Giving Gift Cards to People in Need

Many organizations use gift cards or prepaid grocery cards to assist those in need. Because the cards are the equivalent of cash, there needs to be procedures in place to keep them safe from theft and to document how they were used. I’ll step you through a very basic approach to this.

First, think of the cards as a type of Petty Cash. You need to have one person responsible for keeping them secure and logging who is taking them out. The Gift Card Fundraiser Log in the Freebies tab can be used for this. http://accountantbesideyou.com/blog/accounting-for-gift-card-fundraisers/

If someone needs assistance and you want to give them a card, be sure to document the need and the lack of recipient’s resources as discussed in Chapter 7 of Church Accounting-The How-To Guide to Small and Growing Churches.

Record the purchase of the gift cards:

Debit                    Gift Card Inventory (an Asset account-$ amount should tie to log maintained above)

Credit                   Cash                       (Checking or Petty Cash)

If you write a check for the cards, select Gift Card Inventory as the account and the system will automatically record the debits and credits.

When a card is given to a person in need:

Debit                     Outreach Expense (or whatever you call your program)

              This would be in the 6xxxx series of accounting numbers if using my suggested chart of accounts.

Credit                    Gift Card Inventory

This will need to be done as a journal entry under Company, Make Journal Entries. Don’t forget to assign the related Class for the program.

At the end of the month, reconcile the Gift Card Inventory balance in the General Ledger with the Gift Card Log.