Contribution

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jurnie05@11
Posts: 24
Joined: Thu May 18, 2017 11:13 am

Contribution

Post by jurnie05@11 »

Hello all,
I have been using PCP version 11 for a while but not comfortable with it. We are a small church and sometime a few members may pay a bill or two for the church also purchase Sunday School books. I have been asked to count it as their tithes/offering instead of reimbursing at a later date. My question is can I do that and if so how will I record it.

Tonja

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
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Re: Contribution

Post by NeilZ »

jurnie05@11 wrote:Hello all,
I have been using PCP version 11 for a while but not comfortable with it. We are a small church and sometime a few members may pay a bill or two for the church also purchase Sunday School books. I have been asked to count it as their tithes/offering instead of reimbursing at a later date. My question is can I do that and if so how will I record it.

Tonja
The short answer to your question is no, the reason is much longer but its due to the IRS rules on 'non-monetary' gifts. This thread gives you the reasons for this: https://www.powerchurch.com/forum/viewt ... =4&t=12611

Also, there's more to it as such purchases are then not properly reflected in the church's income and expense. Without entering something showing the expense, the costs to run the church are then not properly shown. If you enter the purchase as a contribution, you would then have to post all normal contributions first to funds accounting, then enter these purchases and only post to contributions. This then throws off your contributions reports as it will show more tithes/offerings than was deposited into the bank. If an audit was then done, this would be a 'red flag'.

As shown in the topic I pointed to above, the IRS has very specific rules about non-monetary donations and what the receiving organization must and must NOT do. What other churches do if the person insists that this purchase be reflected as part of their offerings is write out a check made out to the donor for the amount of the purchase. They will then sign the check back to the church and the church can then enter it as a normal donation on Sunday.

What this does is:
1. Properly reflects the expense so that the actual expenses of running the church are reflected.
2. Properly reflects the income to the church that covers actual expenses.

Otherwise the church is fooling itself.

As usual, I have to say that I am not an accountant, but have done a lot of research into this as someone who has been overseeing finances at a few churches for a while.
Neil Zampella

Using PC+ since 1999.

jurnie05@11
Posts: 24
Joined: Thu May 18, 2017 11:13 am

Re: Contribution

Post by jurnie05@11 »

So let me see if I understand this that I can't just put it in the contribution but if I write them a check and they sign the check back to the church then I can add it to the contribution. So in the AP----Maintain Manual Checks would it be DB reimbursement and CR bank account

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Contribution

Post by NeilZ »

jurnie05@11 wrote:So let me see if I understand this that I can't just put it in the contribution but if I write them a check and they sign the check back to the church then I can add it to the contribution. So in the AP----Maintain Manual Checks would it be DB reimbursement and CR bank account
I guess you write checks and don't print them, so yes you would do this in manual checks, but the Expense would NOT be a reimbursement as you're paying for an item that was bought for a ministry.

So for example, if the person buys some books for the Sunday School, then you would DEBIT the Sunday School supplies account, since that is what the person is buying books for. Or, if he buys some light bulbs to replace the burnt out ones in the hall, you would DEBIT the Building Maintenance Supplies budget (or something similar).

You always need to reflect where the money is being spent. By just DEBITING the reimbursement account, you really don't reflect in the reports where the money is being spent.
Neil Zampella

Using PC+ since 1999.

jurnie05@11
Posts: 24
Joined: Thu May 18, 2017 11:13 am

Re: Contribution

Post by jurnie05@11 »

ok I believe I have it now that reimbursement account should only come into play only if the member will cash the check themselves.

NeilZ
Posts: 10209
Joined: Wed Oct 08, 2003 1:20 am
Location: Dexter NM
Contact:

Re: Contribution

Post by NeilZ »

jurnie05@11 wrote:ok I believe I have it now that reimbursement account should only come into play only if the member will cash the check themselves.
Frankly, not even then. They are buying something for the church, and being reimbursed by the church. You have to account for the ministry and EXPENSE the proper account to so where the money is being spent.

So if they're buying some staples for the office, the expense should be against the office supplies account. If they're buying bread for communion, it should be under any Worship ministry expense, and so on.

Really, there shouldn't be ANY reimbursement account at all.
Neil Zampella

Using PC+ since 1999.

jurnie05@11
Posts: 24
Joined: Thu May 18, 2017 11:13 am

Re: Contribution

Post by jurnie05@11 »

ok thanks for the helpful feedback

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