Accounting for Nonprofits Interest Income Allocation Guide

[Pages:32]011702

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AFN-InterestIncomeAllocationGuide-011702

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INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Changes to General Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Changes to Project, Grant and Endowment Management . . . . . . . . . . . . . . . . . . . . . 5 Changes in Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

GETTING STARTED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Investment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Establishing Investment Pools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Interfund Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

INVESTMENT POOL MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . 19

Adding Projects to an Investment Pool . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Investment Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Investment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

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In This Chapter

Changes to General Ledger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 Investment Pools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Investment Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3 Interfund Entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Changes to Project, Grant and Endowment Management . . . . . . . . . . . . . . .5 Changes in Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6

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CHAPTER 1

You must have

Blackbaud's optional Project, Grant and Endowment Management module to use the Interest Income Allocation add-on module. Please refer to the Project, Grant and Endowment Management User's Guide for complete details on the features of that module and its relationship to General Ledger.

Welcome to Blackbaud's Interest Income Allocation, an optional module for Blackbaud's General Ledger for WindowsTM designed to help you manage investment income. A nonprofit organization often invests money from many different funds and endowments in one or more investment accounts. The organization's account manager must track the money from each of these funds separately in a general ledger. When an organization receives a statement for this type of pooled investment account, the account manager must calculate the amount of the total earnings or losses and allocate these to each fund in the investment pool. This time consuming calculation is accomplished by computing the asset balance for each fund, adding these numbers to get the total asset balance of the entire account, and determining each fund's percentage of the total. The account manager must then create journal entries and post the desired entries to the general ledger for each fund.

Interest Income Allocation simplifies managing investment income by automating this process for you. Interest Income Allocation allows you to define "pools" of projects for investment purposes. After periodically creating the pool of projects, you can enter earnings information for the pool and calculate investment fees. The Calculate Investment Income feature automatically computes each project's share of earnings (or losses), creates a batch of journal entries, and posts the batch to General Ledger. The Calculate Investment Fees feature automatically calculates fees (fixed amount or percentage) for each project in a pool, and posts this information to General Ledger.

Changes to General Ledger

If Interest Income Allocation is present, additional options are available in the Configuration and Security modules of General Ledger. There are also options added to Project, Grant and Endowment Management.

In Configuration, there are three additional tabs.

? Investment Pools

? Investment Fees

? Interfund Entries

The following section further explains these tabs.

INTRODUCTION

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Investment Pools

With the Investment Pools tab, you can establish any number of investment pools for distributing interest income to projects. After defining the pool, you can allocate income from various investments to the pool(s) you establish.

Investment Fees

From the Investment Fees tab, you can define the fee schedules used to calculate and post fees for any individual project, selection of projects, or pool of projects.

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CHAPTER 1

Interfund Entries

From the Interfund Entries tab, you can define accounts to use when posting across funds. General Ledger determines if an interfund transaction is necessary to keep the funds in balance, then automatically creates and posts the interfund entries.

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