Another Fund Balance Question

[grams]

Last year, our Youth account ended at a negative balance. How do I get the Youth Fund Balance to start at zero for 2009? Thanks

[JohnDMeyers]

A negative fund balance is not bad. It is analogous to a for-profit organization showing a net loss instead of a net profit.

Since not-for-profit organizations are not in business to show a profit, a negative fund balance is sometimes going to occur. In fact, the goal is to use all the non-restricted monies that come in. That's why the nomenclature on our balance sheet says "net assets" instead of "net profit". We're not supposed to show a "profit".

To answer your question: the fund balance will become zero "when and if" your income-over-expenses becomes equal to the negative fund balance, or you transfer money in from another source.