Financials Glossary – Foundant Technologies

This Financials Glossary is intended to support understanding of terms used in Financials. In some cases, definitions for key terms are accompanied by examples. Note that examples are not comprehensive; not all examples will be relevant, applicable, or appropriate to all organizations. Nonprofit organizations should always follow the guidance of their in-house accountants.

Accounts

Bank Account - A bank account issues payments, accepts deposits, and requires reconciliation.
Category - Categories include assets, liabilities, net assets, revenue, and expenses.
- Examples:
  - 1000 - Assets
  - 2000 - Liabilities
  - 3000 - Net Assets
  - 4000/5000/6000 - Revenue
  - 7000/8000/9000 - Expenses
Payroll Account - A payroll account indicates the account should be grouped as part of payroll and related expenses on the statement of functional expense.
Sub Accounts - A sub account is a sub-classification for an account and a way to link accounts by a common purpose for reporting.
- Example: In a Supplies account, sub accounts might include office supplies, program supplies, or custodial supplies.

Services

Parent Service - A Parent Service is a way to group program services to create a hierarchy.
- Example: A parent service such as an emergency service might include a foodbank and homeless fund.
Program Services - A Program Service is a way to group revenue and expenses according to the organization's mission.
- Example: Program services examples might include health services, education, or senior supports.
Support Services - A Support Service is a way to group revenue and expenses that support management and general (administrative) and fund development needed to support the organization.
- Example: Fees associated with raising funds for a capital campaign might be listed under fund development. Fees raised through membership revenue might be categorized under general (administrative.)

Revenue

Category - The category selected within a revenue entry broadly defines the funding stream and how it should be categorized in the system.
Donation - A donation is a category within revenue for funding that is a charitable contribution.
In-Kind Donation - An in-kind donation is a category within revenue for a donation of goods or services.
- Example: An electrician who provides services and materials but does not charge the organization is an example of an in-kind donation.
Other - Other is a category within revenue that is not categorized in one of the other categories.
Opportunity - Opportunities include grants for which the organization has applied. Selecting an opportunity on a revenue entry associates the revenue with the grant opportunity.
Pledge - A pledge is a category within revenue for a monetary donation that has been pledged to be given but has not been received. Pledges are important for capital campaigns.
- Example: An organization is raising funds to purchase a building over an extended period of years. A donor pledges $250,000 over a period of 5 years. Each year the donor pays the pledge until the total $250,000 is received. Monies pledged for a specific purpose are often referred to as restricted, meaning the money can only be utilized for the designated purpose directed by the donor.
Program Fees - A program fee is a category within revenue for earned revenue that is related to the organization's programs or membership fees.

Expenses

Allocation Table - An allocation table is a user-defined table that allows an expense to be allocated across program services.
- Example: Allocation tables might include the percentage of expenses for utilities and rent based on a square footage study.
Expenses - Expenses are the costs incurred for an organization to perform their mission.
- Example: Payroll, office supplies, rent, and program costs are example expenses.
Payable Account - A payable account is the liability account for unpaid expenses.
- Example: Payable accounts might include loan payments, accrued payroll benefits for employees such as vacation payouts, or deferred revenue which are fees received for services not provided yet.

Profiles

Profiles capture the contact information and relational framework between constituents. There are three types of profiles: individual, organization, and household.