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TO: Interested Onliners FROM: Jim Bramer, Retired Auditor-CPA
RE: RE: J I Ms J R N L for the months of May/June 2010 FILE: 2010/0506-10/jrnl
(01) Scrip Fund Raising Program (01)
This is another "Fund Raising" effort at a Ministry (Church, Christian School or applicable tax-exempt Non Profit Organization). A “Scrip Fund Raising Program” happens at a Ministry when participants buy via the Ministry various normal products from applicable vendors and a portion of the participant’s payment stays at the Ministry.
Example, you go to the Ministry and buy the equivalent of a Gift Certificate from the applicable vendor for $100.00 and some $5.00 stays at the Ministry. Ministries take part in a “Scrip Fund Raising Program” via at least the following two Methods:
The Ministry takes the $5.00 equivalent and places it into some type of “Pending Account” by the Participant’s name and the Participant (not the Ministry) determines how the Participant’s accumulative balance is to be used at the Ministry. The Participant’s use options of the accumulated $5.00 equivalents might include:
- - - - - - - TAX DEDUCTIBLE - - - - -
>> Use it for a Church’s Mission Trip – as part of their fund raising agreement or toward what someone else must raise for their trip.
>> Use it to fund a Deputizer account. See editorial below.
>> Use it as if you made a donation to any of the Ministry's pre-approved Special Projects/Endeavors or to their General Fund.
- - - - - - - NOT TAX DEDUCTIBLE - - - - -
>> Use it to cover any of your Church Event costs --- examples are Women or Men’s Events, Children’s Camps, AWANA or Vacation Bible School.
The above $5.00 comes to the Ministry as would a normal "Fund Raised" income and the Ministry determines how it is to be used.
As you can imagine, METHOD ONE requires lots of finance record keeping and management. Generally we recommend that a Ministry would have its own set of QuickBooks (QBs) as Scrip participants use Web/Internet resources to: >> Market or sell Online >> Order/obtain/mange Inventory, >> and do the needed Scrip bookkeeping. Plus, there is the general idea of volunteer Managers, Bookkeepers and Logistic Managers and Buyer/Participants work from their homes via the Internet as they are involved in Scrip endeavors.
Below is an example of a Ministry’s annual recap of the Scrip Fund Raising Program:
Number of PARTICIPANTS
Annual Scrip Buying Volume
Scrip Credits Earned
Scrip Credits Used
Excess Carried Forward
Beginning of Year
End of year Available Credits
Here are some more links about “Scrip Fund Raising” matters: Credit Cards Receipts Scrip Issues at a Church Scrip Fund Raising Scrip Store and the Internet . Use of QuickBooks (QBs) aspects Go Here and Here QB Report Samples: Go Here and Here
02 - Church Adult Groups and Finances (02)
Maybe you can identify ..... the Adult Classes at your Church takes a weekly offering and they use the proceeds for their personalized endeavors - often a project that they identify with, etc. They also have a variety of Class Events where money is collected from Class participants to pay for its costs, etc.
Our recommended Adult Class "Finance Policies" include at least the following:
1> They do NOT have their own checking account. This requirement gives credence to the need for the Board of Leadership to be in control of all monies at the Church .... not the Adult Class per se.
2> If the projects of the Adult Class include funding a Missions Committee's endeavor (like a special Missionary project or even providing the monthly support for one of Church’s Missionaries, etc.) they must have advance approval of the Missions Committee (or the Board of Leadership's approval, etc.). Why? Again, the Board of Leadership, or the applicable sub-committee, must ultimately be in charge.
3> The money for an Event (or one of their social activities, etc.) of an Adult Class does NOT flow through the Church. Checks are made payable (or cash is given) to the Event Coordinator and NOT to the Church. Why? Such monies are personal expenses and this process reduces the possibility that such money is claimed as a tax-deductible donation or becomes a part of the Church's giving records.
03 - Accounting for Furniture/Fixtures/Machinery/Equipment/Land/ Bldgs and Deprecation, etc --- Dialog with Onliner. (03)
I am preparing an annual report for our Bank that they request annually because we have a loan on our church building. I have some questions on how to do the Fixed Asset section of the Balance Sheet; especially depreciation.
From Jim Bramer: I am so pleased to learn that you are pursuing the accountability of such matters ….. too often they are not cared for, etc. Please initially take the time to digest the following Link contents:
I have a complete list of all of our furniture/equipment (beginning about 2001) along with the date purchased, the cost, etc., but I am unsure what should be included and depreciated for the report. From what I've read it must have a useful life of at least one year, but is there a minimum dollar amount as well?
From Jim Bramer -- Great !!! – that sounds like one of the projects mentioned in one of the web Links above re physical inventories of equipment, etc.
How do you determine the life? Is there a set amount of years for each type of item or can this be estimated?
From Jim Bramer --- As indicated in one of the web Links above, you come up with a very generic life grouping and apply the mentioned block type of depreciation, etc.
If something is purchased during the year, do I pro-rate the depreciation?
From Jim Bramer --- I would not bother, etc.
If it is an item that has been donated, do I estimate the value? Or if it is something that has been purchased at a very low cost (ex: auction) but valued much higher, do I list it at market value or purchase price?
From Jim Bramer --- You would attempt to place everything at what we call its “Fair Market Value – FMV” or what you would have paid for it in the open market. If this happened during the current year you would have non-cash gift income reporting matter to consider, etc.
For our church/land, can I use the appraised value (church/land combined) instead of actual costs? Or should I be separating the two?
From Jim Bramer--- One of the Fixed Asset categories is “Land and Building” and I would clearly separate the known (or guess-timated) costs of Land and Buildings and depreciate the Buildings portion only on the basis of its separated cost. As a separate piece of information within the financials you could mention its current appraised value, but depreciation is construed to be "future allocation of the original cost, etc".
04 -- Modernization of Accounting for Church Receipts - Another Dialog with an Onliner (04)
From Jim Bramer:
I join you in being thankful for the two “Counting Teams” there at the Church-- made up mostly of volunteers -- who do at least the following:
>> Safely process the weekly donations and receipts
>> Count/proof the money received
>> Prepare/proof monies going to the Bank and safely get it there ASAP
>> Post/proof to the “Computerized DonaMail” system
Which ultimately provides you with the needed accounting information of “why the money came in” and “who was involved, etc.” See more detail about this topic when you Go Here. Below is what is found in one Church’s "Finance and Policies" manual.
>> All Sunday monies are to processed so that the bank deposit is made no later than the following business day.
>> There should be a minimum of three Counters; only two can be related.
>> Ideally, there should be more than one Counting team and the teams rotate.
>> Monies collected during the week should either be left at the office or placed within the Drop Box, or Drop Safe.
>> It is against our policy for monies collected during the week to remain at someone's home.
Yes, Jim, I look forward to discussing with you how we can do much of this by effectively using contemporary resources like what you mention within context when a person Goes Here and reads about some of your thoughts about being "Old Fashioned."
What "modernization" can we pursue re handling the money that we receive? Or this "modernization" effort equally applies to not just the money that we collect on a Sunday, etc.
It would seem that we should maximize the use of staff trained Volunteers and minimize use of Paid Staff in this overall effort. Of course, we need to fully use such tools as mobile-laptop computers and scanning devices.
Well, as we all know, there is a variety of issues related to such matters but initially we need be sure that there is in place the applicable Internal Controls that includes the "Subsidiary Accounts" and "Control Account" process. Or the Ministry should have something like an Excel doc where you record the total of the donations (Control Account) that come in for the calendar year by date and source. Then each week you post to the individual Giving records the (Subsidiary Accounts) within the DonaMail system for that calendar year and arrive at a grand total of such postings to all of the Giving records for the calendar year to date. This grand total of the (Subsidiary Accounts) and the running balance of the "Control Account" must agree to insure internal control compliance.
OK ..... this “Control and Subsidiary” proof process is a bit new to me, but I can visualize its value. But let's return to the topic of the use of the computer and related resources as we modernize our accounting and related administrative matters of handling all money that comes into our Church.
Great ---- as covered in some detail when you Go Here, you will need to relate to all of the following:
>> Encourage people to come to your website and make arrangements to make repetitive Online Donations (occasionally make a one-time donation) as detailed when you Go Here. Then you make full use of Plastic that includes both eChecks (in essence the Church writes a pre-approved check on the Bank Account of the other party) or add to their Credit Card account. Please Go Here and read about a suggested vow that the donor makes to you and the Lord about their use of Credit Cards at your Church. The obvious advantages in the use of such Online resources are that the ministry sees that the donation comes in – not the donor and the Ministry does NOT take any steps to see that the money gets into the Bank. Which is a tremendous internal controls plus and, of course, this means fewer tasks for the Counting Team.
>> The Church makes full use of what is called the “Remote Deposit Capture - RDC” system. As you know the bulk of both Donations or Event receipts flow to the Church via checks (and not green stuff or cash) and via this RDC system you do NOT have to physically take the money to the local Bank (or hire someone like "Brinks" to safely do this). This RDC process is a banking service that allows you to scan checks and transmit the data to a bank as you create a digital deposit. This digital deposit data is then transmitted (usually over an encrypted internet connection) to your bank (Please Click Here and learn how this is done at ECCU) as they accept/deposit this money to your account. The benefits of this service includes such aspects as: improved logistic capability – no transportation effort, more convenience along with overall money movement safety and, of course, a variety of improved finance internal controls issues. It is interesting that RDC has been called “The most important development the (U.S.) banking industry has seen in years” by the Federal Reserve and others. Nearly all of the top banks in the USA have either just launched the service, or are well on their way to doing so.
>> The tasks below could involve steps that prove that you have entered everything properly into the DonaMail file. You will need to thoroughly go through the matters that follow as you personalize this entire modernization process in meeting your unique needs and circumstances.
01> Have an appropriate group batch proofing system
02> Full use of batch proof hard copies (or be able to view on screen) from what was posted into the DonaMail file back to your original documents or information.
03> Fully account for total amount of the dollars that were posted to the DonaMail file.
04> The use of Giving Numbers “Hash Totals” as another proof purpose, etc.
05> Making full use of mobile laptops on Campus that link to your DonaMail system
06> Prove to non GPFund designation information, etc;
07> Use of a "Hash Totals" process re such non GPFund designations .
08> Of course, proof to the money that has gone to the bank via the “Remote Deposit Capture - RDC” system discussed above, etc.
09> Make sure that everything agrees with the total batch dollar amount posted into the DonaMail file.
10> Look into the possibility of Team members working remotely from their home as to non-cash matters rather than using the Ministry’s mobile laptops on campus.
11> We need to discuss the best way to handle your Online Deposits which flow directly to your Bank as such amounts are placed into a “Pending or Suspense” account awaiting batch entry and proofing into the DonaMail system or into the appropriate Events account.
12> Be sure we discuss bar coding resources within context of all of this as you group a unique batch of donation envelopes and take the above steps.
>> The bulk of your receipts/bank deposits will be via Checks that you process via the “RDC” system discussed above. So the Church would have to determine how best to batch and proof Cash, or non-checks, receipts that will weekly be taken to the Bank and deposited manually. Remember all incoming monies are to be deposited in the Bank …. you do NOT use such receipts for matters like Petty Cash or the like. Please discuss with me how you might cash a Petty Cash reimbursement check from such Undeposited resources. I look forward to finalizing these vital matters with you.
05 - Click below for Potentially Helpful Online Online Link Contents for JIMs JRNL Readers: (1)
Christian Computer Magazine/CCMag - "Church Management Software Feature List"
Ordained Ministers/Pastors and IRS Form 1099-Misc.
E-Give and Take --- via Your Church.net
IRS Publications pertaining to Ministries
Charities face more reporting rules
Encouraging Christian Generosity
CCMag Dec 2009 Issue
ECFA The Impact of Health Care Reform
Basic Church Accounting
Float Management or SWEEP Issues
Expectations of Bee Tees (Bookkeepers and Small Ministries Board Treasurers)
Plastic Buying and Vendors
Microsoft Software Donation Programs via Tech Soup
06 - Click below for one of my editorial publications, Please "Click On This Line" for a complete list. (05)
Use of "Scrip" to raise financial support for a Missionary
07- Click below for one of my "Ministry Finance TRUISMs - or precepts/beliefs/principles - Please "Click on This Line" for a complete list.
Depreciation -- this is a once-a-year GAAP year end required accounting process
08 - We have some free WebBOOKs --- Go Here for a list.
09 - Bible Verse and/or Prayerful Thots (3): "Jesus Savior Pilot Me over Life's Tempestuous Sea" ... please Lord!!! In Thy precious Name I pray. Amen.
This "Blogger" like endeavor allows me to share some personal comments/thoughts as to Ministry Finance issues. For a topic alphabetical list in earlier JIM's JRNLs. editions, please Go Here. If you would like to receive the next JIM's JRNL edition, please join the following Yahoo Group: ---- http://groups.yahoo.com/group/JIMsJRNL/. Caution --- the non www.bcidot.org web links that I reference herein do NOT necessarily imply my endorsement. Further, if any of these links do not work, let us know which one at Jim@bcidot.org . Lists of our www.bcidot.org articles (or Web Docs), can be found at 9708, 9709 and 9710
Probable "Ministry Finance Lingo", or "Frequently Used Vocational Terms" used herein, appear below:
BLVR = Someone who has accepted Jesus Christ as Lord and Savior, CBA = Church Business Administrator, CBAer; CMS = Church Management Software/System; CPA = Certified Public Accountant; GAAP = Generally Accepted Accounting Principles/Practices; GPFund or GPF = General Purpose Fund; MFTeam or MFT= Ministry Finance Team; QBs = Quickbooks; RPFin = Righteous Personal Finance , SPFunds or SPFs = Special Purpose Funds
ABOUT US | OUR PURPOSE | TABLE OF CONTENTS | SPECIFIC SEARCH MATTERS | HELP DETAILS | FUND ACCTG VIA COMPUTERS | GLOSSARY
Click Here and go to a list of earlier JIM's JRNLs - Contact Jim@bcidot.org
This document was updated last on: July 09, 2011