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Sanford Levings

"Hi, I’m Sanford Levings, President of MinistryCFO and author of this blog. The purpose of our blog is to share with you information and insights that we gather from working with and listening to our clients and partners, located throughout the country." read more

Why Fewer Designated Funds Is Better

Less Really is More

One of our clients approached us with 27 designated fund accounts. That’s essentially 27 unique businesses within a church because revenues and expenses must be maintained within each designated fund.

It is realistically impossible to manage and maintain 27 separate designated fund accounts. The bookkeeping work to do so is prohibitively too onerous and the reporting of the funds is, frankly, too complex.

So what’s the limit of the number of funds a church should have? At MinistryCFO, we believe a church should have no more than two designated funds, along with what is referred to as the General Fund or Unrestricted Operating Account. Most often, these two designated funds are for capital projects and missions.

At MinistryCFO, we like to record donations according to the conduits in which you are receiving your donations. By conduit, we are referring to the three means in which you are deriving your donations: a) worship service offering, b) electronic giving and, c) mail-in giving. We often subdivide electronic giving into: a) online giving, b) telephone app giving and perhaps, c) kiosks giving.

Below, is an illustration of what the revenue report looks like when combing the revenue classifications with the two designated fund accounts:

General Fund Designated Fund 1 Designated Fund 2
Worship Service Giving X X X
Electronic Giving- Online X X X
Electronic Giving- Telephone App X X X
Mail- In Giving X X X
Total XX XX XX

When counting the number of single X’s above (in blue), you will see that there are 12 unique classifications, or buckets, in which to record donations. You really don’t want more than 12 buckets when having to choose where to record donations.

Can you imagine having 27 fund accounts in the example above? That would result in 108 buckets to choose from when recording donations!

So when it comes to designated fund and designated fund accounting, the adage
that less is more certainly rings true.

Your church needs a CFO on part-time basis. Let the MinistryCFO team help you classify and manage your general fund and designated fund accounts.