Accounts Receivable for Charitable Grant Checks?

[Turning Point]

Our church has a few people who donate through a trust (like Schwab Charitable and Renaissance Charitable). We get checks from those companies each month and there is a note on the check stating that the trust will issue the contribution statement for the IRS so we don't have to.

We have been entering the checks under Fund Accounting>Enter Transaction and then depositing it.

My question is, should I be using the accounts receivable module instead?

[sgbani]

I would advise using the Contributions Module because I prefer any income of any kind such as donations (deductible, or non-deductible), interest, registration fees, even cash/check refunds, come through the contribution module.
Only Credit Card rewards are handled differently (through accounts payable) because it is not actually a deposit, but simply reducing the credit card liability.

I do not believe Accounts Receivable should be used unless you are charging for a service, selling goods, or some other similar action. Basically, with accounts receivable, the church is generating an invoice for some reason to an entity / person, and expecting a payment in return. Receiving a donation, no matter the source, should be handled through the contributions module.

Our approach is to simply ensure different ranges of contribution funds are used appropriately. For example, all contribution fund numbers 5000 and higher are non-deductible, and therefore ignored during the statement printing time. All funds 8000 and above are pass-thru (non-income).

At our church, we have a dedicated person that handles all 'incoming monies', so that is why we do this approach.

1) It makes reconciliation of deposits at the end of the month easier because then all incoming money is tracked through one module before posting.
2) Allows for more than one person to see the deposit in our process at church, and reporting on various contribution fund numbers as a whole for statistical review.
Example: Let us say we wanted to run a comparison on how much was received via QCD's, charitable trusts / donor advised funds (such as your example) and individual donations. Having everything in the contributions module allows such reporting / data to be more easily seen.

Doing it in Fund accounting, while technically possible in software, is not how our church is setup because we separate out for proper isolation and audit purposes those that handle incoming money from those responsible for disbursing / paying out money.

Just my thoughts here.

[NeilZ]

Our church has a few people who donate through a trust (like Schwab Charitable and Renaissance Charitable). We get checks from those companies each month and there is a note on the check stating that the trust will issue the contribution statement for the IRS so we don't have to.

We have been entering the checks under Fund Accounting>Enter Transaction and then depositing it.

My question is, should I be using the accounts receivable module instead?

No ... I agree with the previous poster. All Contributions should be entered via the Contributions module. I

What I've done previously was have a primary 'Tithes and Offerings' Contribution Fund (100), that would cover normal offerings by the congregation. I'd then have a non-deductible Contribution Fund (110) that would be used for these type of 'trust' donations.

With the newer versions of Powerchurch now available, you have the capability to create a Contribution Fund that does not show up on the end-of-year Contributions Statement or Tax Receipt. Previously, you had to create such funds outside the normal range used. When creating this non-deductible fund, you merely uncheck the box that says Include fund on statements.

When these special donations arrive, I would credit the member with the donation, using the 110 fund. In this manner, we have a direct connection to the donor, this donation comes up in other Contribution reports with that member's name, but will not show up on Contribution Statements. So if the member wants a list of all donations, we can give them something that is not a tax statement.

This also properly accounts for the deposit in any audit, that is was a contribution, not a random income check. Plus it keeps the Contributions Secretary or volunteers separate from the Fund Accounting side of the house.

I also agree that AR really has nothing to do with such donations. Its only for receiving funds from sales, or rentals, etc.

[Turning Point]

That is very helpful!! Thank you so much!

[CorinthBC]

I would advise using the Contributions Module because I prefer any income of any kind such as donations (deductible, or non-deductible), interest, registration fees, even cash/check refunds, come through the contribution module.

I do the same thing except when it comes to bank interest, I just do a Fund Accounting transaction.

I really wish a future edition of PowerChurch would allow interest to be added as a field on the bank statement reconciliation page, because I invariably start that and then have to back out to enter the interest.

In other words...along with the balance from the statement on the reconciliation screen, a separate field to enter interest, and while they're at it, another field to enter services fees. That way, it would all be ready to reconcile after going to the next screen. I've already submitted it as a suggestion, so I hope they'll do it.

[NeilZ]

I would advise using the Contributions Module because I prefer any income of any kind such as donations (deductible, or non-deductible), interest, registration fees, even cash/check refunds, come through the contribution module.

I do the same thing except when it comes to bank interest, I just do a Fund Accounting transaction.

I really wish a future edition of PowerChurch would allow interest to be added as a field on the bank statement reconciliation page, because I invariably start that and then have to back out to enter the interest.

In other words...along with the balance from the statement on the reconciliation screen, a separate field to enter interest, and while they're at it, another field to enter services fees. That way, it would all be ready to reconcile after going to the next screen. I've already submitted it as a suggestion, so I hope they'll do it.

I agree ... bank interest is not 'contribution income', nor are 'refunds'. Refunds are monies being returned, not additional income. Entering them as income is basically 'double counting' the funds, as they came in as income originally. Registration fees are not normally deductible; while you can use a Contribution Fund that does not get reported, using Accounts Receivable is the best way to handle these, as you have a record of payment, and can easily prepare reports for the event organizers.

As far as adding an 'interest' income box to the reconciliation, its a great idea, I normally have a memorized transaction that I use in Funds Accounting to enter that data, then post so it shows up on the reconciliation.