Bookkeeping guide
Moving money between funds
When a transfer between funds is appropriate, how it shows in the reports, and the difference between a transfer and a loan.
Sometimes the board moves money from one fund to another. For example, the General fund gives $5,000 to the school, or sets money aside for the roof.
Transfer or loan?
- A transfer is a gift from one fund to another; it isn't paid back. It shows on its own line, Transfers between funds, in "How each fund changed". It isn't income or an expense. See Read your reports, and drill down to any amount.
- A loan is to be repaid. The lending fund shows an amount due from the borrowing fund, and the borrower shows an amount due to the lender, until it's paid back.
Good practice
- Get the board's approval first, and note the meeting date in the entry.
- Never transfer out of a fund restricted by donors to cover something else. That money must be used for the donors' purpose. See Fund accounting in plain words.
- The bank balance doesn't change; only each fund's share of it does.