Charitable contributions

Hello, giannibyte. 

When you make donations or charitable contributions, how you record them depends on the type of donation you've made. For non-cash charitable contribution, First, you must create an invoice in QuickBooks Desktop. 

Once done, create an account to use to record charitable contributions from your Chart of Accounts. The next step is to create a product item for donations. From here, issue a credit memo for the value of your donation.

To create an invoice: 

1. Go to the Customers menu and choose Create Invoices.
2. From the Customer: Job drop-down, select a customer or customer job. If the customer or job is not on the list yet, you can select Add New.
3. Add all the necessary information.
4. Select Save & Close.

To create an account to use to record donations: 

1. Go to Lists menu and select Chart of Accounts.
2. Click the Account drop-down arrow at the bottom of the window and click New.
3. Set Expenses as the Account Type and click on Continue.
4. Enter a Name for the account.
5. Click Save & Close.

You can also consult an accountant to get advised what account to use when creating this account. 

To create a product/service item for the donation: 

1. Go to List at the top menu bar and select Item List.
2. Click the arrow beside Item and choose New.
3. Under Type, select Inventory Part.
4. Use the account you've created from the drop-down list in the Income account field.
5. Add the needed details.
6. Click OK.

To issue a credit memo for the value of the products you're donating: 

1. Select Customers and then click on Create Credit Memos/Refunds.
2. Enter the info for the credit memo or refund. 
3. Click on Save & Close once you're done. 

Check these articles for more information:  

• Create an invoice in QuickBooks Desktop
• Create, edit, or delete account in QuickBooks Desktop
• Add, edit, and delete items
• Give your customer a credit or refund in QuickBooks Desktop for Windows 

If you have any further questions, don't hesitate to ask. Thanks for being part of the QuickBooks family. Have a splendid week!

Hello AileneA, thanks for your response. I did everything you instructed. My question is: when I run a report the account for Charitable contribution has zero balance because the credit memo "paid" out the invoice. How then we can keep track of the amount if is not showing in P&L and Trial?

Welcome back, @giannibyte.

Allow me to provide additional information and help you show the balance of your charitable contribution in the Profit and Loss report.

The balance for your charitable contribution should show even after applying the credit memo to the invoice. Since it doesn't show in the Profit and Loss or Trial Balance report, you'll want to make sure the reporting period is correct. Here's how:

1. Open the Profit and Loss or Trial Balance report.
2. From the Dates drop-down, select the date range when the transactions are made.
3. Click Refresh.

If you get the same result, you'll have to review the credit memo and make sure the charitable contribution item was selected.

As always, you can visit our QuickBooks Community help website if you need tips and related articles in the future.

Our doors are always open to help you again if you need further assistance recording charitable contributions. I'll always be here to help, @giannibyte.

The value of the service provided cannot have any markup to it.  Therefore, the only deduction is whatever actual costs you incur to provide the service.  For example, if it costs you $40 in labor to provide the service, the $40 paid to the employee is your charitable contribution.  You cannot deduct $80 for something that only cost you $40.

Hi Mark, thanks for your reply.

Maybe I'm doing something wrong, but even if I change the date like you said the report is showing 0. When I double click on the line I get all the transactions. These are the steps I did:

Create an invoice for the recipient of the donation (Church) for $80 with an item connected to Charitable contributions account. Then I issued a credit to the Church for $80 and applied to that same invoice.

What I finally get is a washout and I don't know how at the end of the year we can possibly get a total of all these charges that we pick up from time to time. Thanks again.

Hi, I'm actually not applying any markup, the value of the contribution is determined by the hours spend to do the job and the hourly rate, but the employee who does the job has a fixed salary, so that value is built in that employee salary. Thanks for the response.

Hi there, @giannibyte. 

I appreciate you for providing details about your concern. 

QuickBooks report generates all accounts that include activities. You'll want to pull up two reports and export them to Excel. Let me guide you through the process.

While zero balance items are still showing on the P&L report, you can export it to Excel. Then, remove those items from there.

Let me show you how:

1. Go to Reports, then type Transaction Detail by Account.
2. Select Customize and Filter.
3. Mark the Distribution Account box, then choose All Income/Expense Accounts.
4. Click Run report. Make sure to change the Report period to your  desired report date.
5. Hover towards the Export icon. Then, Export to Excel.

Then, pull up the account list report and export it to Excel. Here's how:

1. Go to Reports, then type Account List.
2. Select the Export icon beside the Printer icon.
3. Click Export to Excel.

Once done, you can then compare which accounts have zero balance with no activity. You also have the option to delete or merge rows and columns in your Excel.

To learn more about the solution above, check this out: Export reports as Excel workbooks in QuickBooks Desktop. This article will also help you get updated reports while working in Excel.

 To learn more about running and customizing reports in QBDT, you may check these articles:  

• Understand reports 
• Profit and Loss report does not match a sales report

You can check the damaged transactions/s shown in QBWin.log and apply the solution once it finds an issue. 

Don't hesitate to leave a comment below if you have any other questions about the report. Have a good one. 

Thank you that’s what I tough too. 

Hi there @Rainflurry,

Thank you for always sharing your inputs to help address other members concern.

Keep safe and have a good one.

I just found your message and I have the very same issue.

I also donate inventory items, using invoices and credit memos, but all the reports show 0 in the charity/donations expense account.

I found several KBs about setting this up, followed exactly the instructions, but I don't find any report that shows how much I have donated throughout the year.

How did you resolve this?

@gerdgoebel 

If you donate inventory items to charity, just make an inventory adjustment and assign your charitable contribution expense account as the 'Inventory adjustment account'.

Or, if you want an invoice showing the donation, create a $0 invoice for the donated item(s).  The invoice won't book any income but will book the reduction in inventory and the item's cost to COGS.  You can leave it like that or you can then create a journal entry to move the expense from COGS to Charitable Contribution Expense - debit Charitable Contribution Expense, credit COGS. 

Now, this makes more sense, as I can see that with an inventory adjustment I will see the cost in the donations account.

If I would still want to use an invoice, I could set up my donation item with the COGS account pointing to the Charity/Donations account, thus, I don't have to make a journal entry to move from COGS to the donations account.

One more question, we also donate non-inventory items, like free drinks, for which my item does not have any cost. For testing I added those to an invoice with a sales price, but it posted as a negative amount to the Charity/Donations account, thus, reducing the total donation amount.

@gerdgoebel 

"One more question, we also donate non-inventory items, like free drinks, for which my item does not have any cost."

There's nothing to record when you donate a non-inventory item.  Your expense was incurred when you purchased it.  Therefore, when you donate that item, it's just lost revenue, not any additional expense.  

Bummer!

But I understand.

I tried the zero $ invoice and the journal entry and this works well for me, and give me the visibility I need.

Thanks again for your help.