How do I account for funding events that make a surplus / loss or that are subsidised??
How to account for self-funding events
Some activities or events operated by your charity or church may generate the funds themselves needed to cover their costs. They may even generate a profit. For example, a youth weekend away costing £2,000 to run, with 25 attendees paying £100 each will generate a £500 profit. Where you need to account for this sort of activity, we'd recommend you use the Projects functionality.
For each event, ensure that it has at least one income category and one expenditure category (you can have more income and expenditure categories if you wish to), then link the categories that relate to that event together as a Project. You will then be able to use the Projects report to view and drill into the income and expenditure detail, as well as view the project balance at any given time. Within the project settings screen, you can also assign access 'per project' so the person leading the project can see exactly what they need all in one place.
You can manage linked Project categories via the Projects settings screen
A simple report detailing monthly Income, expenditure, and the resultant balance can be found within the Summary by Project report.
The Projects functionality removes the need to set up a separate fund for each event you run. Typically the categories of your projects would either be within your General Fund or a specific segregated 'Projects and Events fund' If the former, we'd recommend you create an Income category group called 'Events' and an expenditure category group called 'Events' too (for neatness) where you would list any categories associated with the specific events. As mentioned earlier, some organisations choose to operate a segregated and unrestricted 'Projects and Events' fund (purely for the purpose of self-funding events), in which all event-specific categories are kept, to exclude them from the General Fund Income and Expenditure report. CLICK HERE for more information about how projects work.
How to record a subsidy, or cross-charge expenditure
Where you wish to subsidise an event, for example with money from your general fund typically this is done via a transfer between categories which can be found within the Adjustments screen. You can do this one of two ways with both methods having the same effect on the Project balance. (Method 2 is recommended as preferable).
1. An Income Category Transfer reduces the level of income from one category and instead applies it to the income category of your choosing. In the example below, we are subsidising the Weekend Away Event with income from the general Youth Events category. You will see the subsidy reflected in the Project report below.
2. Preferably though, you could accomplish the same net effect by using an Expenditure category transfer. In the same example, you could choose to leave the income for youth events with 'youth events' and instead reduce your expenditure on the weekend away by subsiding it from general youth expenditure. The effect on the Project balance (shown in the report screenshot below) will be the same, but you will have intentionally decided to account for the change as an increase in youth expenditure as opposed to a decrease in youth income. This is arguably the preferred method as it maintains greater transparency.
How to cross charge expenditure
Similarly, you may wish to cross charge expenditure, for example where your employed staff members are also attending the event or conference you are organising, and your organisation itself will cover the cost of these people (for example from your training budget). This can be done via an Expenditure category transfer, again from the Adjustments screen - Category Transfers, following the same method as above.
Closing the event with a zero balance
Unless an event is recurring and a surplus has been made that you wish to carry over to the next event, then at the end of each financial year, typically you would zero-out the surplus or loss, to or from your general fund.
To do this, you should use the 'category transfers' option within the Adjustments screen to do a category transfer between expenditure categories or income categories. If the project has a shortfall, follow the subsidy guidance above. If you have a surplus (positive balance) to transfer, you can complete an income category transfer to account for the surplus within another category - for example, 'General Income: Income (other)'.
For projects you no longer need, these can be deactivated within the Project Settings screen.