We fundraised for a project using a fundraising platform. With that particular platform you need to hit your agreed target in order to release the funds.
They allow you to top up the fund if you need to, if you are at risk of missing your deadline target (and losing the contributions thus far).
We contributed a small amount, £100, to hit the target with the intention of recouping that amount via other fundraising methods - essentially we loaned the fundraising pot a small amount.
The £100 has come back in via other fundraising, as planned.
My question is about tagging correctly:
how would I categorise the £100 we paid out the the fundraising platform?
when the total fundraised amount comes back in, how do I split off that £100 contribution and to where? Not all of it is a ‘Fundraising & Grant income’ - £100 of it was a ‘loan’ from us
and then how do we categorise the £100 reimbursement when it come back in via a different fundraising stream?
I hope that makes sense!
Thanks.
I’d think about it in the same way as you would with a merchant account when taking payments by card - create a dummy bank account in QuickFile that represents the fundraising platform. I’m ignoring anything to do with fees in this example, I don’t know whether you would record the total amount your donors gave as income and the platform fees as an expense, or if the fees are dealt with by the platform and you only see the net. So ignoring fees:
- suppose you raised £9,900 of actual fundraising, then you would create a “money in” transaction on the dummy bank account for £9,900 and tag that as fundraising income
- then you paid £100 to the platform to top things up, that would simply be a bank transfer from your current account to the fundraising dummy account, causing its balance to reach £10,000.
- when the platform pays out the £10,000 to you, this is a bank transfer back the other way, from the dummy fundraising account to your current account.
At the end of all this your books simply show £9,900 of fundraising income in P&L and a current account whose balance is £9,900 higher than it was before.
The “reimbursement” needs no special treatment as part of this process, it’s just a separate £100 of fundraising income that you would tag in the normal way when it arises.
Thanks for this, much appreciated - when setting up a new bank account the options are current, cash, loan, credit card and merchant. Should I set this up as ‘merchant’ or does it not really matter?
One question - when I hit ‘tag me’ in my current account and click the ‘transfer between bank accounts’ to get it to the new dummy account - how can I then ‘tag’ the transaction appropriately? Does this just happen as usual in the dummy account, once the transaction has been transferred?
It doesn’t really matter, but “merchant” is probably the most accurate - it represents another organisation that is holding money on your behalf and will pay it out to you later.
The act of tagging a transaction as “transfer between accounts” will automatically create and pre-tag the matching transaction on the other end, you don’t need to do anything special.
Great, I’ve got my head around that and have it all set up as described. Thanks you.
One final thing if you can help, which may complicate things slightly!
One sponsor did not have the ability to make a donation to the platform, so they transferred their donation to us, and then we paid to the platform on their behalf.
So we have £1000 coming in to us, and the £1000 going out to the funding platform, adding to the total figure.
That is a donation, it just came via us and we donated on their behalf. How would I factor that into the equation and tag the money in to us, and out to the platform?
If all of that £1000 will eventually count as fundraising income (you’re not losing any of it in fees when you transfer it to the fundraising platform) then you could just tag the money in from the donor as fundraising income and then the money out to the platform as a bank transfer to the fundraising holding account.
If you do lose some of the £1000 in fees then you’d have to do the above but then create another money out transaction in the holding account representing the fees, and tag it either as the same fundraising income nominal (to reduce your P&L turnover, if you’re treating just the net donations as income) or as some kind of expense code (if you’re treating the gross donations as income and the fees as a cost).
Perfect. Thanks again for all your help.