Church balance sheet template

Funds aren't debts, unless you're holding them for someone else

Some churches list their funds under liabilities. The sample balance sheet in a Presbyterian presbytery's treasurer's manual does it, and a QuickBooks Community user who works at three churches wrote that two of them do too.

But a liability is money the church owes someone else. A fund is the church's own money with a purpose, so it belongs in net assets. The accounting standard auditors use for nonprofits, FASB's ASU 2016-14, splits net assets into two classes: with donor restrictions and without donor restrictions. Don't call the second one "unrestricted." The guidance warns against the word, because the board or a contract can still limit that money.

The exception is money you're only holding for someone else, like a special offering you'll send on to your denomination. It isn't the church's, so it's a liability, and the template has a line for it.

Who can lift a restriction decides the class. Donors gave the sample church's $20,000 capital campaign for a parking lot, so it's with donor restrictions. The church council set aside the $30,000 building reserve and can release it, so it stays without donor restrictions, as board-designated. The church financial report template explains the difference in more detail.

The building makes the church look rich

Example Fellowship Church has $476,100 in net assets, and $409,950 of it has no restriction from a donor or the board. That sounds like a church with money to spare. But $340,000 of it is the building and equipment, less depreciation and the $118,000 still owed on the mortgage. Nobody can pay a bill with it.

Take the building out, and the general fund is $69,950, down $6,900 from a year earlier. Over the same year, total net assets rose $16,950, and donor-restricted funds grew $21,850, mostly from the new capital campaign. The church is raising restricted money while the money it can spend shrinks, and the total hides it.

Now suppose the church had spent $75,000 more on day-to-day bills, out of the same bank account that holds everything else. The CPA firm Cerini & Associates says a negative undesignated balance means the organization "has tapped into the donor-restricted or Board-designated funds for general operating purposes." Here, undesignated (the general fund plus the property) would still read $334,950. The general fund would be ($5,050), and that's the line that tells you.

Check it before you share it

The template runs its three checks on both dates. If assets don't equal liabilities plus net assets, a fund, a liability, or an asset is missing or mistyped.

One mistake to watch for: when a building fund pays for the building it was raised for, lower the fund by what you spent. The property line already counts the building, so money left in the fund counts twice and the balance check fails.

A balance sheet by fund, without retyping

In a 2023 QuickBooks Community thread, a user said colleagues were tracking restricted fund balances in Excel, "which is time consuming and can lead to mistakes." The reply said QuickBooks couldn't run a balance sheet by class. This template has the same chore: someone copies every fund's balance into it each month.

In Grain, the funds live in the ledger, so there's nothing to copy. It produces the Balance Sheet, Statement of Activities, and Statement of Cash Flows from your books. Its fund balance reports track restricted and unrestricted fund balances with net asset changes. Board members can get read-only views of reports and fund balances. Starter is free for churches with up to $20,000 a month in expenses. See church financial reports in Grain.

For the month's income and spending against budget, use the church financial report template. For cash and the bank reconciliation, use the church treasurer's report template.