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How to Track Restricted Funds in Quickbooks: Part 1- Settings

best practices board finances foundation reporting Nov 09, 2023

How To Track Restricted Funds in Quickbooks

Part 1:  Settings

     The most common questions that I’ve received since I started my consulting practice relate to setting up QuickBooks to fulfill the GAAP (Generally Accepted Accounting Principles) requirement on tracking donor restrictions. To help answer this common question, I’m beginning a multipart series to help you confidently meet your nonprofit’s need to track restricted funds. Today, we’ll begin this series by talking about the settings. 

What Are Restricted Funds in a Nonprofit? 

     Before we get into the nitty gritty of how to track restricted funds in QuickBooks, I think it's foundational to first establish what this even means.  What are restricted funds?  What creates them? Restricted funds are a concept that comes from Generally Accepted Accounting Principles that require nonprofits to report on two things- funds with restrictions and funds without restrictions. Funds with restrictions are those that must be spent on a specific purpose or specific project. Keep in mind that it is possible that in your organization, all of your appeals for support come in a way that is general to the mission of the organization. If that's true, then you have no restricted funds. Everything is unrestricted or without donor restrictions this will not apply to you. But for many nonprofits, they are receiving funds that have a restriction. Maybe it's for a capital campaign or a specific project or program within their budget. So, it’s very common for there to be a need to track restricted funds. 

     For a step by step tutorial on the specific settings to enable in Quickbooks and where to find restricted funds on your Statement of Financial Position, click on the video above. 

     If tracking donor restricted funds is still a daunting task and you’d like some one-on-one help to get you started on the right path, you can book a strategic consult with me here! 

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