Let us take a few scenarios of accounting challenges that are more commonly found in non-profits and see how best to leverage the features of GnuCash to meet those requirements:
- Non-profit scenario 1 - Income/Expense for an event: You are the treasurer for the non-profit, Save Our Souls (SOS). During the month of November, SOS plans to run a Holiday Fundraising event of buying Poinsettias and Wreathes and distributing them to the local community. You would like to track the income and expenses for the event separately, so that you can create a report showing how the event did financially.
- Prerequisites: Set up a new account hierarchy for SOS. You can use the Business Accounts as a starter.
- Create a new account - the Account Name should be Holiday Fundraiser, Account Type should be Income, and Parent Account should be New top level account.
- Create another new account Income of type Income with Holiday Fundraiser as the parent.
- Create two new accounts Poinsettias and Wreathes of type Expense with Holiday Fundraiser as the parent.
- Enter the cost of a truckload of Poinsettias and half a truckload of Wreathes and the transportation and loading costs in the appropriate expense accounts. As the stock gets sold, make income entries on a weekly basis. At this point, your account tree should look as shown in the following screenshot:
- From the menu, select Reports | Income &Expense | Income &Expense Chart. In the Report Options dialog Accounts tab Clear All, select the Holiday Fundraiser account and Select Children.
- In the Display tab, select Show table.
- In the General tab, select the Start Date to be Nov 1 and the End Date to be Nov 30 and the Step Size to be Week.
- Change the Report name to Holiday Fundraiser and click OK.
- You should now see the Income, Expense, and Net Profit by week, both in chart form and in tabular form. Note that this is for each week and not cumulative.
Note
In the previous chart, net profit is arrived at by subtracting the expense from the income. If the income is more than the expense, there is a net profit. If, on the other hand, the expense exceeds income, there is a loss, which is shown in the net profit column in parenthesis.
In this tutorial, we were not only able to account for the income and expenses of one event separately, we were also able to perform further break-out analysis of those numbers. This is helpful to make important decisions such as:
- Whether the event is profitable enough to run it again.
- Whether there are other event options you have that are more profitable.
- If you are going to run the same event, are there improvements you can make regarding the ordering of supplies, scheduling of delivery, negotiating payment terms, pricing that can help improve profitability and cash flow.
Some non-profits largely depend on fee paying members for their income. Others may have donors who donate services, money, and goods. There are two ways of setting up donors and members in GnuCash:
- Each donor as an income account: Under the top level account Income, you can have Donations as a subaccount and each donor as a separate income account. This method may work if you have a handful of donors.
- Each donor as a customer: On the other hand, if you have a large number of donors, you may find it easier to create each donor as a customer. If you need reports on individual donors, you can run the Customer Report (Reports | Business | Customer Report) and select that donor in the Company field. Another advantage of this approach is, when you obtain a pledge from a donor, you will be able to raise an invoice and show this amount as a receivable for tracking purposes.