Self Funding Church Activities     5023-02  ZZchu

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                            TO:  Interested Church Ministries                                                                                  FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                                            FILE:  5023-02/Chu

                             RE:  Self Funding Church Activities                                                                              Originated:  October 2001


    Below is a hypothetical Online Email thread (THRD) between   Jim@bcidot.org and probably one of the these Ministry MFTeam members: PAT (Ministry Executive), LEE (Ministry Volunteer Treasurer), and FRAN (Ministry Computer Bookkeeper)  Click here and go to List of threads (THRDs) at www.bcidot.org


From:  Fran - 
    Jim, at our church we have concluded that people should pay something for certain of our activities - we call them  'Self Funding Activities.'  Do you have any comments about how to account for the finances.  
      

            From:  Jim@bcidot.org
    Yes .... first of all I commend you for doing this .... I agree with your leadership that some, if not all, of your activity (or event) costs should be born by the participants and not be paid by the Church's General Purpose Fund.  What specific Church activities are we talking about?         

From: Fran --
    The most prominent ones are children's activities like Vacation Bible School and AWANA, but there are also adult programs/sporting events; also money collected for our folk going to various Church Camps/Conferences, etc.  Many of them are partially funded via the Church's Operating budget, etc.  By the way, Is this really Church income or should it be handled like we handle Church expense reimbursements? 

       From: Jim
    My preference is to handle them as expense offsets/defrayments .... and not classify them as  income per se.  Even to the extent of having these payment by participants (let's call them Self Funding Proceeds) appear right next to the costs of such activities.  Restrict the "Church Income" category for Donation Income and other things like Interest Income etc.  Click here for Church Big Pix info; see below for a portion of this report that points out how such Self Funding proceeds, or Defrayments, appear, etc.

Ministry

Special

General

Gen Fund

Totals

Funds

    Fund

   Budget

Variance

Revenue:

$1,010,758

Donations

$103,168

$907,590

$9,297

Other

$9,297

$0

$1,020,055

Total

$112,465

$907,590

Expenditures:

$380,539

Salaries/Benefits

($1,436)

$381,975

$383,651

($1,676)

$43,869

Church Office Exp

$43,869

$50,048

($6,179)

$98,106

Property/Facility Exp

$5,846

$92,260

$90,252

$2,008

$138,773

Mission Support

$48,223

$90,550

$91,450

($900)

$174,127

Ministry Expenses

$19,144

$154,983

$153,932

$1,051

($25,753)

Defrayments

($23,330)

($2,423)

($1,600)

($823)

$145,000

Debt Service

0

$145,000

$145,000

$0

$954,661

Total

$48,447

$906,214

$912,733

($6,519)

$65,394

Excess Revenue

$64,018

$1,376

From: Fran --
    Looking at the information above, I note that most ($23,330 compared to $2,423) of the Self Funding Activities (Offsets) appear in the Special Purpose Funds  (same as "Special Funds" per above) area of the report; please explain this to me.

          From: Jim --
     Yes, the larger Self Funding Activities are managed as individual Special Purpose Funds since it is easier to account for all costs and proceeds in one high profile place.  Plus the Activity Managers and the Ministry Finance Team can readily see the Activity 'bottom line'.  Other issues are:  1>  Ask us about a filtered and memorized QB SPFund Activity report, and 2> At the fiscal year end, some Activities have not yet happened and they have prepaid proceeds or cost carry-overs; at the end of the Activity the excess of expenses, or proceeds, needs to flow back to the General Purpose Fund.  Any anticipated excess of expenses are General Purpose Fund approved annual Budget line items.
  Since QB does not do Actual to Budget reporting of Special Purpose Funds, you should provide this via an Excel document.  Another option is to have a separate Self Funding Activities QB Company for the reasons explained within
 5025.

From: Fran --
    Do these Activities pay for use of the Church facility or any other type of overhead costs?

         From: Jim --
    Generally speaking the Self Funding proceeds are designed to pay only for direct activity costs and there is no special assessments for Facility use or other general Church expenses.       

From: Fran --
    What about keeping track of what each participant has paid or yet owe?  Since we use QB, or QuickBooks, do you advise some type of QuickBooks Accounts Receivable system to accomplish this?

            From: Jim --  
    You are correct ..... you need some way to monitor if Activity participants pay what is due the Church.  I do not recommend that you integrate such an endeavor within your usual computerized accounting system like QB, or QuickBooks, as it creates too much "clutter."  If you do use QBooks to help you keep track of these things, then, as mentioned in  0611  below,  it should via a separate QB company, etc.  This method is recommended when the Church has a full-time Computer Church Bookkeeper using QB.  
    Let us know at    Jim@bcidot.org if anyone needs more info about any of these matters.


                        Please note additional Web Links below:


     Please Click here for list of Church resources here on www.bcidot.org.   The bulk of this Publication originated in October 2001 and was UPTD: March 09, 2012  .

ABOUT  US   |  OUR PURPOSE   |  TABLE OF CONTENTS   |  SEARCH  MATTERS  |  HELP DETAILS   |  FUND ACCTG VIA COMPUTERS   |  GLOSSARY