Financial management of the Operations of a
Church is like the
"Photo" analogy of two sides of the same coin. Maybe even
"two sides of the same
fence" as to the status of your finances
at a point in time. Please liken Side "A"
- Liquid Assets Management to that associated with
resource management in general while
"1" relates to Imposed Limits Management
that is ever before Churches as part of their
responsibly. To further this analogy, let me share:
S I D E " A" - LIQUID ASSETS MANAGEMENT
SIDE "A" shows the Operation's pool of liquid assets (Please note that I have not included any assets and related liabilities as to "Land, Buildings and Equipment", etc) as recapped below by Balances at a point in time of the Sample Balance Sheet - Photo, . This responds to the "WHERE" are the assets, or money, issues --- again, at a point in time.
Checking/Savings @ Credit Union
Money Market-rate x.xx
CD-rate x.xx due xx/xx/xx
CD-rate x.xx due xx/xx/xx
Office Petty Cash
140 Memo Accts re Fixed Assets 0102
SCRIP Store Advance
Total Asset Pool
The contents of this "Asset Pool" needs to be prudently managed in a secure fashion so that these balances earn a yield (Interest Income) between the time they are on deposit and when they are ultimately used to carry out the purpose of the Church. Please Go Here for some details about all of this. We recommend short term investments in what we call replicating financial institutions. Make every effort to work with a financial institution that has a SWEEP system whereby your checking account at the Bank always shows virtually zero at the end of a business day because residual balances are always in a Daily Interest Bearing Savings (DIBS) accounts of the appropriate type.
TRUISM ---- Get your "Undeposited Money" on hand to the Bank ASAP; further, make sure all Bank Account Balances are earning the maximum amount of yield.
Please remember that this SIDE "A" has a "pool" perspective .... for uncluttered management purposes, none of the short term investments are "married" to a specific Fund or obligation shown below within SIDE "1" . Sometimes it is appropriate to distribute their allocated share of the pool's yield to applicable Fund Balances within SIDE "1" below.
Other unique management features of SIDE "A" include:
Utilize Sweep arrangements when possible; Comply with Internal Control issues whereby undeposited monies are deposited ASAP
When automatic Sweep arrangement is not possible, each deposit ideally goes directly to a DIBS account (not to the checking account);
Then daily transfer funds to cover checks that daily clear the bank;
Have a safety-net Line of Credit (LOC) in case transfers are not timely made;
Make full use of Online services where you can at any time access and view your bank account status and activities.
Please Go Here for information about a BREC-SWEEP system whereby you manually do the sweep process at the same time as you do your weekly Bank Reconciliation.
S I D E "1" - IMPOSED LIMITS MANAGEMENT
SIDE "1" emphasizes the need to manage the portion of the Photo representing Obligations, plus Fund Balances/Net Assets with Imposed Limits ( it responds to the question of WHAT are these monies here for or WHY do you have these monies) that are assumed by the Operations of the Ministry. Please also know about the issues set forth when you Click Here. Please note the following samples:
Normal payables due to Vendors and to the Credit Card Company.
Monies temporarily held for others for whatever purpose.
Unspent Donor Preferences/Restrictions - Temporary; targeted for portions of the usual Ministry Operations or for ongoing Ministry Projects;
Plus monies SetASide from the operating budget for specified anticipated needs.
Board Discretionary - Unrestricted: or available as needed for operational budget to be determined by the governing board;
Please see sample below:
Payable to Vendors
Due on Credit Cards
Fund Balances/Net Assets:
Other Donor Designated
Special Missions Fund
Short Term Mission Trip
All Other such Designations
Total Net Assets
"Features of "Imposed Limits" management re SIDE "1" include such issues as:
In order to make informed decisions, your accounting system needs to provide daily knowledge of Obligations/Fund Balance status and activity - see above status sample..
The Ministry should have a Board policy as to the possibility of temporarily borrowing among the above Net Assets of $72,761 plus the Year To Date General Fund Excess of $46,587.
Any approved Year To Date General Fund deficit of the current year can not exceed the above Board Discretionary amount of $72,761.
For example, the usual way to process a check that you write is to first record it at your check stub (or equivalent) and reduce the Bank Account in Side "A" above. Then you simultaneously add it to the expenses in the General Fund or reduce the balances that reside in Side "1" above. For more info along these lines, please go to the lady that we respectfully address as ALICE when you Go Here .
Special Purpose Funds - SPFunds Portion of the Photo
This is what "FUND ACCOUNTING" at a Church is all about as it manages restricted or designated money; or it is to be used for a stated pre-approved Special Purpose. Such money is sometimes called "Spoken For Funds" --- please note that you can also abbreviate this as "SPFunds." Christian Ministries handle "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 "Outsiders", or donor, directed monies plus there are "Insider", or Board directed, monies SetASide for a stated purpose. Please Go Here for some more perspective on what is called S)PECIAL P)URPOSE FUNDS - SPFunds. The information shared Here might also be helpful. A related issue is that SPFund money comes in that is for Activity Reimbursement (or Defrayment) purposes. Please Click Here for more specifics.
Of course, being good stewards of these special fiscal resources give rise to the whole "FUND ACCOUNTING" issues that Churches must address.
General Purpose Fund - GPFund Portion of the Photo
This, of course, has to do with accounting for unrestricted/undesignated monies available for the regular operations by department of the Christian Ministry. This Board discretionary income is usually under some type of departmental expense "line item" Budget "control"; as apposed to "control" defined as: "if a SPFund has a balance, we can spend it." You will note that GPFund is singular, while SPFunds are plural.
With respect to a Christian Ministry's finances and these "GPFund" (we shalt) and their "SPFunds" (thou shalt) money management issues, some like the analogy that people are either "right handed" or "left handed" but we learn to use them together. Both of these "GPFund" and the "SPFunds" 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. Please Click Here. and notice the "total" and yet the "separate" "GPFund" and "SPFunds" activities as shown within the sample "Big Pix" report.
PHOTO (POINT IN TIME ) Report
This is a sample of the applicable "Actual to Budget" line item non-departmental GPFund Actual to Budget report.
GPFund 01/01/xx through 06/30/xx
401 Unrestricted Donations
500-Salaries and Benefits
640 Facility Expenditures
660 Generic Ministry Exp
800-Self Funding Activities
Ask us about using the QB Class feature to enable you to provide such "Actual to Budget" line item GPFund Budget reports for applicable operating departments. We often reference them as DAG reports.
Note below a sample report via QBs Fund Accounting Method One of what all of the SPFunds started with 01/01/xx and why they changed throughout the "PERIOD IN TIME" involved --- though 06/30/xx.
SPFunds) Video (Income Statement) - since 01/01/xx through 06/30/xx
01 Beg. Bal. 1/1/xx $ 134,202
40 SPFunds Income
44-Restricted Donations 171,978
48 Other Income 2,369
49-Interest Income 6,960
Total 40 SPF Income 181,307
50 SPFunds Expenditures
61 Operating Exp . (82,912)
63 Travel Expense (9,105)
64 Bldg. Maint . (25,700)
65 Grounds Maint. (2,065)
66 Modular Expense (14,104)
67 Help Provided (15,968)
81 Expense Reimb/Event Fees 60,599
71 Grants (78,341)
91 Internal Transfers 25,936
92 Fixed Asset Acquired (31,350)
94 Debt Service (1,179)
Total 50 SPFunds Exp (186,140)
SPFunds Ending Balances (1) $ 129,369
(1) This must agree with the total SPFunds balance as shown within the Church Photo report, etc. The overall format above can be used for one or more individual SPFunds. Ask us at Jim@bcidot.org for an example of a columnar report showing this overall information by each SPFund. Also ask us about QBs samples for non Church Ministries
B I B L I C A L A D M O N I T I O N:
You say: "I can not do it" ----- The Lord says: "You can do all things through me� (Philippians 4:19)