Handling Donor Restricted Funds in FE NXT

Duane Bozarth

We're in database COA/Fund Hierarchy design phase in moving from Banner account structure and unsure of nomenclature between Banner and FE in how to set up the restricted/designated fund.

Presently Banner has a separate COA for income/expense by expense code and donor designated funds have another Fund code (from 1 to 4 each as follows for a restricted fund which each have the four)

F63000 Fred Flinstone Fund

F63001 Corpus

F63002 Realized G/L

F63003 Unrealized G/L

Permanent Designated funds will be the same excepting will not have a corpus account since they’re not endowed funds so they have only three. What we term “Misc Designated” funds are designated funds but are of a temporary nature and so do not participate in investment earnings so they have simply a single current value account although an income/expense pair wouldn't be bad idea thus leaving them also with three. This adds up to a lot of fund accounts very rapidly, obviously.

The Q? I've been unable to get Blackbaud folk to answer directly or show us a sample of another institution nor can I find any details on setting up originally in the doc or knowledge base is – does one create a similar account structure in FE or can one somehow use funds to simplify? Does FE require the three above separate accounts or does it understand internally about investment income and handle it?

Kylea Johnson

Well I don't know much about Banner as we transitioned from Abila, but we use Projects for this. The corpus has one project, and the usable gains (4% of the 5 yr rolling average) get distributed to a spendable project.

So it'd be the Fred Flintstone Endowment (corpus) and the Fred Flintstone Endowed Scholarship (spendable account).

Our account string leads with the designation, so 01 is unrestricted, 02 is temp restricted, 03 is permanently restricted.

Let me know if you want more info. Glad to share our account structure, it works really well for us! = )

Duane Bozarth

Thanks for the feedback. Our spending policy is essentially the same, annually-set percentage of 5-yr rolling average NAV.

The Q? then is how do you track the earnings – do you simply post only the monthly NAV? That would let compute the available, certainly, but for audit purposes we need to track (quoting directly from the our accountant) the “Split of investment income (interest/dividend income, realized, unrealized) between classification (unrestricted & restricted)” so somewhere, somehow, we need the various components of earnings allocated by donor fund.

I suppose this then could extend to each of the fund subaccounts could be a project, but the initial feedback we've gotten from BB that doesn't ever go so far as to make the alternative clear is to not create “vertical duplicates” which I interpreted as not having the three/fund hierarchy as above in Banner. (That may be a complete misreading of what was intended, but haven't been able to get that clarified as of yet).

Here's the best example I've gotten so far – but it doesn't address donor funds, specifically, I'm not sure how to adapt or if is even applicable. We get started on one of these conversations and then we're left hanging with no resolution.

"Account codes – streamline to avoid vertical duplicates that can be captured by other dimensions like segments or transaction tags. Example - might have 60010 salary admin and 60020 salary programs. Instead in FE you can have segment 3 for departments; say 10= admin and 20 = programs and use ONE salary account code 6000 -so your account string for instance is 10-6000-10 and 10-6000-20. "

So, then maybe there's a segment for Realized/Unrealized gains, instead? There seems to be so much flexibility but no “best practice” guidelines on how to use it; everybody seems to have to reinvent it on their own.

At the present we have a separate spreadsheet that is used first to compute/back out the unrealized gains from the brokerage statements each month and those are then allocated by fund in the equivalent of the allocation module. We're hoping to be able to get this step much more automated w/ FE, but not getting much guidance on just how to set up to be able to do so.

I'd love to see a working COA; be glad to share any information we can offline, probably not good to post in the forum. I'm not at all reluctant to be contacted directly via the email; for record I am the board VP having passed on the President's position last year to concentrate on getting our financials back in order; the transition to FE a key component of that.

Kylea Johnson

Ah I see you're a college too so we'd have some overlap on how our COA works. We only distribute gains once per year. I don't distribute them--our accountants do.

Sure, shoot me an email if you'd like at kylea.johnson@centralia.edu. Fair warning I'm not an accountant but I manage Financial Edge so I'm of limited help here. We have third party accountants who I had to teach how to use this software lol.

Angela Tuttle

We use Projects in FE (this is the Raisers Edge Fund - if you will also be using Raisers Edge) we set the numbers to match.

So for your example:

Project 72-98005 Fred Flintstone

Account code for corpus 99-1026-00-0 (asset account)

Account code for market change 99-1025-00-0 (asset account)

Revenue Account for Unrealized Gains/Loss (we combine the two) 04-4310-72-1

We distribute the gains/loss and management fees every month. We calculate the spendable once a year.

Just as someone else mentioned the department is included in the GL account. In the example above 72 is the department. We also include the department in the project numbering.