Hi Jeff. What do you classify as donor restricted funds and what are board restricted funds? Also, if a church has 3 bank accounts (checking, savings, investment) with multiple donation categories, will these categories be represented on the balance sheet as sub-accounts of the actual bank accounts they are deposited into? Thanks.
Any money given by a donor for a specific purpose would be a "Donor Restricted Fund." Examples would be if people give money to a remodeling project or to support a missionary or maybe to support a specific ministry of the church such as a Food Pantry or Youth Mission Trip. For Board Designated, this is when the Church Board makes a decision to set aside money from the General Fund (unrestricted) for a specific purpose instead of an individual. The key with this is that whoever restricts the money is who would be able to change or remove the restriction. They will. I've seen this many times although I have never done it myself. Lets say you have a Savings account that supports various Missions. It would show up something like this: - Savings - Food Pantry $1,000 - Missionaries $5,000 - Disaster Response $3,000 - Savings Total $9,000
You answered my question about Opening balance equity. Thanks! Now, I am trying to take that balance down to zero, but I'm struggling. What is the process to take the Opening Balance equity down to zero while leaving the Equity restricted balances reflected accurately? Thanks again!
What I normally do is start by looking at my Assets & Liabilities. If any of these are specifically donor restricted, I create an equity account for that. If you have property and/or mortgage, I created an equity account called Investment in Capital Assets. I then make a journal entry to make the equity balances equal to the asset balances (or assets and liabilities for Capital Assets). Any other donor restricted balances in the bank I also ensure that that balance is correct. Anything leftover in Opening Balance should then be Unrestricted or General Fund. I rename my Retained Earnings to something like General Fund Balance Beginning of Year and zero out the Opening Balance to this one. (This would make a good video as it's not easy to describe).
Hi Jeff. What do you classify as donor restricted funds and what are board restricted funds? Also, if a church has 3 bank accounts (checking, savings, investment) with multiple donation categories, will these categories be represented on the balance sheet as sub-accounts of the actual bank accounts they are deposited into? Thanks.
Any money given by a donor for a specific purpose would be a "Donor Restricted Fund." Examples would be if people give money to a remodeling project or to support a missionary or maybe to support a specific ministry of the church such as a Food Pantry or Youth Mission Trip. For Board Designated, this is when the Church Board makes a decision to set aside money from the General Fund (unrestricted) for a specific purpose instead of an individual. The key with this is that whoever restricts the money is who would be able to change or remove the restriction.
They will. I've seen this many times although I have never done it myself. Lets say you have a Savings account that supports various Missions. It would show up something like this:
- Savings
- Food Pantry $1,000
- Missionaries $5,000
- Disaster Response $3,000
- Savings Total $9,000
@@JeffPospisil Thank you so much.
You answered my question about Opening balance equity. Thanks! Now, I am trying to take that balance down to zero, but I'm struggling. What is the process to take the Opening Balance equity down to zero while leaving the Equity restricted balances reflected accurately? Thanks again!
What I normally do is start by looking at my Assets & Liabilities. If any of these are specifically donor restricted, I create an equity account for that. If you have property and/or mortgage, I created an equity account called Investment in Capital Assets. I then make a journal entry to make the equity balances equal to the asset balances (or assets and liabilities for Capital Assets). Any other donor restricted balances in the bank I also ensure that that balance is correct. Anything leftover in Opening Balance should then be Unrestricted or General Fund. I rename my Retained Earnings to something like General Fund Balance Beginning of Year and zero out the Opening Balance to this one. (This would make a good video as it's not easy to describe).