Use Fund Accounting to Track Flows and Balances
Most congregations need to track income, expenses and balances of multiple accounts, including the main “operating” account where “undesignated” gifts are deposited, as well as a variety of separate, “designated” or “restricted” accounts. For example, when a youth group raises funds for a mission trip, a separate fund would need to be created to track related in and out flows and the resulting balance. This fund is designated for the sole purpose of the youth mission trip, and unspent funds need to be carried over into the future to that end. Endowment funds are examples of restricted funds that also need to track income, expenses and balances. This simultaneously tracking of multiple funds is called fund accounting.
Each additional fund that exists means additional complexity; one way to simplify your fund accounting is to seek out appropriate ways to close funds (like memorials) by spending remaining balances.
