How to record when a donor pays a bill for a nonprofit?

Hi there, @molbrez.

Thanks for posting your concerns here in the Community. I'm here to help you record bills paid by a donor for your nonprofit business. 

First off, you'll have to set up the donors as customers in the Customer Center to track the fund donations and donated items. Here's how:

1. Go to the Customers menu, then select Customer Center.
2. At the top of the Customer Center, click the New Customer & Job drop-down arrow and select New Customer.
3. Enter the needed details and click OK to save.

To record the donation, you can create a sales receipt. Here's how: 

1. Go to the Customers menu, then select Create Sales Receipts/Enter Sales Receipts.
2. From the Customer: Job drop-down, select a customer or job. If the customer is not on the list yet, you can click Add New.
3. Fill in the relevant information at the top of the form like the Date and Sale No, then choose the payment method.
4. In the detail area, select the item(s) you propose to do or include as a sale.
5. Click Save & Close.

Once done, you can now follow the steps to pay the bills in QuickBooks Desktop. 

Lastly, you can consult with your account so you'll be guided accurately in tracking your donations.

For more insights about managing your transactions, you can read through these articles:

• Add, edit, and delete items
• Accounts Receivable workflows in QuickBooks Desktop
• Accounts Payable workflows in QuickBooks Desktop

Leave a comment below if you have more questions. I', always around to help.

Hi @katherinejoyceO - thanks for your advice. It sounds like you’re advising just entering the funds used to pay the bill as cash donation? And then recording payment of the bill - using what kind of payment method? In this case the donor is actually writing a check directly to the vendor. 

Thanks for your direction, @katherinejoyceO . It sounds like you’re advising entering the bill to be paid, recording  the amount used to pay the bill as a cash donation, and then entering bill payment - through what method?

To clarify:  In this case, the donor is writing their personal checks directly to the vendor, so the dollars are not actually  moving through the organization. 

Thanks!

@molbrez Hi there! I have a similar situation and I was wondering if the solutions offered worked out for you. You marked the question as "solved" but I'm not sure I fully understand the solution(s) offered and was hoping you could add some insight.

Here are the details: we were granted $3,000 to cover heating costs.  Rather than send us a $3,000 check, the donor sends the check directly to our gas utility company and the utility company credits our account for the full amount of the grant. Until the credit is fully spent our gas bill reflects $0.00 "owed" each month. To keep it simple lets say our heating costs are $1,000/ mo, for three months we would receive an invoice with a $0 due from the utility, the grant credit balance on account with the utility company would decrease by $1,000 each month, and the credit would be fully applied after 3 months.

I need to report on how much it actually costs to heat the building on a monthly basis.  In the past, we would record an "in-kind" journal entry for the full amount of the "donation" (debit in-kind utility expense $3,000, credit to in-kind contributions $3,000) and simply file away the $0.00 gas invoices without recording them in QB. The two in-kind accounts (in-kind revenue and in-kind utility expense, reflected in the "other" section at the bottom of the P&L) zero each other out, so without actually recording the gas expense incurred, our P&L won't reflect the true cost of heating the building. 

What transaction(s) must we record so the actual heating costs incurred with the gas company are reflected as an expense on the P&L without creating an AP due to the gas company? And then how do we correctly record the in-kind donation received? 

If I follow the instructions offered by @katherinejoyceO (set up the donor as a customer, then enter the donation as a "sales receipt") I would need to select an account for the "deposit to" dropdown on the sales receipt (my choices are existing Cash, AR, and Other Current Asset accounts). Since the check was sent directly to the utility company, it doesn't make sense for me to choose any of these accounts. @JasroV suggested using a Clearing Account (bank) when recording the bill payment (which I would have to create since we don't currently use one); would I select the Clearing Account when creating the sales receipt? 

I'm still lost as to the next steps. I assume I would enter the utility bills for the full amount (lets say there are 3 x $1,000 bills) as I normally enter all bills, and then use the "pay bills" function and select the clearing account. But, where does the customer (donor) "sales receipt" come into play? I somehow would need to apply the payment made by the donor as a credit against the bill and I'm not sure these steps would accomplish this. Any further assistance would be greatly appreciated! 

Thanks for joining the thread, Jeremiah.

I'll provide a different method for recording the full amount of donations sent by your donors.

You can create a bank deposit to record the full amount of the grant. This way, the amount will reflect in your in-kind revenue account without affecting the Accounts Receivable (AR). I'll show you how.

1. Go to the Banking menu.
2. Click Make Deposits.
3. Select the In-Kind Revenue account in the Deposit To field.
4. Choose the Gas Utility Company in the From Account column.
5. Enter the amount and fill in all the necessary information.
6. Once done, hit Save & Close.

Then, generate a monthly bill and use the expenses tab to record the transaction to the in-kind expense account.

Here's how:

1. Go to the Vendors menu.
2. Select Enter Bills.
3. Choose a vendor from the Vendor dropdown (optional).
4. Fill in the date and all the necessary details.
5. In the Expenses tab, select the In-Kind Expense account. Use the Items tab if you have created an item or service for heating the building.
6. Enter the amount.
7. Once done, hit Save & Close.

After that, you can follow the steps provided by my colleague JasroV to pay the bill using the clearing account. 

I recommend getting in touch with your accountant for your other option to record the transaction. This ensures your books stay accurate.

You may also visit our website for more suggestions and other resources to help you manage your books: QuickBooks Help Articles page.

You're welcome to post again if you have further questions or concerns. We're always available to help you.

So I have a similar question. I have a donor who has offered to write a check to cover the cost of some printing. I want to be sure he credits credit for his donation while at the same time recording the printing expense so I will know how much the program cost at the end of the year.  How is it best to record this situation?

Thanks for any guidnace.

Hi bhamilton,

It's good to know that your donor has offered to pay some printing costs for your business. I will guide you through recording their donation, and at the same time, reflecting the expenses in your books.

QuickBooks Desktop has a feature called billable expenses charge, which allows you to mark the printing costs transaction as billable to your donor. The that billable expense reflects in the customer's profile and can be turned into an invoice. You just need to mark that invoice as paid, which represents the donor's donation.

To record the printing cost, you can write a check to the vendor (printing shop) and make the item billable to the donor. This process will post the expenses to your books.

The billable charge can be added to the donor's invoice, and the invoice can be marked as paid. The payment represents their donation to to your business.

1. From the Customers section, select Customer Center.
2. Right-click on the name of the donor and choose Create invoice..
3. Click Add time/Costs at the top.
4. There's a popup window saying there's a billable cost. Select the first choice and click OK.
   
5. Go to the Expenses section and select the created expense charge and click OK. It goes to the invoice.
   
6. Save the invoice and mark it as payment. Put a memo in the payment transaction, saying it was a donation.
7. Click Save & Close.

You can also check  some customer/donor-related reports after recording your transactions. Here's an article for your reference: Customize customer, job, and sales reports in QuickBooks Desktop.

Let me know how I help you record the printing expenses paid by a nation. Take care if you have more questions.