The problem I have ran into is that a few of their restricted funds are more generic and can have contributions from more than one donor. I was already using Projects to track restricted donations for one of my non-profit clients. Want to learn more about managing nonprofits in QuickBooks Online, connect with Megan through her website. The more you understand both the needs of nonprofits, and the features available in QuickBooks Online, the easier it is to create an elegant and scalable data file that can provide meaningful financial information, for as long as it takes to say, “Mission Accomplished!” Use sub-customers or Projects to track restricted grants!.Save the chart of accounts for your natural categories.That removes it from the dashboard while maintaining all your information and allowing you to easily get back to it later. When the grant is finished, simply mark it Complete in the Projects Center. You can even drill down further to see what makes up the detail of “Materials & Supplies,” all from the Projects tab! You can drill down into the specifics of the grant. This is fantastic visibility into grants that cross fiscal years! ![]() ![]() With the Projects Center, you get a dashboard view of all your restricted grants at once, from their inception to the present moment. The difference is the new and constantly improving, Projects Center. You assign costs to them using the same Customer/Project field on expense transactions. In many ways, Projects function just like sub-customers. I am really excited about the new Projects Center as a way to track restricted grants! To use this feature, you must first turn on “Use project financial tracking” on the Advanced Tab of Account and Settings. QuickBooks Online gives us another option: Projects When you want to see the activity on the grant, and know the restricted balance, run a Profit & Loss by Customer report, filtered for that specific sub-customer, and set the date range for the correct time period. In order to use this feature, you must first turn on “Track expenses and items by customer” on the Expenses tab of Account and Settings ![]() This allows you to see the income from each grant separately, and to track costs back to it using the Customer/Project field on Expense transactions. Plan ahead! Be optimistic! Assume that a Customer giving you a restricted grant will probably give you another and that you will want to be able to tell them apart! Set each individual restricted grant up as a sub-customer A nonprofit might have donors, members, students, clients – consider anyone who gives you money to be a Customer. ) That source is your customer.ĭon’t get hung up on the terminology. ![]() Audited financials now show income and net assets With Donor Restrictions. Every restricted contribution comes from somewhere: an individual, a foundation, or a government entity. How should you manage restricted grants in QuickBooks Online?Īn easy place to track restricted contributions is in the Customer list. I hope lots of funders fully support your Theory of Change and give you grant after grant after grant… Close your eyes for a moment and imagine what using Classes for all of those grants would look like in QuickBooks …ĭon’t do that to your data file. I hope your organization is around for as long as it takes to fulfill your mission. Even if there is a 1:1 relationship between the program and its funding source, the grant is not the program! Don’t let the tail wag the dog.Code it to the grant class? Code it to the program class? Eliminate the struggle whenever possible. Often restricted grants will cover expenses that cross function, which leaves you debating which class to put it to.Classes are ideal for tracking the information needed for the Statement of Functional Expense: Program, Management and General, and Fundraising.I don’t recommend this method, for several reasons: In short, do the tax preparer a favor, and be a good steward of the organization’s resources: don’t use accounts that require translation or a calculator to flow to your 990! Some organizations may try to use Classes to manage restricted contributions What are “natural categories” of contributed income? Some organizations manage restricted contributions in their chart of accountsĭon’t do this! You should use the chart of accounts to track the “natural categories” of income and expense needed to run the organization and report to the IRS on the annual 990 filing. If it is properly set up and maintained, QuickBooks Online is an effective and affordable tool for nonprofit organizations and even provides some options not available in the desktop version. While that is false, it is TRUE that the need to accurately account for restricted contributions is one of the key differences in working with nonprofits. It’s a common misconception that nonprofits are run entirely with other people’s money – meaning grants and donations.
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