Bookkeeping guide
Fund accounting in plain words
What funds are, why each one keeps its own balanced books, and how restricted gifts must be handled.
A church holds money for different purposes: general ministry, a building project, missions, sometimes a school. Fund accounting keeps each purpose's money in its own set of balanced books, so you can always say how much belongs to each.
The kinds of fund
- For general use (unrestricted): the General fund. The board decides how it's spent.
- Set aside by the board (internally restricted): money the board has set aside, such as a roof reserve. The board can change its mind.
- Restricted by donors (externally restricted): the donor gave for a purpose, such as the building appeal. It may only be spent on that purpose. Changing it needs the donors' agreement.
- Endowment: given to be kept. Usually only the income from it can be spent.
Every fund balances
In Core1440, every entry balances within each fund, not just overall. Money in the Building fund is always matched by what the Building fund owns and owes.
When one bank account holds money for several funds, each fund owns its share of the bank balance. If an entry would leave one fund owing another, Core1440 records it on Due to / due from other funds. That account always adds to zero across all funds.
Example
The Smiths give $500: $300 for General and $200 for the Building fund, in one cheque.
| Fund | Account | Debit | Credit |
|---|---|---|---|
| General | Bank: chequing | $300.00 | |
| General | Donations: receipted | $300.00 | |
| Building | Bank: chequing | $200.00 | |
| Building | Donations: receipted | $200.00 |
Each fund balances, and the bank shows $500 in total.
Good practice
- Record the donor's purpose when the gift comes in. A designated gift recorded to General is hard to untangle later.
- Spending from a restricted fund should match its purpose. Keep the approval with the bill.
- To move money between funds by board decision, use a transfer between funds. See Moving money between funds.