Charity Accounting Classification Best Practices: Preferred Model

Owned by David Geilhufe
Last updated: Aug 05, 2013
2 min read

 

 

 

This is the preferred model for configuring NetSuite to manage nonprofit operations.

 

Solution Overview

A charity classifies income and expenses on multiple dimensions:

  • Functional accounts
    • Chart of Account: Standard financial account. (NetSuite Account)
  • Organizational Activities
    • Activity: Functional categorization of income and expenses. (NetSuite Department)
  • Funds & Funding Sources (restrictions, grants, etc.)
    • Restriction: Categorization of income by restriction. (NetSuite Class)
    • Funding Source: Categorization by funding source. (NetSuite Class)
  • Projects (organizational projects)
  • Revenue Detail
    • Items: Items represent the types of things you sell ― sell including donations, pledges, grants, inventory items and much more (NetSuite Items)

Many charities use chart of accounts segments to track a wide variety of additional information. NetSuite provides the capability to add two additional dimensions which can be used for its native
purpose or another purpose unique to your situation.

  • NetSuite Location (or: <your renaming of location>)
    • Natively tracks the geographic location of offices and/or activities.
  • NetSuite Subsidiary (or: <your renaming of subsidiary>)
    • Natively tracks separate legal, tax or other entities that automatically roll up into a summary financial statement.

 

Functional Accounts (NetSuite Account)

 

Funds (NetSuite Classes)

  • Unrestricted Revenue
  • Temporarily Restricted Revenue
    • Grants
      • Grant A
      • Grant B
      • Grant C
      • Grant D
    • Projects
      • Project A
      • Project B
      • Project C
      • Project D 
    • Other Time Restricted Revenue
    • Other Use Restricted Revenue
  • Permanently Restricted Revenue
  • Cost Pools
    • Central Service Expenses
    • Facilities Expenses
    • Salary & Related Expenses

 In general, you can track EITHER grants OR projects with NetSuite classes, but not both. The other dimension can be tracked at the NetSuite project level. Grant tracking may occur at the NetSuite Class level or at the NetSuite Project level. In general, tracking at the class level is required if grants fund multiple projects or if you need to report on grants using NetSuite's native reporting integration with NetSuite classes. If you have neither of these requirements, or need to generate a grant balances report using the native customer/project profitability report, you should track grants as projects.

 

Activities (NetSuite Departments)

  • Fundraising Expenses
    • Special Events
    • Professional Fundraising Fees
  • Management & General Expenses
    • Executive
    • Information Technology
    • Human Resources
    • Legal
  • Program Expenses
    • Program A
      • Activity 1
      • Activity 2
      • Activity 3
    • Program B
      • Activity 4
      • Activity 5
    • Program C
      • Activity 6

 

Locations (NetSuite Locations)

  • North America
    • California
    • Texas
  • Latin America
  • Europe
  • Africa
    • Congo
    • South Africa
    • Senegal
  • Asia

 

Revenue Detail (NetSuite Items)

  • Gift
    • Donation
      • Annual Campaign
      • Matching Gift
      • Online Donation
      • Regular Donation
    • Grant
    • In Kind
    • Major Gift
    • Pledge
      • Planned Gift
      • Regular Pledge
      • Recurring Donation
  • Earned Income
    • Product Sales
    • Consulting Sales