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JulieC_EXP
April 28, 2024
Question

CLASS or LOCATION for tracking Restricted Funds

  • April 28, 2024
  • 1 reply
  • 0 views

Context: 

I'm a long-time QB desktop (for-profit) user and a NEW QB Online Advanced user for a NON-PROFIT

First, I'm wondering if I've made a terrible mistake subscribing to QBO... but we'll leave that for the moment.

I transitioning our church from fund accounting software to QBO (existing software has been used for years and is a hot mess, i.e. chart of accounts 12 pages long, and pass-thru accounts with huge negative balances.)  I've been doing a ton of research on the best way to set it up, etc.. It looks like QBO is not optimized for non-profits who have to track designated or restricted funds.  

HOWEVER, I've come across a couple suggested ways to do it, but I'm not sure which one is best... Using CLASSES or using LOCATIONS (2 locations:  1 - with donor restrictions, 2 - without donor restrictions).

So, I'm asking the hivemind for help!

Our primary source of revenue is member donations. We rarely do fundraising campaigns or receive grants. 99.9% member donations, but some of them are designated/restricted. We DO have lots of different programs or departments with their own budgets, and occasional pass-thru or designated income.

Given our situation, what do all y'all think??

Any transaction examples, links, blogs, articles or YouTube videos you could point me to would also be very helpful.

    1 reply

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    Ivan_G
    April 28, 2024

    I acknowledge that setting up and handling an account as a new user in QuickBooks Online (QBO) can be challenging, Julie. No worries, I'll share some steps on how you can track the donations you receive and manage them accordingly.

     

    By analyzing your situation, the best way to track the donations you receive is by utilizing the Class tracking. This way, you can review and manage the restricted and unrestricted donations in QBO. Still, I'd recommend collaborating with your accountant for accurate guidance and help regarding your concerns.

     

    The first thing that we need to do is turn on the Class tracking so you can use and utilize the said feature:

     

    1. Go to the Gear icon and select Accounts and settings.
    2. Choose Advanced, and on the Categories section, click the pencil icon.
    3. Tick Track classes and then press Save.

     

    Next, let's set up a class for both unrestricted and restricted funds:

     

    1. Go back to the Gear icon and select All list.
    2. Choose Classes and then click New.
    3. Enter "Unrestricted Donations" in the Name field. You can use this class to track the unrestricted donations.
    4. Once done, press Save.
    5. Click New again to generate a class for the restricted donations.
    6. Name this class "Restricted Donations". Use this class to track the restricted donations.
    7. After that, click Save.

     

    Once you receive donations and record them in QBO, you may select the classes you've created on the Class field. This field can also be used for your existing transactions. You may also maximize the Classes feature in QBO to generate other necessary classes for your donation tracking.

     

    For a complete reference on handling your funds in QBO, kindly check this article: Fund Accounting for non-profits in QuickBooks Online.

     

    Meanwhile, you may turn on the location tracking in QBO to set up and organize your data from different locations, regions, or departments.

     

    Additionally, you may explore these articles that could help you manage and personalize your reports in QBO. This way, you can freely filter your data and check for your company's profitability.

     

     

    I'm always ready to provide additional help if you have more questions about handling your received donations in QuickBooks. Feel free to reply to this thread, and I'll assist you right away. Take care!

    J
    JulieC_EXPAuthor
    April 28, 2024

    Thank you, Ivan - I appreciate your response.

    I've read all the articles you referenced - the article about Fund Accounting is very basic and doesn't cover some of the very complicated issues. Frankly, I'm having trouble finding any resources on Non-Profit/Fund Accounting in QBO (which makes me wonder if it's a mistake). I'm not ready to abort yet, but I just need some deeper resources to get it set up correctly.  I'm transitioning from a disaster (not my disaster), but don't want to create a new disaster.

    Any other references/help you could point me toward would be great.

    J
    JoanaC
    April 28, 2024

    I'll be more than happy to assist you with more references you can check, Julie.

     

    I know finding more relevant references or help here in the QuickBooks Community is a little bit hard, as it has too many posts and articles that you can choose from.

     

    Let me share these articles I found that can help you learn more about tracking your funds: 

     

     

    Let me know if you still need some articles to check. We'll be here to help you. Have a great day, and take care always.

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