Fund Level Accounting

Fund Level Accounting

Many charitable institutions need to maintain their General Ledgers at the Fund level, rather than at the organizational level. Maintaining the General Ledger at the organizational level means keeping General Ledger accounts only for the organization as a whole (for example, an organizational level G/L would only have one Grants Payable account). Maintaining the General Ledger at the Fund level requires each Fund to have its own set of accounts (for example, a separate Grants Payable account for each Fund). The sum of the balances in these accounts equals the organizational level balances.

When the General Ledger is maintained at the Fund level, each Fund has its own balanced General Ledger, which generally includes between 10 and 25 accounts. The account identification number (called the General Ledger Account Key in FIMS) is made up of at least two different segments. The Fund ID code identifies the Fund that uses the account, and the Natural Account Number identifies the type of account. For example, the Account Key for the Grants Payable account for the Jefferson Fund might be jeff21000. In practice, additional segments further categorize the Fund in the Account Key, so a Fund-level Account Key would be something like 000PFjeff 21000. This enables you to roll up consolidated financial statements by those additional categories.

The main advantage of a Fund level General Ledger is that it maintains current balances for each Fund, so that you can easily produce donor statements. Compliance with FASB Guidelines also requires Fund level accounting.

Maintaining General Ledger accounts at the Fund level can be a new way of thinking about a G/L, particularly as concerns asset accounts. Most people think about asset accounts at the bank account level rather than the Fund level. A Fund level asset account represents one Fund’s share in a bank account, rather than the bank account as a whole. For example, 000PFjeff11000 could be the Jefferson Fund’s share of the organization’s checking account. The actual checking account balance would be the sum of the all of the 11000 accounts in the General Ledger. Each Fund’s share in other assets (for example, an investment pool) is represented by a separate Fund level G/L account. A Fund might also have a unique asset (for example, a real estate holding), whose value is tracked in a single asset account, appearing only in that Fund’s chart of accounts.

If you use FACTS to manage an investment pool, each participating Fund must have a G/L asset account to represent the Fund’s share in the pool. Debit and credit entries to Fund level pooled asset accounts are automatically passed to FACTS for inclusion in the valuing process.

NOTE: A Fund may participate in more than one investment pool, and requires a separate pooled asset account for each pool.

NOTE: If the pool is invested in several custodial accounts, these bank accounts do not usually appear separately in General Ledger. Instead, they are tracked in FACTS. Refer to the FACTS module for more information.

Diagram: Fund Level General Ledger