Moving from unrestricted to restricted

[debbieg]

Well, after reading several other threads I thought that I was on the right track with this but it's not turning out the way that I expected. here's the situation:

Every month, we calculate the total amount of money received as a general offering and then a certain percentage of that is set aside to go into our Building Fund. Church members can also desginate their offerings to this fund. This building fund is set up as a restricted account within the same general fund as our checking and all other expense accounts. After reading another thread, I set up a transaction that did the following:
DB 01-4020 General Offering Income 1,000
CR 01-4210-102 Building Fund Income 1,000

But now that I have run reports, it is not the reflection that I was hoping to see. I guess the ending balances are correct but it is misleading. It makes it look like we had less general income than we really did and inflates the amount of income that was actually received for that fund. I guess I would like to be able to see a difference between what was directly contributed by members to the Building fund and what was set aside internally from General Offering. does that make any sense?

We do a similar thing with money for Emergency Savings but that money is actually moved to a savings account so my transaction that debits checking and credits saving works out fine. But this money is not really physically going anywhere, it's just now being restricted.
any ideas?
thanks,
Debbie

[debbieg]

Just as a follow up....I think in the thread that I got my idea from, the person was just trying to correct a mistake and move money to the correct fund. Mine legitimately comes into the General Fund but then I want a portion moved to the restricted fund.
dlg

[debbieg]

OK...talking out loud here....to myself....

It seems like what I want to do is just move the money from unrestricted net assets (3110) to the appropriate restricted asset (3210-102). Is this allowed? Then it doesn't show as movement in income.
debbie

[JohnDMeyers]

Debbie:

The problem you are having is this: This is not a donor restriction, it's a church decision to use money toward a building.

If a donor gives toward the building, it should go directly to the restriction like this:
DB 01-1110-000 checking (or a different building checking, if appropriate)
CR 01-4210-102 Building fund restriction

If money comes in as a General tithe, and the church decides to use it toward the building, you can do that, but it will make your General tithes look less, because you are treating it as if it was given as a donor restriction, and it really wasn't.

You should have two separate accounts for your building. One is the restricted account 01-4210-102, and the other is a separate asset account where you show the money that the church board is "designating" toward the building out of the General tithes, going from 01-1110-000 to another asset account, like 01-1120-000 Building Savings, and not touch your General Income account.

[NeilZ]

John,

couldn't they do the same with one checking account, just create an O2 accounting fund, then transfer using the transfer accounts.

The money is in the checking account, but the balance shown under 01 is only that amount that can be used for operating funds ??

We have done that here, and it works out fine.

[JohnDMeyers]

Neil:

Good point!

[debbieg]

You should have two separate accounts for your building. One is the restricted account 01-4210-102, and the other is a separate asset account where you show the money that the church board is "designating" toward the building out of the General tithes, going from 01-1110-000 to another asset account, like 01-1120-000 Building Savings, and not touch your General Income account.

John, when you say a "separate asset account", do you mean a PC account or an actual new bank account? It would probably make things "cleaner" if it was in a separate bank account (not to mention, earning interest!).
I understand what you're saying about it not being "donor restricted" money. It came in with no strings attached, but as a church, we decided that we wanted to restrict that amount of money every month to be used in the future for the new building. We are doing a similar thing with our "Emergency Savings" to be used for some unknown, large expense in the future (like new furnace, etc). That is actually in a separate savings account. I set that up in PC with a breakout of sub-accounts for (1) original CD transfer,
(2) Emergency Savings and (3) Interest Earned. I suppose that I could move all the existing Building Fund money over to savings and set up another sub-account to track it.

Neil, nothing wrong with your idea...just really didn't want to get into a whole separate fund to track that one thing. Perhaps, when we get to the point of actually doing the "building" and have expenses, then it would make sense. But I don't want to remember to run reports from another fund right now just to show the money coming in.

[JohnDMeyers]

Here are the options.

You can keep the money in the same bank account, and in the same fund, by creating a sub-account under your checking account, such as 01-1110-001 building checking. If you do this, I prefer to create a GROUP account, like this:
01-1110-000 CHECKING ACCOUNT (GROUP ACCOUNT LEVEL 4)
01-1110-101 General Checking (detail level 5)
01-1110-102 Building Checking (detail level 5)

Then, you can keep it in the same account.

The problem with one account is when you get the bank statement, you see $150,000 in general checking, and you think "gee, Martha! look at all the money we have" and you tend to spend it.

I would suggest putting a large EXTRA sum of money in a separate account, just to avoid that feeling.

[debbieg]

Yes, the more I think about this, the more I tend to agree with moving it into the savings account. the transaction to do it in PC would be straight forward plus we'll be earning interest. I agree with your statement about how people tend to look at the account balance and think that is all available for spending. Even though it shows it on other reports that this is restricted money, that tends to be forgotten. The amount in that restricted money is probably over $50K now so it will make a substantial difference.

the transaction that I have been doing to move our "Emergency Savings" set aside is
CR 1110-000 checking acct
DB 1210-991 Emergency Savings

Is that correct? If so, I would just do the same thing except create a new sub-account like 1210-994 Building fund savings.

I sure appreciate your input, especially on a Sunday.
Debbie

[JohnDMeyers]

Debbie:

I'm just Sunday surfing, anyway. I have my laptop on the porch in a rainstorm with my winter coat on.

Your transaction is correct. Have a great day!