Accounting for Contributions earmarked for a specific project

by Gordon
(Santiago, Chile)

With regards to the Main Question above, should such earmarked contributions be taken to Income or would it be acceptable to treat it as a Special Fund Account either under Liabilities, as related expenses will be charged to this Fund account, or could it also be taken to Equity?

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Apr 24, 2021
Accounting and Tracking Restricted Donations
by: Vickey

I have seen people account for "restricted" donations and special projects using equity and liability accounts...but I don't personally care for that method.

I like to use the "donor" field in QBO Plus to "tag" all income and expenses related to those special projects or restrictions. If it is something that is going to be carried on regularly, I will consider setting up a class for it...but it just depends on the client or situation.

If it is something that is going to span over a year and I need a "balance" to roll over....I will combine using an equity account...but I never use an equity account alone to record those donations and expenses related to a special project.

I only specialize in one other software and that is Aplos. I use the tag feature to track it in that software sometimes combined with a fund...if I need to track it over multiple years.

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If you want to DIY your payroll, I highly recommend you look at using Gusto! It is very user friendly and their support is awesome! Plus they know how to set up and maintain payrolls for churches and nonprofit organizations.

Note: I am a "partner" of Gusto, but as I have told you before ... I never recommend anything that we or our clients have not tried and love =)

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