setting up new fund

[athomas]

Church school has surplus money from FY 2016-17 that was not set aside. Fortunately there are sufficient funds in general fund to claim the proper amount. There will also be surplus funds this FY 2017=2018. In order to set this aside, is it better to set up a separate fund or a restricted account. Regardless there will only be one bank account. So is the money transferred from fund 01 to fund 02 checking and use an income account. If using a restricted account in fund 01, how is the money moved to the restricted account. Thanks for any help.

[NeilZ]

Church school has surplus money from FY 2016-17 that was not set aside. Fortunately there are sufficient funds in general fund to claim the proper amount. There will also be surplus funds this FY 2017=2018. In order to set this aside, is it better to set up a separate fund or a restricted account. Regardless there will only be one bank account. So is the money transferred from fund 01 to fund 02 checking and use an income account. If using a restricted account in fund 01, how is the money moved to the restricted account. Thanks for any help.

I'm of two minds on this, one of which is to keep it simple, and just use a donor restriction, but another to use a new Fund Account so that the funds are visible outside of the General Fund.

The problem with a new Fund Account is that you'd have to use transfer accounts. These are not hard to use, but can be confusing to some people.

The simplest use of Transfer accounts can be found on page 235 of the PCPlus v12 manual. The example there shows a simple transfer from Fund Account 01, to Fund Account 02. This is basically how you'd move the funds if you chose this route, its also how you'd move the funds to Fund Account 01 from 02 if you needed to use some of the reserve.

If you use a Restricted Funds account in Fund Account 01, you'd need to setup the restriction using the Maintain List of Donor Restrictions, then move fund to the fund balance/equity/net asset account you would create for use. That's very easy. Then if you have to use funds, all you'd have to to is release funds using the 'release restricted funds' button when creating an Invoice or Manual Check.

That all said, I lean toward the Fund Account 02 method, as you can then see at a glance how much is in the Fund Account by running an Accounting Funds Balance report, which would keep the funds visible for your church board/trustees as well as the church school, since these are reserve funds that carry over year to year.

Does this help?

[athomas]

Yes it does. I was leaning toward the separate fund account. I am somewhat familiar with the transfer process. Let me clarify something. Even though it will be the same checking account, the checking account number in fund 02 will just begin with 02. Correct? What are you calling reserve? Other than the checking account what other account(s) are needed. Will it be a liability or income account.

[NeilZ]

Yes it does. I was leaning toward the separate fund account. I am somewhat familiar with the transfer process. Let me clarify something. Even though it will be the same checking account, the checking account number in fund 02 will just begin with 02. Correct? What are you calling reserve? Other than the checking account what other account(s) are needed. Will it be a liability or income account.

Yes the account number will be 01-1110-000 and 02-1110-000.

I see these funds as 'reserved' these are funds that were allocated, not spent, etc, thus are being held over (reserved) for a rainy day.

Other than the checking account, you'll need the Unrestricted Net Assets - 02-3110-000 (number the same as in 01), and transfer accounts.

Since all the checks will be written from the 01 account, you don't need anything else. Are you going to be showing any income, as in contributions to these funds?? It didn't sound like it, so you'll not need liability, or income accounts.

Unless I'm missing something, you're all set.

[athomas]

thot I was clear until you throwed out about writing check from 01 account. are you saying i would need to transfer $ back to 01 before writing check.

[NeilZ]

thot I was clear until you throwed out about writing check from 01 account. are you saying i would need to transfer $ back to 01 before writing check.

You said that this would hold excess funds, as I mentioned above I was assuming that this would be a 'reserve' account where funds would be held, then moved to Operating when needed.

If you plan to use the 02 to pay bill, you'd then have to add all the expense accounts to that fund.

Transferring money back to Operating will show your church board that you are using reserved/excess funds left over from prior years, which would then show that income is not what it should be.

Again, I've assumed that this would be a 'reserve' fund, not to be used unless the main Operating fund has a shortfall. I asked in my last post if I was missing something, evidently I am.

[athomas]

You're on target. just wanted to make sure my understanding is accurate. Thanks again.