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.
- Bank Account - A bank account indicates that the account needs to be reconciled, issues payments, and accepts deposits.
Category - Categories include assets, liabilities, net assets, revenue, and expenses.
- 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.
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 nonprofit’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 nonprofit.
- 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.)
- 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 your nonprofit is applying. 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 nonprofit’s programs and/or membership fees.
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 a nonprofit 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 (vacation payouts), or deferred revenue (fees received for services not provided yet).
- Profiles capture the contact information and relational framework between constituents. There are three types of profiles: individual, organization, and household.