In the world of nonprofit accounting, tracking restricted donations and grants can be a challenging task. However, Quickbooks Online offers a powerful ” Projects ” feature that can simplify this process. Here’s how you can leverage it.
What are Quickbooks Online Projects?
Quickbooks Online Projects is a feature that allows you to organize all the pieces that make up a project, including transactions, time, and running reports, so you always know where you stand with all your projects. Nonprofits can utilize projects for restrictions by setting up a new project for each grant or restricted activity.
Why use Projects and not Classes or Tags?
Quickbooks Online limits the number of classes, locations, and tag groups based on your account subscription type, however, projects are unlimited. Projects can also be tagged to Donors to track historical giving and grants. Classes are typically reserved for departments or true funds when your organization uses fund accounting.
Setting Up a New Project
To set up a new project, navigate to the Projects menu and click “New Project”. Enter the name of the grant as the project name and fill in other details as needed such as linking to an existing Donor in your database.
Adding Income to a Project
When you receive a restricted donation, create an invoice or a sales receipt and select the appropriate project from the customer field. This will ensure that the income is correctly allocated to the restricted fund. Consistency is key – make sure you have a system in place to check that projects have been assigned to all restricted donations and grants.
Adding Expenses to a Project
When you incur an expense that should be charged to a restricted fund, record the transaction (like a bill, check, or expense), and select the appropriate project from the customer field. This will ensure that the expense is correctly allocated to the restricted fund.
Managing Your Projects
You can view each project’s income, expenses, and profit margin on the project dashboard and reports. This will give you a clear picture of the financial status of each restricted fund. You can generate a Project Profitability Summary report to view all current balances of restricted funds and even run a detailed report to break down to which general ledger accounts those expenses are being recorded.
Closing Thoughts
Using Quickbooks Online Projects to track restricted donations can greatly simplify your nonprofit accounting processes. However, it’s always a good idea to consult with an accountant familiar with nonprofit accounting to ensure you’re following all relevant regulations and best practices.
We hope this information is helpful and encourages you to make full use of the features available in Quickbooks Online. If you have any questions or need further assistance, please don’t hesitate to reach out.