuilding confidence that designated gifts & funds will only be used for their express purposes.

In order to be clear about where general offering and/or designated gifts are expended, we would like to be able to generate separate income & expense reports for the general fund/budgeted expenses and designated funds and their expenses.

What might be some of the ways to accomplish that?

[NeilZ]

We are revamping our chart of accounts and seeking to streamline some of our reporting, and have various designated funds with their own non-budgeted expenses (food pantry, health ministry, flowers, etc).

Unfortunately our former director of finance co-mingled general and designated funds and used up all of our designated gifts for general expenses and so we are in need of rebuilding confidence that designated gifts & funds will only be used for their express purposes.

In order to be clear about where general offering and/or designated gifts are expended, we would like to be able to generate separate income & expense reports for the general fund/budgeted expenses and designated funds and their expenses.

What might be some of the ways to accomplish that?

Well .. the only way to do a separate I&E would be to create separate Accounting Funds for each area. Considering that you really don't want 10 separate accounting funds as it does tend to get unwieldy.

However, if you have the Donor Restrictions setup properly, and the Temp Restricted Income, and Equity accounts setup properly (I'm assuming that you're using only one checking account??); the system will 'protect' the funds and will only show them being used when they are RELEASED to cover an expense. The amounts that are in the restricted accounts will be seen in the Cash Management Report.

Again, if you're using the one checking account, your treasurer/bookkeeper needs to keep an eye on the Cash Management Report to make sure that they aren't spending money as unrestricted that is actually restricted. This is not hard, just something that needs to be understood.

If you're using separate checking accounts, let me know as that would result in different advice.

FWIW ... we had the same issue when we moved here. A few years back much the same happened, but the fix here was to create checking accounts for everything. Which caused more problems as you needed to have signers for each account. (We don't allow our bookkeeper to sign checks, and we require two signatures on each check).

We merged everything into one checking account, using Restricted Funds for those areas that do fall under operations, but have specific donor restrictions. We did break out our Building & Missions into their own Accounting Funds for greater visibility and they have very specific expenses, but we kept everything in one checking account.

[Pastor Drew]

The previous finance director did not properly account for restricted funds which led to the issues.

To assure our members, we did indeed open a secondary checking account for all designated funds.

[NeilZ]

The previous finance director did not properly account for restricted funds which led to the issues.

To assure our members, we did indeed open a secondary checking account for all designated funds.

In which case, I would just setup a separate Accounting Fund, use a different Asset number (normally the checking is 1110-000) I'd use 1120-000 for the new one. Then I would setup Donor Restrictions for all those different areas using the Donor Restriction Assistant. It will guide you through creating an income, equity (Restricted Net Assets) and release accounts for each Restriction, and will allow you to either use an existing Contribution Fund or create one specifically for that Donor Restriction.

You can optionally create an expense account in the assistant, but I'd do that outside the assistant as you'll have more flexibility to setup your headers and display levels.

[Pastor Drew]

I would just setup a separate Accounting Fund, use a different Asset number (normally the checking is 1110-000) I'd use 1120-000 for the new one. Then I would setup Donor Restrictions for all those different areas using the Donor Restriction Assistant. It will guide you through creating an income, equity (Restricted Net Assets) and release accounts for each Restriction, and will allow you to either use an existing Contribution Fund or create one specifically for that Donor Restriction.

You can optionally create an expense account in the assistant, but I'd do that outside the assistant as you'll have more flexibility to setup your headers and display levels.

Great, I will point our finance people in that direction! Thanks