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 donated $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 a 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.

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