I run a small youth community service organization that has a scholarship program. I want to be able to track the awarding and paying of scholarships to the students using Quickbooks however I'm not sure how to do this as some of the scholarships will sit uncollected for years and some will be forfeited.
Really need more information, but basically
money donated specifically for a certain scholarship, is an asset account.
when you pay it out, in QB first you move the amount to be paid out of the asset account and into your bank account. journal entry, debit bank credit asset.
Then the student is a vendor, and you pay him with a check, use scholarship expense as the expense for the payment - this also assumes you recorded the donation as donation income
If a scholarship is forfeited, you either pay it back using the asset account as the expense for the payment, or you use a journal entry to move those funds out of the asset account and into the general fund bank account
Additionally, @Chief, is your organization the one actually handling the scholarships, or is there an additional party?
@JamesOng Our organization is handing out the scholarships, from fundraised money we get throughout the year. The funds are not specifically restricted to scholarships, this is just how we choose to use them.
@Rustler The funds are non-restricted from general donations our organization we receive. There is no reporting to donors on specific fund usage.
Have you reached out to others in your industry about their best practices? Will you need to do any kind of reporting throughout the years? Certainly, you will definitely want to track and classify the distributions of donations to individuals/organizations.
At the very least, you will get great learnings about year-over-year trends so you can share out the positive impact to your donors!