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L
laurakan
September 21, 2023
Question

(church) fund accounting

  • September 21, 2023
  • 2 replies
  • 0 views

Question for the hive mind: I know QBO did not work very well in the past for those of us who need fund accounting. Is anyone currently using it successfully? I'm seeing more and more help pages and functions that seem to be making it easier to do fund accounting (or maybe I'm just desperate to get away from the clunky software my client uses). I'd like to suggest that my client switch to QBO, but not if it's going to make fund accounting more complicated than it already is.

 

FWIW the client is a church. We'd only need the main module (not payroll). I realize they'd need to subscribe to Plus at a minimum to get the option for Classes, which I think is essential for separating out their designated and restricted funds from the general fund.

 

Thanks for your thoughts on this!

2 replies

J
JamesAndrewM
September 21, 2023

I'll share information about Fund Accounting for non-profits and how to track funds in QuickBooks Online.

 

Fund accounting is essential for non-profit organizations to track and manage their financial resources in a way that ensures transparency and compliance with donor restrictions. QuickBooks Online can be used for fund accounting by setting up classes or locations to segregate funds and transactions. 

 

To be able to see the Class field on relevant forms that let you identify the class associated with different transactions, please follow these steps in turning on Class tracking:

 

  1. Go to Settings ⚙, then select Account and Settings.
  2. Choose Advanced.
  3. In the Categories section, click edit ✎.
  4. Turn on Track classes.
  5. Select Save.
  6. Click Done.

 

Then you can now set up a class for each fund. Here's how:

 

  1. Go to Settings ⚙, then select All lists.
  2. Select Classes.
  3. Pick New, then enter the name of a fund in the Name field.
  4. Click Save.

 

For detailed information, refer to this article: Fund Accounting for non-profits in QuickBooks Online.

 

I also suggest reviewing the plans and pricing on which product will work best for your company. Check out this link: https://quickbooks.intuit.com/pricing/. 

 

You can visit this article you can use in the future: Track funds you receive from donors in QuickBooks Online.

 

Feel free to post here again if you have further QuickBooks-related concerns. We are available 24/7 to lend a hand with each of your queries. Stay safe!

L
laurakanAuthor
September 22, 2023

Thank you for the information about setting up QBO to handle fund accounting. What I am looking for is feedback from users about how it is working for them.

O
oliverm
October 16, 2023

Works well for Profit and Loss purposes but as far as Balance Sheet is concerned, useless. Only way of tracking the balance of a fund is by running an All Dates P&L and that's assuming you had no opening balances.

    S
    suckmyballz
    November 20, 2023

    I work for four churches that use QBO and fund accounting. Two of them set up the funds as liability accounts, and then all of the revenue and expenses are on the liability accounts. The fund balances then show on the balance sheet and we run the register on the liability account to view activity detail. The activity does not show on the statement of activity for the operating fund, which is how we want it.

     

    The third one uses the same method as the other two except that one of the funds is for a large ministry program with its own budget. In this case, the liability account basically serves as a reserve fund for this ministry. We also have a class for the ministry so that we can run typical activity and budget reports on it. 

     

    At the fourth church, these funds are set up as equity accounts and there is also a class for each fund. It's a huge complex mess. There are 20 funds and thus 20 classes. We don't run the activity report by class because it would just be too much detail and the board wouldn't be able to manage it. The bad thing about this is that there is no way for them to easily see whether specific expenses were on the operating account or not. If the priest buys expensive new vestments with money from the altar guild fund, this shows on the statement of activity, which is not what we want. At the end of the year, the statement of activity by class gets run and then journal entries are made to adjust the fund balances. I think this is not a good way to do it. 

     

    All of these methods were developed by CPAs.

      L
      laurakanAuthor
      November 21, 2023

      That's interesting to set up the funds as liability accounts. What is the rationale behind that, and how do you set up the income and expenses? Are they entered as asset and liability, respectively? I can't quite wrap my head around how to do this. Thanks!

      S
      suckmyballz
      November 21, 2023

      The person who set it up just felt that liability accounts were the most suitable option for funds with restricted uses. The activity is tracked by using the liability as the account that is debited and credited for expenses and income (instead of expense and income accounts). We use the register as a report of the activity.

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