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How to Track Restricted Funds in Quickbooks: Part 3 - Reporting

best practices board finances foundation reporting Nov 22, 2023

How to Track Restricted Funds in Quickbooks

Part 3: Reporting

     The most common questions I keep hearing from my financial consulting clients involve how to set up QuickBooks to track restricted funds. So, I've been tackling those questions in a three part series, and today we’re concluding with a tutorial on how to report on the restricted funds that you've been entering so that you can automatically track their balances. 

Restricted vs. Unrestricted Funds in Nonprofits

     As a reminder, “restricted funds” is a generally accepted accounting principle that requires nonprofits to report the balances (gifts they've received minus outgoing funds) for funds that are either restricted by donors or have no donor restrictions. Your organization may have both restricted and unrestricted funds, but they also might utilize only one of those categories. 

     Today’s tutorial is specifically focused on tracking funds with donor restrictions. As we discussed last week, we track restricted funds in Quickbooks by utilizing the “classes” feature in Quickbooks. (See how to set this up here and how to code these transactions here.) Please note that each category of restriction will need its own class. We can’t simply have one class for restrictions and one class without or our balances will not reflect each individual restricted account. Funds entered without restriction (not assigned a class) will ultimately be reflected under the “Not Specified” column in your reporting. 

Please refer to the video above for an in-depth walkthrough of a sample report explaining how to track the balances of restricted funds in Quickbooks. 

     I hope these Quickbooks video tutorials have been incredibly helpful for you and your nonprofit. I've tried to break it down into three bite-sized pieces, but I know every situation is unique, so I'm here for you if you’d like to talk about your specific situation! Schedule a call with me here so we can make a plan to address your unique needs.

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