Restricted Fund

[CorinthBC]

New User...still trying to set up PowerChurch

I am confused about how to treat funds, and to be clear, when I say "fund" in this context, I mean something like a "Cemetery Fund" that has it's own income from designated contributions and expenses related to grounds/grass mowing, etc. This fund is contained within the general checking account as far as the bank is concern.

I need to be able to tell PowerChurch that as of October 1, 2023, the start of our fiscal year, the Cemetery Fund had a balance of $979.13.

As of October 3, 2023, I need to write a split check for $1150.00 from that fund with $230.00 coming out of this non-budget Cemetery Fund, and the other $920.00 coming from the Ground Maintenance budget (that part, I do understand how to do).

As of October 3, 2023 after posting, I need a balance sheet to reflect activity of $979.13 minus $230.00 leaving a balance of $749.13 in the Cemetery Fund.


Suggestions for how to set this up are greatly appreciated!

[CorinthBC]

To add context, I am 57 years old, and I've been using Quickbooks Desktop which will discontinued and cease to operate in 2024.
It has been about 40 years since I took an Accounting class in high school where I had to think about double-entry accounting.
So, with that in mind, please respond to me as if I'm still in high school! I had a pretty good handle on Quickbooks, but I've forgotten everything that I didn't have to use in Quickbooks.

[NeilZ]

To add context, I am 57 years old, and I've been using Quickbooks Desktop which will discontinued and cease to operate in 2024.
It has been about 40 years since I took an Accounting class in high school where I had to think about double-entry accounting.
So, with that in mind, please respond to me as if I'm still in high school! I had a pretty good handle on Quickbooks, but I've forgotten everything that I didn't have to use in Quickbooks.

First off ... have you moved your accounts into Powerchurch?

Before we go any farther ... I need to know that. If you did, how did you add this cemetery restricted fund?

[CorinthBC]

Yes, during setup, I added it as an "Equity" account, which I realized after running a balance sheet was the wrong thing to do.

PC thinks the actual money for the fund is in this account, but it's in the bank account. It's adding the equity account to the grand total at the bottom of the balance sheet, so the total financial position is too much.

And to make matters worse, this church has about 30 of these non-budget funds like this, though gratefully many of them had a zero balance carried forward from the previous fiscal year.

[CorinthBC]

The good news is I am continuing to use Quickbooks through the end of 2023 so I'll have all the records in place when it comes time to do W2 forms in January...so I'm not depending on PowerChurch for anything just yet...just back entering tranactions starting with October 1 so as to have a complete fiscal year there come next September 30.

[NeilZ]

Yes, during setup, I added it as an "Equity" account, which I realized after running a balance sheet was the wrong thing to do.

PC thinks the actual money for the fund is in this account, but it's in the bank account. It's adding the equity account to the grand total at the bottom of the balance sheet, so the total financial position is too much.

And to make matters worse, this church has about 30 of these non-budget funds like this, though gratefully many of them had a zero balance carried forward from the previous fiscal year.

Frankly, I'd redo the entire setup because unless its setup correctly, you'll have more issues with trying to correct this, and it would just to redo.

My suggestion. These all sound like 'Temporarily Restricted Funds' that could easily be setup under the standard Operating Fund, as it appears you're using the same checking account for all. Rethinking what I said above, if you already have a net assets (equity) account setup, you may be able to easily remedy the situation by creating these as Donor Restricted Accounts.

These temporarily restricted funds do have a separate net assets acccount (equity), but the funds are moved to the new equity accounts from the base Unrestricted Net Assets account (usually 01-3110-000) which is usually created during setup. When this is done correctly during setup, the system will remain in balance as all the separate TEMP RESTRICTED net asset assets account are accounted for.

The system will maintain each one when funds are released from these temp restricted accounts. So when you enter an 'invoice' when receiving a bill for the maintenance you will write it against the 01-1110-000 checking (credit) using an expense account for maintenance (balance). You'll then click on the 'Release Restricted Funds" button at the bottom left of the Maintain Invoice window. You'll then get a list of all the temp restricted funds available. You'd select the Cemetery Fund, and on the next page of the window enter the amount you wish to release from that fund.

May I suggest reading the User Guide section on 'Maintain List of Donor Restrictions' ... here's the overview:

"Donors often apply restrictions regarding how the money they contribute may be spent. For example, a donor may contribute money to support missions or to fund a new building. It is the church's responsibility to manage and spend these funds in the desired manner and to account for their proper use. To help you, PowerChurch Plus tracks how restricted funds are handled and spent by linking together a Contribution Fund with specified Equity, Income, and Release accounts. You can then track and report on money that moves through your accounting system, until the restriction is satisfied. You can even track what happens to the excess."

As you can see, when its setup properly, the fund is automatically updated whenever Contributions are made to it, and then posted to Fund Accounting. As it all goes in the same checking account, there's no having to 'separate' funds to different accounts, and no manual adjustments to show where the funds are going.

[CorinthBC]

Thanks for trying to help me. I understand maybe half of that...sounds like I need to start over with a completely fresh install.

I'm rather discouraged with the whole thing at the moment. I'm only paid to be at this church eight hours per week and switching this over has been more of a challenge than I'd ever imagined it would be. There's just not much margin for error...certainly aren't enough hours to start from scratch more than once unless I can get them to approve extra hours...that I don't really have anyway with the Christmas season and other duties.

At this point, I'll probably forego the goal of back entering everything from October 1 and just start on January 1...but then, I wouldn't be able to set it up ahead of time, because I won't have the bank balances until January 1.

[NeilZ]

Thanks for trying to help me. I understand maybe half of that...sounds like I need to start over with a completely fresh install.

I'm rather discouraged with the whole thing at the moment. I'm only paid to be at this church eight hours per week and switching this over has been more of a challenge than I'd ever imagined it would be. There's just not much margin for error...certainly aren't enough hours to start from scratch more than once unless I can get them to approve extra hours...that I don't really have anyway with the Christmas season and other duties.

At this point, I'll probably forego the goal of back entering everything from October 1 and just start on January 1...but then, I wouldn't be able to set it up ahead of time, because I won't have the bank balances until January 1.

FWIW ... the initial setup is not that hard. you can do that in December using the end of November balances. What I would do is go into File -> Preferences -> Accounting Setup and click on the Restart Accounting button there. Then take the time to review the user manual starting on page 185. It will give you an overview of double-entry accounting (which really isn't as hard as it may sound). It also gives you an idea of how things are used within Powerchurch. You should have already setup all your Contribution Funds in Contributions so that they can be connected during the setup.

The Setup Assistant is covered starting at page 196, and there is a list of things that you should have with you prior to your starting. One of the main things is having your current Chart of Accounts handy. You should see what can be eliminated to simplify the CoA for the future, your finance committee should have done that already. It makes no sense to have 'dead wood' in the CoA.

All that said, once its setup, you'll find that you'll get very used to the way it works.

[CorinthBC]

Thanks. I'll give that a try.

[CorinthBC]

I ended up starting over with a new install and followed your suggestion to set up donor restricted funds in the Contributions module before doing Account setup. I believe I'm on the right track there now using "temporarily restricted" plus there are a few that are more suited as "pass through" since they get cleared out at the end of the month (like a Lottie Moon Offering fund that is forwarded to the mission board).

I then set up Fund Accounting starting with December 1 using November 30 bank balance, etc., re-entered the chart of accounts, and everything fell into place on the balance sheet like I expected it to look.

Now that it's set up, if I want to add a new fund under Contributions, where do I tell the program how to classify it as a "pass through" or "temporarily restricted" donor fund? Do I add it under Contributions and then go into Fund Accounting to give it that assignment?

I tried that just as an experiment so I'd know for future reference about 30 minutes before my shift ended today and couldn't figure it out; checked the manual some, but didn't find a process...probably something I was looking directly at and just not seeing.

[NeilZ]

I ended up starting over with a new install and followed your suggestion to set up donor restricted funds in the Contributions module before doing Account setup. I believe I'm on the right track there now using "temporarily restricted" plus there are a few that are more suited as "pass through" since they get cleared out at the end of the month (like a Lottie Moon Offering fund that is forwarded to the mission board).

I then set up Fund Accounting starting with December 1 using November 30 bank balance, etc., re-entered the chart of accounts, and everything fell into place on the balance sheet like I expected it to look.

Now that it's set up, if I want to add a new fund under Contributions, where do I tell the program how to classify it as a "pass through" or "temporarily restricted" donor fund? Do I add it under Contributions and then go into Fund Accounting to give it that assignment?

I tried that just as an experiment so I'd know for future reference about 30 minutes before my shift ended today and couldn't figure it out; checked the manual some, but didn't find a process...probably something I was looking directly at and just not seeing.

Great to hear that the restart took care of your issues.

Pass-thrus are relatively easy. These are liability accounts, as they are funds that the church is obligated to pay out, and should not be considered as income. You setup the liability account in Funds Accounting, then go to Contributions, and create the Contribution Fund there, with the bank account being the checking, and the income account, pointing to the liability.

As far as adding a new restricted fund. Go into Accounting -> Fund Accounting -> Setup -> Maintain List of Donor Restrictions. Click on the Add button. The assistant will walk you through adding the accounts needed.

Step 1 is specifying the name of the restriction and whether its temporarily or permanently restricted. Temp are funds that can be used on a day to day basis to cover certain expenses, permanent are basically funds that cannot be used like an endowment where only the interest can be used, and then for designated purposes. Most of your 'restrictions' will be of the temporary type.

Step 2 allows you to select a Fund Balance (net assets) account from a list, or create a new one. Step 3 is where you can setup the income account, Step 4 is for setup of a release account, Step 5 is optional, you don't have to have a designated expense account unless the temp restriction is to a certain expense only. Such as a temp restriction that only purchases food, and nothing else, for the youth camp. Step 6 will allow you to create a contribution fund for the restriction. Just know what fund number you want to use ahead of time, makes it much easier.

Once you walk through all that, your temp restriction is done.