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How do we track designated restricted funds?

Gifts given to designated funds and their subsequent disbursements are tracked on the Balance Sheet as Current Liabilities.  Gifts received are credited to the donor as tax deductible and are recorded to the Fund as an increase to the liability.  Payments made out of the fund are recorded as a decrease to the liability.  A current balance on the fund can be determined at any time by viewing the balance shown on the Balance Sheet.

Sometimes there are circumstances where the organization would prefer seeing the disbursement activity on the Profit & Loss Statement as a record of spending so they can compare it to their budget.  An example of this would be for a Building Fund and the expenses associated with construction or remodeling.  In this scenario, an adjustment would then be made at month-end to offset the building project expenses on the Profit & Loss and reduce the Building Fund on the Balance Sheet.

In the absence of a Benevolence Policy or Mission Fund Policy, gifts marked for these ministry areas are treated as “preferenced” and are recorded as an offset to the expense lines for those ministries, reducing the total spending from General Fund/Operating monies.

Likewise, gifts given to the “Children’s Ministry” are recorded as an offset to the expenses for the Children’s Ministry.

Registration fees for camps and special events are recorded as an offset to expenses on a separate line “Proceeds from Events” within the applicable ministry expense grouping.