Happy Holidays everybody! Two quick updates for the close of 2012 and kicking off 2013:
End of Year Donations
This comes up every year, when do you record a donation received in 2013 but dated 2012, and your fiscal year closes on December 31st? Click here for a post about that issue.
2013 IRS Mileage Rates
The IRS has updated them as follows:
Beginning on Jan. 1, 2013, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
- 56.5 cents per mile for business miles driven.
- 24 cents per mile driven for medical or moving purposes.
- 14 cents per mile driven in service of charitable organizations.
The rate for business miles driven during 2013 increases 1 cent from the 2012 rate. The medical and moving rate is also up 1 cent per mile from the 2012 rate.
Click here for the full article.
Is the end of the year the end of your year? We get questions like this all the time:
Question — The end of our fiscal year is December 31. Our offices our closed from December 31 through January 3rd. If funds are sent on or before December 31 but not received and deposited until after January 3, do those funds get credited for the previous fiscal year as a donation?
Answer — You should set a cut of date in January for when you start recording gifts as 2011 rather than 2010. A week to ten days in is usually sufficient. If funds are sent prior to 1-1-11 (I prefer to use the post mark on the envelope as a guide rather than the date on the check) I would definitely honor those as a 2010 contribution.
You would record those as 2010 income even though you deposit them in 2011. In QuickBooks, you would list each of the checks as a sales receipt and date them for the appropriate December date and have the funds go to Undeposited Funds (you may have to create or activate that account). Then record the bank deposit of those funds on the day they were deposited. The income matches the donor intent and your checking account will reconcile up nicely to the bank statement. Then all you have to do is get the donor thank-yous out so they can prepare their tax returns.
Other ideas out there? Questions? Ask them or tell us in the comments below.
A question came through my in-box a while ago and made me realize that I should clarify some terms that I think we hear a lot in nonprofits. Here is the main part of the email:
When a member joins our nonprofit they are required to provide a membership fee which is refundable in full if they move out of the neighborhood. Because these fees are refundable (i.e., deposits), would they be considered restricted funds?
The short answer is no, and for several reasons. #1 – the monies received were probably not contributions with any donor restrictions on them so would not be restricted funds. #2 – These sound like deposits that they have to hold onto and not spend so they can give them back if need be. That would not be considered income so could not be restricted.
Restricted is a word we hear quite a bit in nonprofits when it comes to money. So is unrestricted, conditional, temporarily restricted among others, and with the above email in mind I thought I would define a few terms.
Restricted — as in restricted income, restricted donations, restricted revenue. The world of nonprofit accounting is made a touch more complex because donors can tell us exactly what they would like us to do with the money they give us. They can restrict the use of the funds for specific purposes. “I like your organization and I want to give you money to operate this program.” That is a restricted donation. Your nonprofit is given money for a purpose that is narrower is scope than your organizations overall purpose. You can ask for restricted donations, “Please help our organization by giving money to support this program.” The donor imposes any restrictions on the funds they give you. If they don’t the donation would be considered unrestricted. Earned revenue is unrestricted. Most government money is unrestricted – they are not giving you any money, they are hiring you to perform a service and will only pay you if you perform the service.
Conditional — not the same as restricted. Conditions are imposed by donors on funds they want to give you. Matching funds are a common example; you’ll get $20,000 if you raise $10,000. Even if you already have the $20,000 sitting in the bank it is not yours (it is in fact a liability — money you owe someone else) until you raise the other $10,000 and satisfy the conditions of the grant.
I’ll do some more terms in later posts but if you have any questions about the above items or have other questions leave them in the comments section below.