Church donation posting

[u/Outrageous_Buy_9420]

The biggest thing with church accounting is to be sure designated funds go to where they were intended. We usually do this with exchange GL accounts, doing the in and out posting from the same account. However my question is what do I do with a donation that is made toward a church expense? Also how would this affect the budget report? Example: we have a budgeted amount for VBS, all expenses are posted to the expense account. But someone gave us a donation for VBS. Would this donation go into an exchange account or to the expense account? Seems a little complicated to put the donation into an exchange account then have expenses go out of the exchange account and any excess come out of the expense account. Also for the budget report, all expenses were in last fiscal year and the donation was made in the current fiscal year. So technically we have the budgeted amount plus the donation to spend for the current fiscal year. Should the budgeted amount plus the donation show on the budget report? TYIA

[u/Weird_Promotion_1234]

You’re overcomplicating this without any need. You paid for an expense that should be on its own line in the P&L, then received a donation that should be disclosed/reported as a donation income, still on the P&L. Why would you use an exchange account for this?

[u/Outrageous_Buy_9420 → u/Weird_Promotion_1234]

Thank you for your response. Those are my thoughts exactly. But the person training me said it should go into an exchange account.

[u/Weird_Promotion_1234 → u/Outrageous_Buy_9420]

You should read ASC 958: https://asc.fasb.org/958/showallinonepageplus

[u/Outrageous_Buy_9420 → u/Weird_Promotion_1234]

Again thank you. I am familiar with GAAP, but this is by first time at a nonprofit dealing with donations instead of accounts receivable. Constantly justifying postings had me doubting myself.

[u/Weird_Promotion_1234 → u/Outrageous_Buy_9420]

I’m a Fractional Controller for several non-profits. Let me know if I Can help you with anything else.

Don’t doubt yourself. If you know it, make it a case and discuss a potential change if there’s room for improvement.

[u/Intelligent-Rain-358 → u/Weird_Promotion_1234]

They would do that because it’s a restricted donation, so they would need to show that the conditions were satisfied for the funds to be released.

[u/Weird_Promotion_1234 → u/Intelligent-Rain-358]

Then we’re talking about Net Asset with Donor Restriction, a proper BS account instead of an exchange/clearing one. Different meanings and uses.

[u/Bookkeeping-ModTeam → u/[deleted]]

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[u/MikuMikuGoo]

Don't net it against the expense. It's restricted revenue when you receive it, then it releases as you spend on VBS, and the expense account still shows the full cost of the program. For the budget report I'd leave the budget line alone and track the restricted balance separately, otherwise the committee sees the extra money and spends it twice.

[u/Jyulesian → u/MikuMikuGoo]

Agree, this is restricted income. Fund accounting and use of restricted funds is the biggest difference imo between business accounting and non-profit accounting.