budgeting and income/expense reports

[CCSBA]

Surely, someone has had this problem: I have PowerChurch+9. We are an association. We will budget for an item and then get donations for it. So we will spend donation money first and then budget money. On the Income and Expense Report, it shows that we went way over budget when actually we didn't. What do I need to do differently.

[karlaj]

Here's what I do...My COA has 01 General Fund and 02 Designated Fund. For example, we have an 01 YOUTH FUND that is budgeted and an 02 YOUTH FUND that a few people contribute to. When there are YOUTH expenses, I use the 02 YOUTH money until it's used up, then use money in the budget for the youth. I do this instead of having restricted accounts, seems easier to me. We have lots of 02 Designated accounts, the most used being the Building Fund and Missions. Hope this helps!

[Ronz]

Oh yes. We cringe when we get specific donations to a budgeted line item (PowerChurch 'account'). But people really like to give to specific things.

Our solution depend on what the item is.

In some cases, we have created a special matching non-budgeted expense line. That can add a lot of additional line items if that happens a lot. Can get a little confusing trying to decide which expense line to charge it to. We often also create a non-budgeted income line item for the expense.

If it is a 'big item' with quite a bit of special giving for the item, we create a new fund. There should be in income line item in the fund for the special donations. We have an expense line items for those expenses paid by donations, but also have the budgeted line item in that fund too. That means when the budgeted expenses are paid from the general fund money, we need to transfer money into the fund. It can get a bit complex. We would rather have all or our budget items in one fund (our Genral Fund 01), but we do use cross fund budgeting. I don't like the budget reports when using budgeting in other funds.

Another way that we've done it is to change the budget amount. We do that on a quarterly basis as a policy anyway.

I'd sure like to know if there are better ways to handle donations for budgeted line items.

Ron Zastovnik
Memorial UMC, Clovis CA

[Pam]

Our church is using a different approach to this, which takes a whole new way of thinking - but it DOES make it easier!

This is only for normal annual events:

We budget for the event, and we do not accept designated funds. If someone expresses a wish to give to a specific fund, then we tell them we do not take designated funds, but we have budgeted for this event, so their contribution will go to the budget. Everything is paid from budget, so there's no need to keep track of designated funds.

Then, when you spend from the budget and charge it to the line item, it is a true reflection of where you are at in your budget for that activity.

As an example, we have Member Care for any church members that need assistance financially. Let's say we budgeted $2,000.00. A church member says they would like to help that person. The funds are recorded as a contribution and goes into the budget. When the person is assisted, it comes from the Member Care line item budgeted amount.
If it's something that I need to track, if a lot of people are giving and we want to make sure that the individual receives full benefit of what is being given for them, I keep an excel file of who has given and how much, then also record what is paid out to them. I am careful to record in PowerChurch a description, person's name, etc. so everything is clear.
If budget is depleted, then that is brought before the congregation to contribute for that cause, if it's laid on their hearts to do so.

This does not apply to Missions or In and Out Contributions. Of course, you also would not use it for a Building Fund or some other big activity that you are specifically trying to raise funds for.

At first, I was a little apprehensive about this approach, but it works beautifully! It saves a lot of time and recordkeeping.

[Roy MacLean]

Ron,

I can certainly understand why you would cringe when you get specific "designated" donations for anything. That can get to be a monster - and in short order, too. See if the following helps you:

We use three bank accounts, all in one commercial bank:

01 - The General Fund
02 - The Communion (Deacon's) Fund
03 - The Savings Account

Checks are written out of the General Fund and the Communion Fund ONLY. If money is designated for the Communion Fund, it is deposited to the Communion Fund. Unrestricted offerings are deposited to the General Fund. This is pretty straightforward, correct?

What about the funds that are designated for a special project - for example, converting a large, unused janitor's closet into a handicap bathroom? Here's how I handled it:

In the Maintain Chart of Accounts Menu item, I created a Temporarily Restricted detail account named "Handicap Bathroom," and assigned that account to be used in both the 01 - General and the 03 - Savings Accounts. Most of our designated items are long term, anyway, and I see nothing wrong with making interest on the monies before spending them.

There is one "trick" to this that is outside of Powerchurch. It requires that you have internet access to ALL the accounts. My bank calls this "porting."

Let's follow a $100.00 contribution designated to the handicap bathroom. That money is deposited into the 01 - General account as a debit, and the Handicap Bathroom as a credit. The contribution is then transferred, VIA AN INTERNET TRANSFER to the 03 - Savings Account as a debit and the 01 - General Account as a credit.

So far, the money has been deposited into the General Account, transferred into the Savings Account, and my accounting shows $100.00 in the temporarily restricted Handicap Bathroom Fund.

The plumber presents me with an invoice for installing the bathroom sink fixture - in the amount of $79.00. I go on the internet and transfer $79.00 from savings (debit) to the general account (credit.) I write the check to the plumber and debit the Handicap Bathroom fund and credit the general account.

So...the money has been transferred from savings to checking...the check has been cut (happy plumber) and the Handicap Bathroom account shows $21.00 still available.

When you reconcile the Savings Account, the amount in Savings should equal the total of your restricted account balances plus any interest.

Some final remarks: First, it takes longer to write out the process than it does to do it. Second, not knowing the level of accounting knowledge of those who read this, I wrote this for a brand new Accounting 101 student...and apologize if you feel insulted in the reading

[Roy MacLean]

In my previous post, I said:

The plumber presents me with an invoice for installing the bathroom sink fixture - in the amount of $79.00. I go on the internet and transfer $79.00 from savings (debit) to the general account (credit.) I write the check to the plumber and debit the Handicap Bathroom fund and credit the general account.

Actually, it should read:

The plumber presents me with an invoice for installing the bathroom sink fixture - in the amount of $79.00. I go on the internet and transfer $79.00 from savings (credit) to the general account (debit.) I write the check to the plumber and debit the Handicap Bathroom fund and credit the general account.[/b]