How to Record Donations or Charitable Contributions in QuickBooks?

QuickBooks is widely used by profit-focused businesses, but non-profit organizations may face challenges with tasks like recording and reporting charitable contributions. This guide explains the concept of charitable contributions and provides clear steps to record them in QuickBooks without errors.

A charitable contribution, also known as charitable giving, is a donation of money or goods to support a nonprofit organization in achieving a specific goal. Contributions can include cash, stocks, checks, or tangible items like clothing or equipment. Tracking donations in QuickBooks is crucial for accurate financial records, ensuring accountability and transparency.

This guide explains how a business owner can record donations or charitable contributions in QuickBooks Desktop or Online.

How to Record Donation or Charitable Contributions in QuickBooks Desktop?

Step 1: Create an Invoice

1. To start recording a donation, you must prepare an invoice for the service or the product in order to record the income.
2. Make sure you do not miss out on this step. If you do so, the balances will not be in sync when you do the other important steps in the process.

Step 2: Make an Account for all kinds of Charitable Contributions

1. Navigate to Settings.
2. Choose Chart of Accounts.
3. Choose New.
4. In the particular Account dialog, choose Expenses from the particular drop-down list named Account Type.
5. Choose Charitable Contributions from the particular drop-down⬇️ list named Detail Type.
6. Add a Name for the particular account.
7. Press Save and Close.

Now, when the account is already created, the next move is to make a product/service item for contribution.

Step 3: Make a Charitable Contribution Service or Product Item

In order to make a service or product item for charitable contributions, you need to perform the steps given below:

1. Navigate to Settings.
2. In the Lists section, choose Products and Services.
3. Choose New.
4. In the given Service/Product information panel, choose the type of service or product.
5. Add a name for the item.
6. Choose the option that says I sell this product/service to my customers.
7. Choose the Charitable Contributions Account you built from the given drop-down⬇️ list in the particular Income Account field.
8. Choose Save and Close.

Note: When an account has been created along with a service/product item, the next move is to generate a credit memo for the exact value of the donation.

Step 4: Generate a Credit Memo

In order to generate a credit memo for the right value of the services or products you are donating, please follow the steps given below:

1. Choose +New.
2. In the Customers section, choose Credit Memo.
3. Add to choose the Customer that you have donated the Service or Product to.
4. In the particular Product/Service column, choose the Charitable Contributions item and add the Amount of your particular donation. Make sure the donation is entered as a positive number.
5. In the given Memo field, add Charitable Contribution or Donation.
6. Choose Save and Close.

Note: The credit memo shows the donation amount. The next move is to authenticate that it has been incorporated into the invoice you issued.

Step 5: Authenticate the Credit Memo was Incorporated to the Invoice

The final step is to verify the credit memo added to the invoice for the contributed items. To confirm the credit memo has been correctly integrated, follow the steps below:

1. Navigate to Get Paid & Pay and choose Customers.
2. Choose the customers to whom you have donated the Service or Product from the given list.
3. On the particular Transaction List tab, please authenticate the Invoice Transaction you have built when the process commenced. Click the Status as Paid.
4. Authenticate the Credit Memo transaction that you have built is registered as Closed in the given Status column.
5. Authorize that a New Payment transaction is noted and is listed in the particular Total column. And in the Status column, Closed is noted.

Now, recording the charitable contributions is completed successfully.

How to Record Donation or Charitable Contributions in QuickBooks Online?

The amount of charitable contributions you make is entirely dependent upon the kind of donation you have made. In QuickBooks desktop, you have to create an invoice for non-cash charitable gifts. Next, utilize your Chart of Accounts to create an account that you will use to track charity contributions. Next, design a product to be donated. You must now provide a credit memo for the full amount of your donation.

Step 1: Generate an Invoice or Bill

1. Click the Customers menu, then choose the option to Generate Invoices.
2. Pick any customer or customer job from the list displayed.
3. You can click the Add New icon if the client or job is not yet on the list.
4. Add all the information that is required now.
5. Click on the “Save & Close” option.

Step 2: Create an Account that can be Used for Recording Donations

1. You must click on List menu, then select the Chart of Accounts from the dropdown.
2. Select the New tab by clicking the Account drop-down arrow located at the window’s bottom.
3. Click Continue after selecting Expenses as the Account Type. Provide the account a name.
4. Select Save & Close after that.

Step 3: Create a Donation’s Product/Service Item

1. Hover over List in the top menu bar, then select Item List.
2. Click the arrow next to Item, then click New.
3. Next, select the Inventory Part in the Type section.
4. Next, select the account you created from the drop-down list under the Income account field. Next, add the necessary information. Finally, click the OK tab.

Step 4: Grant a Credit Memo Equivalent to the Cost of the Goods You are Contributing

1. Select Customers, then select Create Credit Memos/Refunds.
2. Enter the details for the credit memo or refund.
3. Finally, press Save & Close.

We have highlighted all the information related to recording charitable contributions in QuickBooks. If you still want professional guidance and help and want to know how the experts in the fields can do it, let us help you.

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