American Donations

Abbie Barns

Hello All

I am writing on behalf of a UK charity regarding donations received in America. For the purposes of tax efficient giving there is a 501 c 3 organization in America (American Friends), to which donors can make their gifts. All donations are kept into an american bank account and the Board of Directors can approve a grant to the UK charity. The american bank account is not only used to deposit donations but to pay for the maintenance of the 501 c 3 organization (insurance) and other bank charges. Therefore, the money in the bank account is the result of donations minus expenditure.

Historically, gifts from America have been added as a pledge on the American Friends record on the date the donor made the donation and soft credited to the donors record. Once the grant is approved and wired into the UK account, we apply the gifts that consist the grant to the pledges.

As the bank account in America is used for expenditure the money that reaches the UK is always less than the actual donations received. This causes an outstanding balance on the American Friends record on RE, which is not an actual balance, since all gifts have been received but monies have been spent on maintenance. We have now closed the 501 c 3 and received the final grant. However due to the expenditure mentioned the final grant payment does not match the outstanding pledge total on the American Friends record.

Any advice on how to deal with this? We don't want to write the outstanding pledges off as the money has actually been received and we want to be able to accurately report on the amount our American constituents have donated.

Any help would be appreciated! Thank you.

Heather MacKenzie

Hi Abbie,

If this was all happening completely in the USA, it would be recorded like any other fees. The philanthropy office would record the entire donation, and the finance department would record the revenue and the fees. Fees like this are considered an expense and just part of doing business. GAAP says this is how to do it here. Could you do it that way there too?