- Getting overall Income Statement for the non-profit: Even though you are keeping separate Income and Expense accounts for events as well as keeping the funds for building the new wing separately, you still need the overall Income Statement for the non-profit for tax returns, audit, annual report, and other purposes.
- From the menu, select Reports | Income&Expense | Income Statement. In the Report Options dialog, in the Accounts tab, you will find that all Income and Expenses accounts have been selected by default. In the General tab, make sure the start of the year and end of the year are selected. Click OK to see the Income Statement for the entire year covering all accounts, as shown in the following screenshot.
Non-profits tend to work with a lot of volunteers and some of them may be occasional volunteers. This is another reason why it is harder to do bookkeeping for a non-profit. Keeping track of expenses and paperwork is a huge challenge with a transient workforce. Ask any accountant of a non-profit. And, while you are talking to them, ask whether a non-profit is allowed to make a profit. Of course, you should be prepared for a sudden shift into the accountants' lingo and, especially, the non-profit dialect. How would you know you are there? When you hear profits being referred to as surplus.
Yes, non-profits are allowed to make a profit, except it is called a surplus now. Not just allowed, but encouraged to generate a surplus. Only then the non-profit can ensure its survival and growth, and be in a position to deliver whatever services the non-profit set out to deliver to more of its target population. However, the surplus cannot come out of unrelated business income. In which case, not only the IRS may want its cut, but also the tax exempt status may be at risk as well.
Tip
Making reports presentable
As we pointed out earlier, when you run reports, you may find that 'Donors' are called 'Customers' and Pledges' are called 'Invoices' and other such anomalies. Thus, even though you may get the right numbers, you may find that the labels and headers are not right. You should plan to export the reports to HTML, open it in your favorite spreadsheet program and change these, as needed, before printing and distribution. However, please note that only the tabular report can be exported, not the chart.
Let us say your process is that you get pledges of donation from donors first and later they make the actual payment. When you get the pledge, you can invoice them and show the amount as receivable. Later, when they pay, you can process the payment. Similarly, at the time grants are awarded, you are unlikely to receive the money. You can book that into a receivable account. You may have to do a lot of paper work and follow other processes to receive payments. Also, you may receive these payments in many installments. You can keep showing partial payments received against the original invoice you created at the time of the grant award.
Tip
Handling multiple grants from the same foundation
When you receive multiple grants from the same foundation, you can make use of a feature of GnuCash called Customer Jobs. Each grant can be treated as a job. This approach will allow you to get a separate report for each job. This will allow you to account for each grant and the corresponding expenses separately from other grants from the same foundation. However, be aware of the limitation that there is only one job report. Please check and make sure this report will meet your needs before jumping in.
If your programs have special requirements such as stringent reporting or the need to be grouped differently or require program level accounts to be maintained for audit purposes, you may want to consider maintaining separate GnuCash accounts for each program.
If you decide to use multiple sets of accounts, you will have the following options:
- In the first approach, you may decide to maintain a set of accounts for the organization as a whole and separate books for the major programs that require separate accounting. This will involve duplication of work, because transactions have to be entered once in the organization's account and again in the applicable program.
- In another approach, you can choose to account for program-specific transactions only in that program. Only non-program specific transactions would be entered into the organization's book of accounts. However, there will be some number of cross charges. Also, to arrive at the overall organization's financials, you have to consolidate all of these accounts in a spreadsheet, outside of GnuCash.
Here is a list of frequently asked questions about using GnuCash for non-profit accounting and our answers:
- Q: The non-profit for which I am the treasurer has a large number of members. We want to send invoices to them twice a year for membership fees. Is there a way to generate invoices in bulk?
- A: No, invoices can only be done one at a time in GnuCash. You may have to rely on an external program to generate invoices in bulk, using the mail merge capability of a word processor such as OpenOffice.org Writer or MS Word.
- Q: Will I be able to create budgets for events and run budget vs. actual reports?
- A: Yes, as we saw in Chapter 7, Budget: Trip Planner for your Business, GnuCash allows you to create several budgets and save them. If you need to create a budget for an event or a project, you can do that. Then, when you create the budget report, you can select only the accounts pertaining to that event or project.
- Q: I need to have a Donor ID in order to keep track of pledges and donations from individual donors. How can I do that?
- A: You can set up separate accounts for each donor and give an Account Code for each account. However, the better option would be to set up each donor as a customer. As we saw earlier, GnuCash will automatically generate an ID for each customer. Alternatively, you can assign your own ID.
- What should be the Parent Account for creating a separate group of accounts for an event or a project?
a. New top level account
b. Placeholder account
c. Event account
d. Project account