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How to show annual donation as monthly income?

For tax purposes, some of our church members will give large donations in December 2018 instead of making weekly or monthly donations during 2019.  We record the donation for 2018 and they receive a donation letter in 2018.  Yet we would like to find a way to show that income distributed over the months in 2019 on the P&L reports, so our monthly income appears more stable when compared to the previous year. 

I have read about restricted income from some grants entered as a liability until certain requirements are met, but this isn't really a liability, because we would never be required to refund it. 

Is there a smarter/more accurate way to record these donations and income?

Using QB Non-profit Desktop with classes for various programs.

Best answer 12-13-2018 11:09 AM

Accepted Solutions
Established Community Backer ***

Re: Cash or Accrual basis Entity, drives this

"Yet we would like to find a way to show that income distributed over the months in 2019 on the P&L reports, so our monthly income appears more stable when compared to the previous year."

 

A Cash Basis entity got Donation Income in 2018. Period.

 

An Accrual Basis entity also got Donation Income in 2018, Period, unless there is a restriction on the use of the funds. If so, you would hold it, such as Grant Income that isn't yours to keep until you start spending it. Then it relieves the liability and it is Income at that point. Or, a Child care operation takes prepayments against next Semester, so Prepayments in Dec are liability until Tuition is charged for March.

 

I recommend the book Running QB for NonProfits, by Kathy Ivens.

 

"but this isn't really a liability, because we would never be required to refund it."

 

There you are, then. You recognize this is Income when you got it. What you need to do is help your Board read the Balance sheet, so that they understand their Equity position. And you set up Budgets. In other words, income in Any Year, is shifted to the year end before as "prepaid" and that simply is part of your Income Cycle.

1 Comment
Established Community Backer ***

Re: Cash or Accrual basis Entity, drives this

"Yet we would like to find a way to show that income distributed over the months in 2019 on the P&L reports, so our monthly income appears more stable when compared to the previous year."

 

A Cash Basis entity got Donation Income in 2018. Period.

 

An Accrual Basis entity also got Donation Income in 2018, Period, unless there is a restriction on the use of the funds. If so, you would hold it, such as Grant Income that isn't yours to keep until you start spending it. Then it relieves the liability and it is Income at that point. Or, a Child care operation takes prepayments against next Semester, so Prepayments in Dec are liability until Tuition is charged for March.

 

I recommend the book Running QB for NonProfits, by Kathy Ivens.

 

"but this isn't really a liability, because we would never be required to refund it."

 

There you are, then. You recognize this is Income when you got it. What you need to do is help your Board read the Balance sheet, so that they understand their Equity position. And you set up Budgets. In other words, income in Any Year, is shifted to the year end before as "prepaid" and that simply is part of your Income Cycle.