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Level 2

How to track donations made to grantees by a nonprofit

I am setting up Quickbooks 2020 Non Profit edition for the first time, and am wondering how a non-profit organization will track donation it makes to various grantees.  In our old, manual system, we have a concept called "Distributions", and each transaction where money flows out of the organization is captured there.  For example, say are making a grant to "Hometown SPCA", consisting of pet supplies and a check.  We generate a new distribution and itemize the donation: "Distribution 1234 for Hometown SPCA consists of $500 in pet food and a $500 check, for a total distribution of $1000".

 

How do I accomplish this in Quickbooks?  I understand that our bank will show two transactions ($500 pet store purchase and $500 cashed check), and that these items would be recorded as Program Expenses, but I cannot see how to keep the detail of who the distribution went to.

 

Conceptually, I'm thinking of how money flows out of an organization - one way is in response to a bill received from a vendor, which shows an itemized list of charges.  In my case, it seems like the grantees should be considered "vendors", but it doesn't quite fit, as I would be the one generating the bill (that is, the list of items donated).

 

I've browsed the forums and Googled, but surprisingly haven't found an answer to what I think is a basic question that most grant-making nonprofits would have.  This leads me to believe I'm going about this in the wrong way, and our old approach shouldn't be forced into Quickbooks.

 

Any suggestions appreciated.  Thank you!

9 Comments
QuickBooks Team

How to track donations made to grantees by a nonprofit

There are two ways of tracking donations in QuickBooks Desktop, wplee.
 
Aside from the invoicing option, you can use Sales Receipt to record a donation. Let me show you how:
 

  1. Go to the Customers menu and select Enter Sales Receipts
  2. Select the name of the donor and enter all other details.
  3. Click Save and close.

If you enter contributions as either donations (Sales Receipts), or as pledges (Invoices) instead of as deposits, you can check which form to use below:

 

  • Select the Donation form when you receive cash, checks, or credit card donations.

Note: QuickBooks processes donations in the same way that it processes Sales Receipts. If your Sales & Customers preferences are set to "Use Undeposited Funds as a default deposit to account," you will not see Deposit To on the donation form, and your donation checks will automatically be added to your Undeposited Funds account. In this case, remember to create a Deposit transaction to move funds from the Undeposited Funds account into your checking account. Otherwise, you apply donations immediately by clicking your checking account in the Deposit To drop-down list on the donation form.If you track donations with classes, select the appropriate class in the Class field or type Other. If a donation has been designated for more than one class or fund, calculate the amount of the donation for each class and enter a separate line item for each portion of the donation (or create a separate donation form for each). If, for example, you receive 200, and the donor specifies that half of the donation go to the Building Fund and half to the Outreach fund, create a donation (sales receipt), and enter one item for 100 (choose Building Fund as the class), and then enter the second item specifying that the remaining 100 goes to the Outreach Fund (class). You could also create separate donation (sales receipt) forms for each portion of the donation.In the Customer Tax Code menu (in the bottom left corner of the Donations form) select Non-Taxable Sales for standard donations.

  • Select the Pledge form when you receive a pledge (promise) of a future payment. When the donor sends a payment, use the Receive Payments form to link it to the corresponding pledge. Use the same procedure for partial payments; QuickBooks will keep track of how much of the pledge has not yet been paid (using the Balance Due field below the total on the pledge).


You can also visit the Help Center inside QuickBooks for additional guidance about tracking donations. Here's how:
 

  1. Go to the Help menu and select QuickBooks Desktop Help.
  2. Enter "donation" in the Search bar and click the Magnifying glass icon on the right-hand side.
  3. Click the title of the article to see the complete details.
  4. Add a comment below or post another question if you need additional help when recording transactions.

 
Let me know if you need further assistance. I’ll be around to help. Have a good one.

Level 2

How to track donations made to grantees by a nonprofit

Thank you so much for your reply - however, the question I asked wasn't about money coming in, but rather money going out.

 

For income, I understand you can use invoicing or sales receipts to record pledges or donations made to the organization.  However, I was asking about money an organization spends on programs to fulfill its mission.  I know that these are recorded in expense accounts dedicated to programs, but I do not see how to track who the grant is made to, or how to present the grantee with a list of money or items donated.  As I said previously, "vendors" appear to be the best fit, but even this feels forced.  I was thinking there must be a better way to do it.

QuickBooks Team

How to track donations made to grantees by a nonprofit

Hi there, wplee.

 

I'm here to give you insights about how donations work in QBO.

 

You're right, these transactions are treated as an expense and are recorded to it's dedicated expense accounts. When recording it, you can add your grantee as a vendor, then associate it to the transaction so that you can track the person to whom a grant is made. When you make a donation, you can record it as a cheque or an expense just as you would for any other payment to a vendor. 

 

Here's how to track the expense you made to your grantee:

  1. Select Reports from the top menu bar.
  2. Choose Vendors and Payables.
  3. Select Transaction List by Vendor.
  4. Click the Customize Report button.
  5. In the Display tab, you can:
    • Set the appropriate date range.
    • In the Columns section, put a checkmark beside Source Name to add it to your columns and click the checkmark beside Name to remove it from the list.
  6. Go to the Filters tab and from the Filter List, select Transaction Type.
  7. Select the transaction type associated with the Vendor purchases (i.e. Check or Expense).
  8. Hit OK to display the report.

I've added an article that will help you track where your company stands in terms of expenses: Customize vendor reports.

 

Feel free to tag me in your comments if you have any other concerns or questions about donations. I'll make sure to get back to this thread as soon as I can.

Level 2

How to track donations made to grantees by a nonprofit

Thank you for your reply.  This is closer to what I need, but is still lacking the component that allows me to group and track individual distributions.  Using the method you describe above, I can determine the total that was given to a grantee for any period.  Our manual system has something more granular, so instead of simply reporting we granted Hometown SPCA $20000 in 2019, we could break it down by individual distribution, as Dist # 1 , January 2019, for $12000 (with an itemized list of items or cash donated), Dist #7, April 2019, for $6000, Dist #20, November 2019, for $2000 etc

 

Maybe reporting like this is missing because it's not necessary for financial statements?  I would think organizations would want this level of detail.  I was hoping I could get Quickbooks to generate grant detail lists for me based on transactions associated with both a "vendor" (grantee) and a specific grant event.

Moderator

How to track donations made to grantees by a nonprofit

Hello wplee,

 

Aside from your ideas above, you can also set Classes as events. With this, you can tag the vendor transactions specific for the event.

Here's how to turn on the class feature:

  1. Click Edit at the top menu and select Preferences.
  2. In the Preferences window, select the Accounting menu and go to the Company Preferences tab.
  3. Go to the CLASS section and mark the Use class tracking for transactions box.
  4. Click OK.

Here's how to create a class:

  1. Click Lists at the top menu and select Class List.
  2. In the Class List window, click the Class button and select New.
  3. Enter the event name in the Class Name field.
  4. Click OK.

Now, the CLASS field will now appear when you create transactions. You can also go back to the existing transactions and add the events.

 

When pulling up the report, you can customize it and add the Class column. I'll use the Transaction List by Vendor report as an example.

  1. Click Reports at the top menu and select Vendors & Payables > Transaction List by Vendor.
  2. Click the Customize Report button and go to the Display tab.
  3. Go to the COLUMNS section and mark the Class column.
  4. Click OK.

You can also use this link for reference: Set up and use class tracking.

 

If necessary, you can export the report to Excel and customize it further.

 

We'll be right here if you require more help in doing this.

Level 2

How to track donations made to grantees by a nonprofit

JamesDuanT, thank you for your response.  It's really great to see the community pitch in to offer help to a new user, on Sunday, no less! 

 

Unfortunately, this idea won't work either.  In setting up my chart of accounts, I'm planning to have a single account called "Programs" to record all expenses incurred to fulfill our mission.  In doing so, I plan to use Classes to differentiate between the different programs that we offer.  I have seen multiple sources suggesting this method to keep the chart of accounts simple, will retaining granularity between the programs.  I do not believe there is a way to assign more than one class to a transaction.  Splits won't be accurate as they expect an amount for each split.  I suppose I could enter a dummy split of zero value and tag it with an event from the class list, but if I try to run a report based on the event tag, wouldn't I get zero value for each event?

 

The most recent idea I had was to use Purchase Orders, which at least conceptually is close to what I want, as I'm generating a list of "items" to the "vendor" - except the flow of goods is backwards.  Again, this feels like forcing QB into doing something that is inherently incorrect, which I'm sure will lead to problems later.

 

It seems like such a simple and obvious thing to do: associating program expenses for actual grantees by grant event.  There's got to be a way to do this while keeping the class list available for the different type of program.

Moderator

How to track donations made to grantees by a nonprofit

Thanks for trying our suggestions, wplee.

 

We'll share your thoughts and experience with our Product development Team. They'll evaluate and put it into consideration for product updates. Your feedback will help us know where to focus the product enhancements to suit your business needs.

 

Keep us posted if you have other concerns that require our assistance.

Level 2

How to track donations made to grantees by a nonprofit

I wonder if sub-classes could be used?  For example, say I have three classes I use to classify transactions in the Program Expenses account, "Mission 1, 2, 3".  If I created a subclass under each main class with an event number, perhaps I could pull the transaction information by event.:

 

Mission1

    Event1

    Event2

    Event3

Mission2

    Event2

    Event3

    Event4

Mission3

    Event1

    Event5

 

Obvious drawbacks are 1) potentially making the class list very large and 2) "Event n" doesn't really exist as a unique entity - to get an accurate report by event I'd have to search for "Mission1:Event1, Mission2:Event1, Mission3:Event1", etc  But it could work if the number of missions isn't large (and in my case it isn't.

 

Moderator

How to track donations made to grantees by a nonprofit

Glad to have you back, @wplee,

 

Using classes to categorize income and expenses for different events is a great idea for your business.

 

Once you've assigned them to your transactions, you can pull up several reports to help you review how they affect the business. You can simply go to the Reports tab and select any of the following reports:

 

  • Balance Sheet by Class
  • Profit and Loss by Class
  • Sales by Class and Item Type
  • A/R Aging Detail by Class

To learn more about this feature, check out these links:

 

Set up and use class tracking.

Filter, sort or total reports by Class. 

 

Feel free to visit us any time if you have any questions about this topic or anything QuickBooks related. I'm always here to help. Have a good one!

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