Returned/Unused Funds from College to Foundation

Alicia Van Straten
Alicia Van Straten
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in Blackbaud Raiser's Edge NXT®: General Discussions

There is a temporary finance person working on our accounting side of the house in college finance. They are challenging me on the question of where/what to do with returned funds. I am with a community college foundation that solely exists to support our students and college. We are a separate 501©3 entity with separate accounting/funds, but college employees.

Example: Donor A gives us $1,000 for a scholarship. The gift is booked in RE. We administer and award the scholarship to a student through our regular scholarship system. We send the funds over to the College (along with all the other awarded scholarships) for student finance to apply the funds to the student's account. The College “backdated” the students account to $0 balance for some internal student/college reason, thus, rendering the scholarship null and not needed. The college is sending the $1,000 back to the Foundation. We would not enter again in RE as we already entered the gift. But it needs to go back into the donor's fund. Wouldn't it just get deposited on the FE side into that donor's fund? They are pushing back a bit saying that somehow it has to through RE again, but that would count the gift twice. Am I missing something? It's never been an issue before so not sure why now, other than new person.

Comments

  • Alex Wong
    Alex Wong Community All-Star
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    @Alicia Van Straten
    definitely not entering a 2nd gift in RE as it is not a 2nd gift of $1000.

    what is the policy on this type of return? if there isn't one, there needs to be one that is agreed upon by all.

    is the $1000 being “refunded” to the donor as if the donor didn't give a donation? if yes, then the original $1000 should be adjusted to $0. if the gift has “crossed year" (fiscal or calendar year), is adjusting a revenue reporting gift allowed by finance or auditor is a policy finance need to answer

    is the $1000 going to be used later on for another student? if so, this is an issue to handle on the “scholarship system” that you used when administering the award, basically “taking” the money back for a future use

  • Alicia Van Straten
    Alicia Van Straten
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    @Alex Wong
    Definition of not entering a second gift, meaning not entering the same $1,000 gift twice in RE. The policy is that the funds stay in the donor's fund and we re-award to the next qualified student. Then send the funds back over to the college for that re-award.

  • Alex Wong
    Alex Wong Community All-Star
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    @Alicia Van Straten
    sorry my typo. I mean to say

    “definitely” not entering a 2nd gift

  • Alicia Van Straten
    Alicia Van Straten
    Tenth Anniversary Kudos 1 Name Dropper Facilitator 1

    Wouldn't they do a journal entry to zero out the expense in FE and add back in the funds. Then when I re-award the scholarship, it would get sent back over to the college again? I'm not an accountant by any means, but I think this is how it has been done in the past with no issues.

    Everything I've been told/know is that RE is the gift entry/donor side of the house. FE is the accounting side of the house.

  • JoAnn Strommen
    JoAnn Strommen Community All-Star
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    @Alicia Van Straten I agree with you. This is an accounting issue. There is not a second gift to enter in RE. If issue is pushed, you would need to adjust original gift to $0 but definitely seems unnecessary and not the best practice IMO.

  • Alex Wong
    Alex Wong Community All-Star
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    @Alicia Van Straten
    there is always 2 flow of information: data and money.

    • donor donated (check or credit card or online)
      • money
        • check is deposited into a physical bank account
        • credit card is charged virtually on a merchant account and into physical bank account
        • online donation made is sent from merchant account into physical bank account
      • data
        • RE records a gift record that indicates all the info, INCLUDING the physical bank account (if an org has more than one, if not, maybe it just defaults to one and no need to be recorded in RE)
        • when posted from RE to FE (or if you do not use FE, any financial system), that data is recorded in FE too, including which bank account holds the money
    • scholarship system
      • I don't know what this system does, does it handle the “money” or “data” side of things, but if it does one or both, something manually or automatically is recorded in the financial system that indicates the money left the physical bank account that was originally deposited in.
      • if there is a “change” in the data that indicates the money left the physical bank account and went somewhere else, then the reversal transaction will need to be recorded as well. the question is where: RE or FE.
        • if the “movement” of granting the money has change made in RE, then the reversal also happen in RE, if in the financial system, then in the financial system.
        • Definitely not a new gift in RE, but depending on what your org does, the reversal may happen in RE.
  • Laura Vaughan
    Laura Vaughan
    Fourth Anniversary PowerUp Challenge #3 Gift Management Kudos 1 Name Dropper

    @Alicia Van Straten Assuming an expense was recorded for the transfer of funds to the College, the funds need to be deposited back into that project's expense account within Financial Edge. Raiser's Edge would not be involved. That is how it would work at my institution.

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