Endowment and Memorial Investment Accounts
Between classes and accounts, assets and equity, it can get very confusing trying to figure out how track all the related pieces of an endowment or memorial account. Let’s separate the pieces to see how to record these in QuickBooks.
In this example, a generous donor has donate $10,000 of stock to seed an endowment fund. If you are going to keep this money in a separate bank account from your other investments, you will record the initial receipt as follows:
Account Type Debit Credit Class
1xxx Endowment Investment Asset 10,000
4xxx Endowment Donations Income 10,000 Endowment (Restricted)
Assuming $50 of quarterly earnings are to be transferred to the general fund, the following entry would be made.
1xxx Checking Asset 50
4xxx Investment Income Income 50 General Fund (Unrestricted)
The system (QuickBooks) assumes only one equity account, so at the end of the year (or monthly or quarterly if desired), the net change in assets (Donations less Expenses) needs to be recorded in the Restricted Net Asset equity accounts. To do this, run a P&L by class. Using our examples above, we need to set up an equity account for the Endowment to record the $10,000 net income.
3xxx Unrestricted General Fund Equity 10,000 Do Not Use Class
3xxx Restricted Endowment Equity 10,000 Do Not Use Class
Now you will have a balance sheet with an Endowment Investment Asset of $10,000 and an Restricted Endowment Equity account of $10,000.
Please note: you can track restricted accounts without separate bank accounts using the Equity account. It would be treated the same way, only the asset would be your combined investment account.