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KHardee
Level 1

Accounting for non-cash donations

We are a small nonprofit using QB DT Pro 2019.  We received a noncash donation of gift cards from a large business.  The gift cards are to be used at the donor's business to purchase supplies for the nonprofit. I am at a loss how to enter donation.  Any help for a QB beginner would be appreciated.  Thanking in advance.

1 Comment 1
KlentB
QuickBooks Team

Accounting for non-cash donations

I'm here to in entering the donations you've received, KHardee.

 

I also want to thank you for choosing QuickBooks Desktop as one of your partners in running your business.

 

To track your non-cash donation, we'll have to set up an income and clearing account for charitable contributions first, then create a product or service item for the donations. I'll guide you in doing the whole process.

 

First, let's create an income account:

 

  1. Go to the Lists menu.
  2. Select Chart of Accounts.
  3. Click the Account drop-down menu then select New.
  4. Choose the appropriate income as the account type, then click Continue.
  5. Enter "Non-Cash Donations" in the name field.
  6. Click Save & Close.

Second, let's set up a clearing account:

 

  1. Select Lists from the top menu bar.
  2. Choose Chart of Accounts.
  3. Click the Account drop-down menu then select New.
  4. Select the Bank as the account type, then click Continue
  5. Enter "Non-Cash Donations Clearing" in the name field.
  6. Click Save & Close.

Then, we can now create a dedicated item for your donations. You use Non-Inventory Part as the item type. Once done, we can now enter a sales receipt and create a bill for the donation, then mark the bill as cleared to record the non-cash/in-kind donation.

 

Step 1: Enter a sales receipt.

 

  1. Select Customers from the top menu bar, then go to Enter Sales Receipts.
  2. From the Customer: Job drop-down, select the name of the donor. If the donor is not on the list yet, you can click Add New
  3. Choose the payment method.
  4. From the Deposit to drop-down menu, select the "Non-Cash Donation Clearing" bank account you created.
  5. In the detail area, select the items that you've received.
  6. Enter the fair market value (FMV) of the donation in the Amount field. You may consult your accountant if you are unsure of the Fair Market Value of a donation.
  7. Click Save & Close.

Step 2: Enter a bill.

 

  1. Select Vendors from the top menu bar, then choose Enter Bills.
  2. In the Vendor field, enter the donor’s name and add a period (.) or 1 after the name so the system will accept it, then click Add and Save.
  3. Under Items, select the dedicated item you've created from the drop-down menu.
  4. Enter the necessary information.
  5. Click Save & Close.

Step 3: Mark the bill cleared.

 

  1. Select Vendors from the top menu bar, then choose Pay bills.
  2. From the Payment account drop-down menu, select the"Non-Cash Donation Clearing" bank account.
  3. Select the checkbox of the bill you entered.
  4. Click Save and send.

I'd still recommend reaching out to your accountant to know that what's the best way of handling it according to the nature of your business and be guided in this process.

 

You can also read this article if you'll be processing a credit card donation in QuickBooks Desktop.

 

I'll be right here to continue helping if you have further questions about donations or any other concerns. Have a pleasant day ahead.

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