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Designated monies reimbursing budget?

Our church spent 2000.00 in January 2010 from budgeted funds.

In August 2010, a donor contributes 2,000.00 designated for worship.

Does this mean the worship budget now has and additional 2000.00 as of August 2010 or can that money be used to reimburse the January 2010 expenditures?

The long and short of the question. If a donor gives designated money for general account already in the budget, is the budget now increased to reflect the gift or does the gift reimburse the budgeted amount? Does the time of expense incurred and funds received influence the accounting practice?

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Comments for Designated monies reimbursing budget?

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Mar 09, 2022
 budgets
by: Dickie Pyle

on a line item budget does the amount designated in the budget have to be spent on that item only because the majority voted that way , if not and the elders can use the money for another item that they choose , then why have a vote on the budget anyway, if the elders can over rule the majority vote ?
Aug 03, 2021
 Designated funds
by: apwasden

The IRS says designated funds or to be used only for what it was designated. If a non profit receives funds that are designated for music it can only be spent on music or music related expeses, such as sending the choir to sing in a church out of state or to purchase an organ. I suggest you use designated funds first saving budgeted funds.
Oct 19, 2017
 Drag money
by: Anonymous

Track the designated funds separately. Use the budgeted funds first, and then use the designated funds after that. That way the gift is used for what it was intended.
Nov 13, 2016
 Be Careful
by: Anonymous

For tax purposes, it's important to have a stated policy to the effect that designated monies will not necessarily be spent on the designation, but it will be taken under advisement. This is especially important if the donations is going to be reported back to the individual on a givings statement.

See for instance: http://www.churchlawandtax.com/blog/2013/february/are-designated-gifts-for-individuals-tax-deductible.html
Jul 01, 2013
 Designated Monies Reimbursing Budget
by: FiscalSolutionsLLC, NJ

Normally, when someone contributes to the church for something already in the budget, it is the funds that provide for that budget, not extra funds. The budget is made anticipating contributions to support it. So, the budget is expected funds to come in for it.
However, the appropriate governing body of the church (Board, etc.) can decide to increase the budget to provide the additional funds, if they wish and if it is permitted in the by-laws or the church's policies. FiscalSolutionsLLC.com
May 06, 2013
 Balanced Budget?
by: SC

We are struggling with this issue as well as we are trying to update our practices.

I think that is a dangerous practice, primarily because putting it into the budget negates the designated intent. Once money is in a line item in the budget, technically those monies can be moved around as needed to meet the actual operational needs of the church...which means that $2000 could end up being used for something else.

I feel that designated monies should be put into designated funds. However, church members should understand how those funds work. Having funds that are too specifically designated simply ties the hands of the treasurer and finance committee. Having funds that are more general in nature, such as Benevolence, Building, Youth and Children leaves a lot of leeway for those who have to find funds to make ends meet, yet allows members to contribute to their favorite ministries.

May 09, 2011
 I'm Not Sure
by: Nazman

I'm not sure this answer actually addresses the issue, although it comes close. To me, the issue is: Does the designated donation reimburse the account, or does it add to the budgeted amount. I think it does both: Since my church maintains one checkbook account, I track designated funds individually. This means that I subtract from the balance when there's an expenditure, and I add to the balance when there's a deposit designated for a particular fund. In other words, I let the bookkeeping take care of the issue. If the result is a figure greater than the budgeted amount, it increases the fund; if the result is less than the budgeted amount, it simply reimburses the fund.
Nov 17, 2010
 Designated monie
by: Kathy

I'm not real fluent in this topic,however, I would think that if a donor is giving a certain amount designated for a certain account, such as Worship, then that amount could only be used in the Worship account for Worship expenses. That way the donor can see that what he/she gave has actually went to the Worship account for Worship items and not say a building expense item. That is the way we do it at our church. When a donor gives an amount designated for food pantry, it goes into that account and is spent only on food pantry items.

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