Quick background - I am doing the accounts for my sons pre-school which are currently all manual. I mentioned I may be able to computerise the accounts for them but I have one small query. They are a registered charity and some of their income comes by way of fundraising, which is fine. However sometimes they make purchases which needs to be shown to have come from the fundraising - so certain equipment. When entering these payments is it best to enter them as equipment purchases and then do a journal entry to offset the purchase against the fundraising income.
What you are referring to is a Restricted Fund. The income and expenditure for this needs to be kept separately, although it is included as part of the final accounts. If you are looking to computerise I would suggest using Quickbooks which is very good for restricted funds - you can give each fund a "class" and post everything to this "class" and do reports for the "classes" separately as well as including them in the overall total.
Yes of course it would, all you are doing is reporting the funds differently. The overall income for the organisation and its overall expenditure, then separating out the income and expenditure related to the restricted fund. This is because the funders need to know that the money they have donated is being spent in line with the bid.
Just caught up with this forum again, I worked in the voluntary sector for some years, and will say be careful of how you keep your returns. One organisation I did books for had 6 different funding bodies plus generated income, and each had their own rules and regulations on how they wanted their records kept. Believe me, the funding body can make you go right back to the start of the funding period if you have not been keeping records in the manner they want. Sometimes these procedures are designed by administrators and not finance experts, so they really do not make sense to trained finance staff, but that is part and parcel of the hoops you have to go through to get and spend their money. I have seen small organisations go under as the funding body has got really pissy with them about their record keeping, and have demanded money back.
A lot of funding bodies require an audit as standard, which is stupid for a small charitable or not for profit organisation that only has a few thousand turnover, but, like I said, that is one of the hoops you have to jump through to get their money. A well kept set of computerised accounts makes this job easier for the auditor, and cheaper for your organisation, so is a good idea.
I always used QuickBooks for the voluntary sector work, with the exception of very small charities with a turnover of a few throusand pounds, then a simple excel spreadsheet would do, but you could use Sage just fine. For the bigger companies QuickBooks did everything I required for all income & expenditure and balance sheet recording which covered the end of year audit okay, and then I would set up a seperate excel spreadsheet for each funding body. This was essential as funders sometimes pay by percentages ie, if a funding body has 3 Project Workers, they will pay for one wage including NIC, and a percentage of the rent (by number of rooms or square foot of floor space of the office space used). Classes wouldn't work in this scenario unfortunately unless you split the rent/electric/other overheads cheques which isn't really practical. The same may go for the wages, I have seen workers wages funded by 2, even 3 different sources of funding.
At the beginning of the funding period, I would set up an excel page for each funding body with the various categories that the funding body supports (overheads, wages, equipment blah blah), enter these categories down the left column, and across the top row, the months Jan-Dec, or whatever date the funding runs from and to.
In the first column, I would enter the total, amount the funding body is giving you (for example, £1000 towards rent, £500 towards stationery, £1000 for equipment etc) and at the end of every week/month, whatever suits you best, I would lift the expenditure out of QuickBooks relating to that funding body, calculate the percentage if required and drop it into the spreadheet, along with the details of the invoice numbers so you can easily find the info for the monitoring visits (this can be entered directly into the cell as a note - in excel 2007, this is review/new comment, the note just sits in the background and does not interfere with the figures). I do not know how well you know excel, but I would have set up formulas so that every time I spent some money out of each category, it automatically deducted it from the total amount funded, I found this really handy as when it gives you an easy reference point for how much money you have left in each category, and you can easily see towards the end of the funding period if you have to spend money, or request it to be moved to another category if required - no-one likes to have to send money back.
This may sound complex, but it really isn't once set up and you get used to it. After years in the sector working with a wide range of funding, some of which are as difficult as hell to work with, this was the one system that worked and kept them all happy. It may seem like you are keeping 2 sets of books, which you are, but funding bodies are usually particualr about transparancy and like to have a clear picture of how you have spent their money so there is no way around this bit.
Some funding bodies have their own excel spreadsheets already set up for their returns, which is handy, but for larger organisations, I always kept my own spreadsheet as well for the reasons I have already touched on. I never had to send money back using this system, and definitely no overspend either, which for a small organisation with not much money, very important.
-- Edited by mushroom on Tuesday 12th of July 2011 05:46:40 PM
I don't think Sammy's pre school group would be very complicated.
You are correct funders always want the information in a specific way and I believe that QB is ideal for this. I do work for 2 charities both with several different funding streams and earned income one on QB and one on Sage and whilst I usually love Sage it isn't a patch on QB when it comes to charity accounting, due to the reporting. For the charity using Sage we use spreadsheets similiar to how you have explained extracting the data (and copy receipts and invoices). For the QB one we percentagise (is that a word) salaries on a spreadsheet when they work for several projects based on hours for each inc eers ni by journalling the figures from one class to the other, and use FCR for management and admin charges which is billed from the organisation to the project via internal invoices. We don't have any problems with either for our major funders but there is one small funder from whom we have had 4 separate projects with funding of 4K and you would not believe the detail they want for their reporting - it's barely worth the trouble but the beneficiaries really gain from the projects. They want proof that all the expenditure has been received by the suppliers/staff so we have to send copies of invoices and redacted bank statements showing the money going out of our account to suppliers. Likewise for the staff salaries we have to show the payments leaving our bank to their accounts - obviously the payments don't match what we are claiming for salaries because they only spend x hours on the project, so we supply detailed timesheets showing the time spent on all projects for the period of their project. It's an absolute nightmare.
Sheila. What a great word. Couldn't find it any dictionary but it should be
Until I looked in the Concise OED, didn't realise that percent is the american spelling, the british spelling is per cent (percentage and percentile are the same, how strange)
