Fund Accounting - Help For Charity with Multiple funders

Hi Emma & Jayne

My understanding was that people generally used classes to tag different funds, having an overarching class each for restricted and unrestricted funds, and then having subclasses within that.  That way you can easily run income and expenditure reports by fund and see what you've got in each pot

I don't understand how the accounting on Emma's suggestion works - but I'd love to because it might solve my multidimension problem.  My concern is that it would involve quadruple entry for each transaction.  Please can you explain how it works - when you receive money, it comes into cash and you show it as income, and when it goes out, it goes out of cash and is shown as an expense. So do you set up an asset called "grant from x" and a creditor called "fund left in grant from x" and every time you spend money, say on salaries, & it goes out of the bank account, you do those tranactions as normal but also credit grant from x and debit fund left in grant from x?  I can see that it would allow you keep tabs on it, but I was hoping for something neater.

Thanks

Rachel

Hi Jayne

The other thing I would suggest is asking around to see if there's a local community accountancy service in your area - they are set up to help small charities, and if you ask your local member of NAVCA they can point you in that direction.  There's one call WYCAS that has great guidance that is charity focussed.  QB can be great for small charities, and but it's good to find someone to help with the workarounds you need to make it work.

All the best

Rachel

There is a firm called Community Accounting Plus ("CA Plus") who are Independent Examiners for charity accounts, and I think they are QB Pro advisers, and also are licencors for QB products.

If folks like those can't assist, I would not b sure who can. They are based in Nottingham, but these days, geography doesn't really matter too much!

Tony

CAPlus are fantastic - and they are prepared to offer support outside the Notts area.  

What would be REALLY useful is for the Income & Expenditure of a given fund (class / category) to update the restricted funds account (Equity). At present, we have to run the income / expenditure of a given class and put through a journal entry to amend the balance of the fund account (equity). Rather messy in the 21st century when it could be just as easy to have the software do it!

Pete,

In other accounting systems, updating the Equity/Retained Earnings is normally done as a part of the year-end close processes. I am a new user to QBO, but I am not sure that QB has this functionality, perhaps because it looks to be, essentially, a "build-out" from a cash book (maybe Quicken?). It may also be because, keeping prior periods "live" allows it to build and provide comparative and historical reports "on-the-fly", which may be less demanding of the software and hardware. I know that there seems to be a Quick Books for NFP's in the US, but not here in the UK (yet!), although, of course, the need for a year-end process to update Retained Earnings is common to most companies, and not merely NFPs.

I too confess to struggling a little bit with categorising a funding grant received as anything other than income? That, said many of ours don't run for more than 12 months, and even if they did, depending on accounting rules for charities, you would still have to find a method for releasing "Year1, Year 2, etc" portions to income. When I talked with CA Plus about having the same problem, they recommended using an Account in the P&L called something like "Restricted Grants" and setting up classes for some (but not all, as the number of Classes would disappear off into the sunset!!). Then, you can just filter the report to see the particular Grant you are looking for at any time. Works quite neatly for "Outcome Reporting" we are finding and I agree with others, this is not a particularly great solution for many, many restricted, and/or multi-funder grants, but will have to do for now, until Intuit dream up something more workable and "built-in" :beaming_face_with_smiling_eyes: