observations are within context of working for
over four decades with small to medium sized Christian Ministries.
(sometimes called Non Profit Organizations - NPOs) are different from regular
Have a Ministry focus, or purpose, and
not a profit focus,
>> Deal with donors instead
of investors (shall we say "stake-holders"; not "stock-holders"),
>> Gather, or raise, Ministry Money via Donation/Contributions rather than
primarily via sales
of Products or Services.
Please read the following verses from the book of
as they are helpful to those of you who handle money and such things at
9:8-9 -- A wise
man welcomes instruction
10:17 -- Heed instruction
11:14 -- Lack of guidance causes failure,
many advisors make victory sure
12:15 -- A wise man listens to advice
15:12 -- A scoffer will not go to the wise
15:22 -- Plans fail for lack of counsel
16:3 -- Commit to the LORD whatever you
do, and your plans will succeed.
19:20 -- Listen to advice�and you will be
19:27 -- Stop listening to instruction,
and you will stray from knowledge
20:18 -- Make plans by seeking advice
24:6 -- For victory you need many
27:17 -- As iron sharpens iron, so one man
28:26 -- Trusting oneself is foolish, but those
who walk in wisdom are safe
RESTRICTED OR DESIGNATED MONEY MATTERS (202)
The first Ministry Finance "unique" matter that enters the scene is that
external money (mostly Donations) comes in for a
"restricted or designated" purposes;
or it is to be used only for the Board's pre-approved
stated special purposes. Plus
the Ministry itself often sets aside their discretionary money for
"restricted or designated"
Not too long ago I was talking with a
person in charge of a Christian Ministry and I was told that this
predecessor really goofed in money handling there. So much
so that it was the major reason that the Board had to let this person go.
No ---- this person did not do any stealing that would benefit them personally
>> Yes --- The General
Purpose Fund - GPFund - GPF (Singular)
was short of money and since it did NOT have internal (discretionary
SetASide money via the Board) money available this person used external
(from donors) Restricted
Special Purpose Fund-SPFund-SPFs
monies to pay what this person considered the necessary operating bills.
I did not get into all of the
details, but it is very likely that this person was in charge of a Ministry that
was NOT able to timely and appropriately answer this question:
Here for info re: "How much
money do I really have to spend this upcoming week for the appropriate
My prayer is that what follows
provides "Christian Ministries" with the means for them to timely
answer this and related questions.
FUND ACCOUNTING - (203)
So it is essential that you
a good grasp of what is commonly called
There is a lot of information available on the generic topic of
Fund Accounting. , but I
have tried to keep Christian
Ministry issues in mind as I have produced this eBOOK.
It is my view that
finance and accounting systems at a Christian
is synonymous with
as money is used for the usual operations plus money is
also used for pre-approved "Donor
and Board Restricted" purposes/objectives.
Throughout all of my eBOOKS (or WebBooks) I will frequently make reference to the
"01" and "02"
Please be sure you understand what they mean and how they apply in your
01 - SPECIAL PURPOSE FUNDS (Plural) --- SPFunds or SPFs
This money (mostly Donations) comes into the Ministry for restricted/designated purposes
or it is to be used for a
stated Ministry's Board pre-approved
Such money is sometimes called "Spoken For Funds" --- please
note that you can also abbreviate this as "SPFunds."
course, both the Special Purpose and General Purpose
monies below are all " Purpose Driven", if you please.
We have concluded that the best Fund
Accounting term for such responsibilities is "Special Purpose Funds
- SPF" Here are some of the
terms that I have encountered during my time in dealing with such
matters: 01>. Dedicated Funds; 02> Spoken For Funds; 03> Strings Attached;
04> In/Out; 05> Trust Funds; 06> To From; 07> Directed; 08>
Encumbered; 09> Non Avail; 10> Ear Marked; 11> Protected Funds; 12>
Impounds; 13> Committed and 14> Escrow. Such issues have been around
for a long time. See the "Obligatory" special purpose money
found in II Chronicles 34:9-11; or note the paraphrased portions below of "II Kings Chapter 12":
The Temple was still in disrepair, so
the King said to the Priests: "Why haven't you done anything about
fixing the Temple? Do not use any more of those receipts for the usual operating needs, but from now on use it to get the Temple in good
So the Priests set up a special
"Repair Fund" by making a hole in the side of a large chest and they set it on
the right hand side of the alter at the Temple entrance. The doorkeepers put the people's
contribution into this chest and this money was used just to repair the Temple.
Suffice is to say, almost all
"Christian Ministries" manage "Imposed Limits" money.
The dictionary defines "imposed" to include such things as:
to force or thrust something on oneself or on others; to put a burden
on. This comes about via "Outsider", or donor, directed monies plus there are "Insider",
or Board directed, monies
SetASide for a
The information shared
about "Two sides of the same coin" might
also be helpful as you digest all of this.
A related issue is that SPFund money
comes in that is for Activity Reimbursement (or Defrayment) purposes.
A ministry collects money to offset a
portion of the costs of an event or activity.
Church examples are AWANA and Vacation Bible School.
We recommend that you report only
real Income and reflect this type
of "Special Purpose Fund" activity
receipts as "Defrayments", or
as expense offsets (contra expense accounts)
and not income per se. Our experience is that such activities
are best managed by them having their own "Special Purpose Fund"
that may be partially funded from the "General Purpose Fund"
Here for more information about such Church operations
for more info on this topic.
Some Ministries buy specific
"General Purpose Fund" event material in
advance and then seek reimbursement, or defrayment
--- especially in small Church settings. We believe the
material costs should appear as an expense and the
defrayment appear, not as income per se, but as an expense
offset. Having both flow through the same "General Purpose
Fund" expense account does NOT fully report what
GENERAL PURPOSE FUND (Singular) - GPFund or GPF
This fund sometimes
goes by General Fund or Operations Fund, as it, of course,
has to do with accounting for unrestricted/undesignated monies
available for the regular operations of
the Christian Ministry.
Use of this Board discretionary income is usually under
some type of expense "line item"
"control"; as apposed to
"control" defined as: "if
SPFund has a balance, we can spend it." You will note
is singular, while
SPFunds are plural.
and view a sample actual to budget "line item" GPFund
and learn about a GPFund spending
"control" alternative to
the above "line item"
budget control method. This
especially enables you to know if you have money to spend.
This is accomplished, with fixed operational expenses in mind, by the practice of
of this GPFund discretionary income to Ministry operating departments, or
expense areas. If there is no
money balance on hand for that operating expense area, then no can spend, etc.
With respect to a
Christian Ministry's finances
and their GPFund (we shalt) and their SPFunds (thou shalt) money management, I like the analogy that
people are either "right handed"
handed" but we learn to use them together. Both of these
GPFund and the SPFund accounting functions are different, yet (like left or
right handed matters) they
are part of a Christian Ministry's single unified finance and accounting system.
and notice the "total" and yet the "separate"
GPFund and SPFunds activities as shown within the sample "Big Pix" report.
EXPENDITURES -- NOT EXPENSES (206)
matter is that Christian Ministries should use the term
than the term "expense" per se. This is
done because some costs of doing
business at a Christ-Centered Ministry are somewhat different and the term "expense"
can be misleading. Such
examples are shown below:
Operational "Expenditures" include obligations like
monthly Mortgage payments that include both Principal and Interest, but the total
obligation comes from operations income or the GPFund.
recommend that the budget "expenditure" line item have a generic title like "Debt
Servicing" and be for the total amount of the monthly payment.
principal portion will at least annually show up as a reduction of the liability account. Please
Go Here and see the discussion about a "Three Legged" accounting
entry whereby the principal reduces the liability now, etc.
Furniture and Equipment
sometimes include purchases of Furniture
and Equipment. Sometimes such "Expenditure" will be made from monies gathered specifically
for that purpose via a SPFund . But
what we often find is that the usual practice is to purchase
such items from the GPFund as a budget
expenditure line item.
All Furniture and Equipment costs should be added
to the Fixed Assets at least annually. Please
Go Here for
more information about Land, Building and Equipment and
related accountability issues. The Construction information
might also be of interest. As mentioned above, please
Go Here and
see the discussion about a "Three Legged" accounting entry
which capitalizes such transactions.
Sometimes a vendor requires you to pay for something in advance;
examples are insurance premiums and/or a deposit for a future event.
The usual accounting procedure is to place such transactions into what
we accountants call a "Prepaid Asset Account" and then you
allocate the cost to the respective future periods involved.
To accurately report the use of the Ministry's resources during the year
it is best to report this as another budgeted "Expenditure"
of the current fiscal year. Then, if material in amount, you
comply with this "Prepayment" accounting matter only
at the end of the fiscal year.
Operational "Expenditures" include
internal transfers, or
SetASides, from current
GPFund operations for future needs. Ask us about funding via the GPFund
certain anticipated major facilities repairs and maintenance -- or even
Depreciation --- not
is NOT a budgeted "Expense" or "Expenditure"
at a "Christian Ministry"--
this is also "unique" since it is only reflected at the year end as part of
that is mentioned below.
GENERALLY ACCEPTED ACCOUNTING
We accountants have
rules and regulations that are to be followed when accounting and reporting
of Ministry's financial
matters to applicable interested parties. Of course, like
many issues in life, we have an acronym for this; please
Go Here . Some other link
references to GAAP on our Website
are listed below: