Whats the difference between Funds, Categories, Category Connectors, Projects and Transaction Groups?
This article gives an overview of Funds, Categories, Category Connectors, Projects, and Transaction Groups, and provides helpful information on when and how you can use these.
Funds - funds are the 'pots' of value that exist on your Balance Sheet. Your Balance Sheet may be made up of cash (in-hand), investments, and assets. Irrespective of what type of value you're accounting for, this must be within a 'fund'. Most churches and charities have a 'General' unrestricted fund into which most of your income and expenditure will go. You may also have a number of restricted funds, where you have collected or been given money for a specific purpose e.g. you are raising money for a roof repair and receiving grants or specific donations for this. Finally, you might also have designated funds, for example for projects and events that you run or where you have money 'set aside' as reserves, and you wish this money to remain separate from your 'General' fund. Designated funds contain money specifically set aside as the result of an internal governance decision (discretionary) and therefore they are unrestricted. Restricted funds are subject to an external restriction from the donor, and can only be redesignated with the consent of the original donor or the Charity Commission. Funds can be managed in the fund settings screen.
Categories - in each fund you will have a number of Income and Expenditure categories (referred to as nominal codes in other accountancy programs). These allow you to track income and expenditure. To help with this, ExpensePlus has category groups (Parent groupings of multiple categories) that enable you to group together similar categories - for example, you may have an expenditure category group called 'Building', under which you have categories called 'Maintenance', 'Cleaning', 'Utilities', etc. You should set up your categories as you wish them to show in your monthly management reports. There is no requirement for each fund to have the same categories. In fact, many organisations have hundreds of categories in their 'General' fund, but only 2 to 3 categories in a 'Grant' fund (i.e. just the relevant categories associated with the grant). In addition to the Income and Expenditure categories, you can also designate a Fixed Asset category for when a piece of capitalized equipment or freehold property is purchased. See this article for more details about fixed assets.
Category Connectors - as well as viewing income and expenditure for each fund, it's also useful to be able to see, analyse, and group together income and expenditure across all funds. In ExpensePlus you can 'link' categories together using the category connectors functionality. To do this, you need to first set up your category connector structure (which may well be the same as your General Fund Categories, although it doesn't have to be). You will then be able to assign each category in ExpensePlus to a category connector to determine how the transactions in these categories show in the Income & Expenditure Summary (by category connector) report.
Projects - When you run a specific project or event, you will likely have one or more income and expenditure categories associated with it. For example, a weekend away for your youth group will have ticket income and event expenditure. These categories may well sit within your 'General' Fund (although where these are self-funding or part self-funding, we'd recommend creating a separate 'projects and events' fund for these to sit within). The projects feature in ExpensePlus lets you 'link' income and expenditure categories that relate to a project together, enabling you to view a report for each project and event that also includes a running balance. Projects are a bit like having a sub-fund within a fund. By using this functionality, you can keep track of the project income, expenditure, and the resulting surplus or deficit using the Summary (by Project) report.
Transaction Groups - are similar to projects, in that they allow you to monitor income, expenditure, and a running balance, but the data comes from individual transactions grouped together, not whole categories grouped together. Whichever category you allocate an income receipt or purchase to, you can specify to allocate all or part of the transaction to a transaction group of your choosing. Your system administrator will need to decide whether your organisation will use the Transaction Group functionality. Within the System Settings screen, they can specify the use of Transaction Groups as optional, hidden (off), or required. You can find out more about Transactions Groups here.
Transaction groups can be monitored using the Transactions (by Transaction Group) report.