"Support groups may want to spend the year creating gift quality artwork in a co-op art class to sell at a holiday bazaar. Families can host a bake sale and present a spaghetti dinner in order to boost attendance. A gift wrapping table and live performances of music are nice additions to a holiday fundraising programs"-excerpts from a website providing fundraising event ideas for non-profits.
Non-profits, by definition, are not trying to earn a buck for their owners or shareholders. So, bookkeeping and accounting for a non-profit should be easier than for a business, right? "Au contraire, mon ami", as the fictional Belgian detective Hercule Poirot, might say.
Non-profits receive their funding from many different sources such as donations from the public, grants, investment income, fundraising, membership fees, and non-monetary contributions of goods. They also receive contributions in the form of hours and expertise, known as "in-kind" contributions.
Some of the donations, grants, and other funds provided to non-profits are tied directly to specific programs. This makes it obligatory on the part of the non-profit to apply those funds only to those specific programs. In addition, common expenses such as rent and salaries must be allocated to each funded program so that the accounts of that program can be prepared separately and sent to that grant provider or to those donors. Although the income statement and balance sheets include the same main categories for a non-profit as for a commercial business, being able to obtain detailed program level totals is a vital necessity.
You may recall the accountant's lingo that we referred to earlier. Well, there are also dialects within that lingo. This type of accounting is known as "fund accounting" in the particular dialect that non-profit accountants speak.
Also, many non-profits tend to depend on fundraising events, seasonal campaigns, and other such events. If you are the treasurer or another office bearer of a non-profit, you would like to account for the costs and income of each such event separately so that you can help decide whether these are providing returns in proportion to the effort put in and whether to repeat them again. If these expenses and income are buried in the overall annual income and expenses, such valuable analysis cannot be done and objective decisions cannot be made.
In this chapter, we shall cover:
- Adapting GnuCash for maintaining the accounts of smaller non-profits.
- Setting preferences in GnuCash and personalizing it to suit your specific needs.
- Protecting your data from unauthorized access and backing up your data to safeguard it from data loss or corruption.
So let's get on with it...
Before you start using GnuCash for a non-profit, you should know that there is no GnuCash version specially created for non-profits. We are going to stretch the business features of GnuCash to suit the needs of a non-profit. As a result of this, you may find the following issues, among others.
When you create transactions or run reports, you may find that 'Donors' are called 'Customers', 'Pledges' are called 'Invoices', and other such anomalies.
Also, as we said earlier, GnuCash is suitable for small businesses. By the same token, GnuCash may suit the needs of only small non-profits. Walk through the steps we have outlined and satisfy yourself that it will meet your needs, before taking the plunge.