Charity accounting and a legacy

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT member discussion
A charity is receiving a significant legacy which is completely unrestricted. It is being recognised in the accounts at probate date although they have not yet received the money because it depends on a house sale. I understand this is an expendable endowment and would like some guidance on accounting for it. My assumption is that the proceeds of the house sale go into an endowment fund. What about the interest income? The charity wants to be able to account for the legacy + interest separately so should everything go into a designated fund rather than endowment? They also tithe (i.e. give away) 10% of all unrestricted income so should the tithe expenditure also be designated? Or can all of these elements be accounted for within the endowment fund? Please feel free to email me at lizholder@freeuk.com. Thank you.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Charity accounting and a legacy

    Liz,
    I used to do our Church accounts - if I remember correctly aren't designation funds accounted for within unrestricted funds? And isn't an endowment when only the interest and not the capital can be used?

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Charity accounting and a legacy

    Jan, yes designated funds are unrestricted. But someone told me that this will be an expendable endowment because there are no restrictions on using the capital. I think that is my confusion. Is an expendable endowment just a designated fund? The church wants to designate the fund for a particular purpose so that they can show its use separately, although it would show in the unrestricted column in the statutory accounts.

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