Using Budget instead of Other

Discuss questions around local unit policies for budgeting, reconciling, etc. This forum should not contain specific financial or membership information.
ponders-p40
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Using Budget instead of Other

Postby ponders-p40 » Wed Sep 17, 2008 9:36 am

In our most recent audits we've discovered at least two units in our stake that are, primarily for the sake of keeping things simpler, depositing funds received from things like camp fund raisers into Budget rather than creating an Other account for this. This violates what I've been taught and understood, but certainly avoids the problems associated with having to manage payments for the camp especially when they need to come from both these receipts and budget.

My question is this: we've all been taught that this is not the right way to do this, but does it in fact cause any real problems? If my memory serves, deposits to Budget, just like those to Other do not count as donations from the Church's standpoint and therefore wouldn't show up on the official tax receipts of the "donors". All the funds deposited are likely to be spent so there's no need to carry the funds into a new year.

The only thing I could think of was if on the Church's side there's some impact that I'm not yet aware of.

What do you think?

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Postby russellhltn » Wed Sep 17, 2008 10:19 am

There might be other issues, but the one that comes to my mind is that it makes it difficult to insure that all funds collected were spent for the purpose intended or refunded. Also, it makes it difficult to assess if the ward is sticking to their budget rather then asking for donations to have bigger and grander events.
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aebrown
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Postby aebrown » Wed Sep 17, 2008 10:32 am

ponders wrote:In our most recent audits we've discovered at least two units in our stake that are, primarily for the sake of keeping things simpler, depositing funds received from things like camp fund raisers into Budget rather than creating an Other account for this. This violates what I've been taught and understood, but certainly avoids the problems associated with having to manage payments for the camp especially when they need to come from both these receipts and budget.

My question is this: we've all been taught that this is not the right way to do this, but does it in fact cause any real problems? If my memory serves, deposits to Budget, just like those to Other do not count as donations from the Church's standpoint and therefore wouldn't show up on the official tax receipts of the "donors". All the funds deposited are likely to be spent so there's no need to carry the funds into a new year.

The only thing I could think of was if on the Church's side there's some impact that I'm not yet aware of.

What do you think?


It's a good question. You're certainly right that deposits to Budget are no different from deposits to Other in that neither will be included in the year-end tax statement as charitable donations.

The training course Understanding and Using the "Other" Category says:
In cases where budget funds are not sufficient to pay for annual youth camps or similar activities, leaders may ask participants to contribute by earning their own money. The “Other” category may be used in these exceptional circumstances.
Note that it says "may be used". My initial reaction was that of course the Other category must be used in such situations. But I am unable to find any official document that makes it a requirement. I personally think the Other category should be used to collect payments from youth who are earning part or all of the cost of an annual camp. This allows better tracking of the funds received from specific individuals for that specific purpose. Your "Other:YW Camp" subcategory can then track the payment side of things, without cluttering your Budget:YW subcategory with all the ins and outs of the payments.

However, I don't see a particularly compelling reason for moving fund-raising money through the Other account, unless the fund-raising activity involves multiple organizations (e.g., both the YW and the Scouts work together on a fund-raiser where they divide the proceeds for their respective annual camps).

The one downside I see is that this practice makes the Budget reports more complex. It seems much more straightforward to read a Budget Detail Report for YW that says the Budget is $2000, $500 was spent on YW Camp, $1200 on other things, leaving $1300, rather than saying the Budget is $2000, plus $1000 of income, $1500 was spent on YW Camp, $1200 on other things, leaving $1300. But I suppose some would say that it's more informative to have one report that accurately says what YW Camp really cost.

Unless someone can come up with some policy I am missing, I would say that this is just a matter of accounting preference by the units involved.

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Postby Mikerowaved » Wed Sep 17, 2008 11:13 am

Sometimes a fund raiser is performed in the later months of the calendar year for the following year's camp expenses. If these funds are deposited in OTHER, they can be rolled over to the following year. If they are deposited in BUDGET, they cannot.
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Postby jdlessley » Wed Sep 17, 2008 12:00 pm

When dealing with an issue such as this the first place to find guidance is in the Church Handbook of Instructions. A quick scan of Chapter 16, Finances, says that both the stake president and the bishop "...ensures that Church funds are never mixed with personal funds." To keep "personal" funds separate from Church funds is one of the purposes of the Other account. I put the word personal in quotation marks because the definition of personal as it relates to funds in this case has a broader scope than just belonging to a person. Budget funds are the Lord's sacred tithe and fast offerings. Funds from individuals or fund raisers for purposes such as camps or equipment are not tithe or fast offerings and must never be mixed with budget funds.

"[D]epositing funds received from things like camp fund raisers into Budget rather than creating an Other account" as described in the opening post to this thread is mixing personal and Church funds and is therefore in direct violation of Church policy.
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Postby aebrown » Wed Sep 17, 2008 12:21 pm

jdlessley wrote:When dealing with an issue such as this the first place to find guidance is in the Church Handbook of Instructions. A quick scan of Chapter 16, Finances, says that both the stake president and the bishop "...ensures that Church funds are never mixed with personal funds." To keep "personal" funds separate from Church funds is one of the purposes of the Other account. I put the word personal in quotation marks because the definition of personal as it relates to funds in this case has a broader scope than just belonging to a person. Budget funds are the Lord's sacred tithe and fast offerings. Funds from individuals or fund raisers for purposes such as camps or equipment are not tithe or fast offerings and must never be mixed with budget funds.

"[D]epositing funds received from things like camp fund raisers into Budget rather than creating an Other account" as described in the opening post to this thread is mixing personal and budget funds and is therefore in direct violation of Church policy.


I am certainly a proponent of following the Handbook, and it's definitely helpful to bring actual policy statements into the discussion. But in no way do I see that this scenario involves personal funds. Once a payment is made, whether it is for a fund-raiser, or where a youth pays earned funds for an annual camp, those funds are no longer "personal" -- they then are Church funds. They may be earmarked for a specific purpose, but that does not make them personal funds by any reasonable definition, and certainly not for the definition quoted from the Handbook.

I can find nothing in any official documentation to justify the claim, "To keep 'personal' funds separate from Church funds is one of the purposes of the Other account." There is an entire training lesson on the Other account, and several statements in other documents. None of them say anything like this.

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Postby aebrown » Wed Sep 17, 2008 12:25 pm

Alan_Brown wrote:Unless someone can come up with some policy I am missing, I would say that this is just a matter of accounting preference by the units involved.


Okay, I just came up with something more specific. In the online training lesson I mentioned in my first post of this thread, it says (on slide 18, to be specific):

All funds collected for special purposes should be tracked in the “Other” category.
So that seems pretty clear, and although I suppose the word "should" is slightly weaker than "must", it's certainly stronger than "may." That's good enough for me.

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Postby jdlessley » Wed Sep 17, 2008 12:50 pm

Alan_Brown wrote:But in no way do I see that this scenario involves personal funds. Once a payment is made, whether it is for a fund-raiser, or where a youth pays earned funds for an annual camp, those funds are no longer "personal" -- they then are Church funds.
I respectfully disagree. Funds provided by a young man or young woman for a camp are their personal funds. They can withdraw them at any time. The Other sub-account has been provided as a means of retaining those funds for individuals to be disbursed on their behalf. The Church does not own those funds. It only collects and retains them as a courtesy and convenience for the individual(s). Fund-raiser funds are identified as personal because they are on behalf of an individual or a group of individuals. The funds must be spent for the purpose they were raised thereby connecting them to an individual, albeit as a percentage of the whole. The only time the fund-raiser funds become property of the Church is when excess funds are remitted to Church headqurters to be applied to the Church's general fund.
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Postby jdlessley » Wed Sep 17, 2008 12:59 pm

Alan_Brown wrote:I can find nothing in any official documentation to justify the claim, "To keep 'personal' funds separate from Church funds is one of the purposes of the Other account."
I will agree there is nothing documented to verify the statement. When I recieved financial auditor training from an area authority he used those words. I will not contend on the issue just because it is not in writing. Common sense must prevail and not Pharisaical dictum.

To ensure personal impressions and undocumented statements do not taint what could be construed to be a quote or paraphrase from Church authority I will revise the statement "To keep "personal" funds separate from Church funds is one of the purposes of the Other account." Instead I should have said "A reasonable purpose for some Other sub-accounts, according to an area authority, is to keep "personal" funds separate from Church funds.
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Postby ffrsqpilot » Wed Sep 17, 2008 1:01 pm

Not sure I totally agree that once funds are put into an "other" account they become property of the church. Case in point. I was taught that funds in an "Other" account were "pass-through" funds. In otherwords, a deposit is made for a specific purpose (i.e scout camp) and if not used they were to be returned to the donor. Another example would be a Special Relief Society project (say canning) and funds are given to purchase canning material. Say one of the sisters is unable to participate, I was under the impression that the funds were supposed to be returned to the individual.

On another note, I believe that if you put funds earmarked for an "other" account like Boy Scouts and it is instead put into a budget account like Young Men, that the funds aren't really in the budget but rather are read by Salt Lake as being a donation to the budget and consequently are taken by Salt Lake. We had a situation like this arise in our stake where one of the wards had extra money in an other account and moved it into a budget account thinking they could then spend it for items like curriculum, etc. Turns out they way overspent their budget and Salt Lake sent a notice to the Stake President. I ended up getting involved trying to figure out what happened and after talking with Salt Lake, talking with the Stake Clerk at that time, and doing a lot of looking at records came to the conclusion that Budget and Other are two separate accounts not to be mixed. If one were to look at it this way, perhaps it would make sense - Budget monies are "owned" by the Church whereas Other monies are owned by the ward or unit.

And just to further clarify (at least from what I have experienced as a Ward Clerk and now the Stake Clerk), if an individual fills out their donation slip and puts money into a budget item it goes to Salt Lake, it does not go to the ward budget. One of our wards found that out the hard way. That is why following the Handbook and looking at the online lessons is well worthwhile.

Jim


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