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Mission Board Accounting

We are a church that oversees, as part of its complete ministry, a sending Mission Board. This Mission Board is set up to support missionaries administratively and manage their support funding. Donors send support made payable to the mission board for tax purposes. What is the clear, correct, way to report these funds and any disbursements from these funds in the financial statements for the ministry? I only ask, because I'm hearing conflicting viewpoints on how these funds should be reported. Some say to record these accounts as liabilities to the Mission Board on the Balance Sheet and others say to record as Temporarily Restricted Funds (which would show up as Net Asset accounts). I'd like more thoughts to this and specifically what it would look like when transactions occur affecting these accounts. These missionaries do pay "admin fees" to the Mission Board and they do also come out of these funds. If I need to clarify anything, please let me know. Thanks,

Answers

Anonymous
(unemployed) |

I should add some more detail about the types of accounts that are set up:

Main account - Missionary name
Other accounts:

Missionary name - General Escrow
Misisonary name - Travel Fund
Missionary name - Missionary Fund
Missionary name - Retirement
Missionary name - CABC (this is for a ministry that this particular missionary serves out on the mission field)
Missionary name - Quarterly taxes

Missionary name - Furlough Fund
Missionary name - Emg Med Fund
Missionary name - Building Fund

Missionary name - General Fund
Missionary name - Gift Fund
Missionary name - Edu Building Fund
Missionary name - Edu Fees
Missionary name - Sawmill project
Missionary name - Library project
Missionary name - New Shoes Fund
Missionary name - Farm Fund

Missionary name - Designated
Missionary name - Housing

Missionary name - Vehicle Fund

among others....some missionaries have more accounts set up than others; not all are used by all missionaries.

The reason I'm addressing this is because we are working on an accounting system conversion and I'm synchronizing our chart of accounts across our entire ministry and revising things that should be revised before we go live in our new system.

Thanks,

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

They are both. Funds/donations received should be classified to either Restricted or Unrestricted. Recording of the donation/pledge is when notification (pledge receivable) is received or the money is received.

I suggest you research on FAS 116

Anonymous
(unemployed) |

The scope of FAS 116 states: "This Statement does not apply to transfers of assets in which the reporting entity acts as an agent, trustee, or intermediary, rather than as a donor or donee. It also does not apply to tax exemptions, tax incentives, or tax abatements, or to transfers of assets from governmental units to business enterprises.".

If this is the case, then FAS 116 doesn't apply to my situation as the Mission Board, as I understand it, acts as a trustee of those funds being sent payable to the Mission Board for support of specific missionaries. So, what is the correct way to record this on the balance sheet and/or income statement?

Can you please elaborate what you mean by both? What does this look like?

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

You record it the same as any other NFP.

Here is the financial statement of The North American Mission Board of the
Southern Baptist Convention, Inc I found off the web. The full financial report (download and view 2012) will contain the Notes to the financials that should be of interest to you.

http://www.namb.net/annualreport/

HOWEVER, If I am reading your posting right, your Mission Board is NOT a separate entity and you are carrying the records of the Mission Board within your church financials? If so, it poses a problem and your CPA should give you a definitive answer.

My first instinct really is to have a Restricted Fund WITHIN the Restricted Funds. Or however you can accomplish separating the classification....say, Restricted Funds 2 ? This is going to be the same for Pledge Receivables meaning a separate category. The goal is to separate the Mission Board records/funds from all the other revenues and expenses of the Ministry.

The alternative is your first option (recording it as a liability to the Mission Board) which I see as more problematic in terms of management and record keeping. My recommendation is much simpler as transactions are processed the same way as your Church records.....just different pockets.

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

You may also look at FAS 136

EMERSON GALFO
Title: CFO
Company: C-Suite Services
LinkedIn Profile
(CFO, C-Suite Services) |

I think I muddled the response. It all depends on who is the reporting entity.

If your church is administering the funds for the Mission Board, FAS 136 states that your church/ministry should report it as a Liability to the Mission Board. However, administration will be difficult if there is a separate processing of transactions for the Mission Board or just lumping it all into a "liability account". It will be a lot easier (and if your CPA will agree), to process contributions and expenses the same way as your church does for any restricted funds. BUT, this means segregating the account names and or Restricted Funds account from the church's....then at the end of the reporting period do a journal entry transferring the balance of Net Assets/contributions of the separate Restricted Fund to a Liability account and reversing this transfer at the beginning of the month for continuity.

If the reporting entity is the Mission Board, then FAS 116 applies just like any other NFP. Just like the sample mission board financial report.

Anonymous
(Process Safety Specialist) |

Our organization has a very similar situation and it is frankly pretty challenging to keep the auditors happy and preserve the tax deductibility for donors. In order to realize the tax benefits to the donor, the funds must be donated to and controlled by the organization, whether that is the mission board or the church itself. I can't imagine a reason that would be beneficial to you in which you would hold funds for a 3rd party missions board and thus incur a liability. If that is the case, please ignore the rest of my post. For the purposes of holding funds specifically for the missionaries funded by the board, all of the funds should be temp restricted. Remember that they are given to the Mission board (in keeping with IRS regs on deputized fundraising) and this means that the Mission board has ultimate control of the funds. An easy solution is to consider all of the funds given in this manner to be 'temporarily restricted missions funds' and use another tracking mechanism to determine the balances that have been sent for individual missionaries.

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