Figuring out how to enter gifts in kinds and donations.

[thedini]

Hi guys!
As a newb I have been having my book keeper do all my quickbooks work and as a result I would have to redo all my accounting for a large grant I have with the nonprofit i work for. So in essence, she set up categories that worked well for her but not well with what we do when it comes time to account for our annual grant. We have a grant that will reimburse us 75% of what we spend for the service we provide. So the remaning 25% we fund raise with gifts in kind and cash donations. The grant will however accept gifts in kind that the IRS does not consider donations, for example time can be donated at an hourly rate. This question has led to various issues with our accounting because we need to keep a record of it but don't want it to be included in our profit loss statement because it is just a value that is donated with no goods or money to back it up. It is a very weird situation but the grant is written to make it easier to raise that 25%.

In addition we do work outside this grant that doesn't get calculated into the whole mess. What is the best way to separate this stuff. For example we run 4 boats. Three boats are paid for by the grant so for every dollar we spend on fuel we get .75 back. It is not that straight forward because we could spend 3000$ on fuel, 4500 on labor and get a 2500 slip donated and the grant would pay 7500 and the donation would cover our 25%. Make sense? So the main questions would be for fuel would I make an expense account "fuel" and then as a sub account make "grant fuel" and "non-grant fuel" also if I wanted to know which boat got fuel would i then need more sub-accounts inside "grant fuel" with "boat1" "boat2" "boat3" or is there a better way to organize this situation with other methods like classes?

Any help would be greatly appreciated.



Thanks

[PennyLane]

Tricky:

For in-kind donations, I normally DO include them on the Profit and Loss. How to do it depends on how detailed your accounts need to be for the reporting.

One idea - you have an expense account for say, professional fees. Right under that account you have another account called "professional fees donated". When someone donates professional fees, you create a check (you can set up a bank account called "clearing account" or something so the transactions don't get mixed up with actual transactions), anyway, you create a check for a total of $0. On one line of the check, you create the expense of, say $100 to the expense account Professional fees, on the second line of the chck you post a negative -$100 to Professional fees donated account. On both lines you will use the appropriate class (grant)

When you run a profit and loss report by class, your negative expense will offset the positive expense, but you will have the detail you are looking for.

When you file your taxes, you just use the professional fees expense less the professional fees donated as the expense amount.

This solution is not very practical when you have a lot of different accounts with donations, because you have a lot of contra accounts.

As an alternative, you could do a journal entry like this:

Debit Professional fees $100 - with the class
Credit Professional fees $100 with no class

Then when you run the profit and loss by class you will see the expense show up. You won't, however, see that they were donated. If that doesn't matter, this would be easiest.

As for the fuel account detail.....

One thing I would need to know is how you track your grant expenses. You should be using "classes". I'm not sure if you need to track the expenses by boat, but here's a solution if you do:

Set up a seperate G/L account as a sub-account to fuel for each boat _ Fuel boat 2, etc.

Then, when you pay for fuel, you put 75% of the cost of fuel on one line of the bill or check to the class "Grant..." and the other 25% to no class or overhead class, assigned to the correct fuel account.

If you aren't using classes, you should. Classes allow for another tier of reporting in addition to the G/L account.

Classes should be the grants or projects you perform and need to track income and expenses for. Then you can run a profit and loss report and filter it by class.

Hope this helps!