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Donation Processing Procedures



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The details and step-by-step procedures of processing donations in DonorWise is discussed in subsequent topics. This topic gives an overview of the steps, and some details within those steps.

Donation Processing Overview

The donation processing includes the following steps:

1.Receive gifts: Initial (provisional) receipting for cash gifts
3.Record in the donation system
4.Record donation batch journal into General ledger
5.Record the deposit in the General ledger
6.Reconcile the clearing account
7.Generate and mail receipts
8.Reconcile the suspense account

1. Receive cash: Initial receipting

Cash or cheques received in person

When donations are received in person, a pre-numbered initial (provisional) receipt is written immediately.
The receipts are prepared in three copies.
First copy: Donor
Second copy: Attached to the deposit
Third copy: Remains in the receipt block.

Cheques received in the mail

Cheques received by mail should either be receipted with an initial receipt, or listed on a preliminary record (list), with:
name of donor
other useful or necessary information (e.g. bank the cheque is drawn on)
This should be done by a person other than the one who enters the batch into DonorWise.

Donations received via direct deposit (bank transfers)

Bank transfers do not need to be receipted with a provisional receipt, but should have source documentation for proper data entry, such as:
A copy of the bank statement,
credit note from the bank, or
an internally prepared list will suffice.

2. Deposits

The deposit may follow the initial receipt of funds or be based on the following factors:

Criteria for the frequency of a deposit:

The amount of money received
The security of the office
Accessibility to the bank

Timing factors for deposits:

At least once a week
Always at month-end
Always at fiscal year end
1.Remove the second receipt copies from the block of provisional receipts and add them up, keeping cash and cheque receipts separate. Include the second copy even for voided receipts.
2.Verify that all receipt numbers are included:
That there is a full sequence of numbers. Voided receipt copies are included so as to make this task easier.
Check that the first receipt number is the number immediately following the last receipt number of the previous deposit.
3.Count the cash and cheques separately.
4.Compare amounts:
Compare the total cash to the total of the receipts for cash
Compare the total cheques to the total of the receipts for cheques.
If either of these amounts do not agree, any missing money needs to be either authorized as a miscellaneous expense and recorded as “Cash short” (79..), or paid by the receipting person.
If there is more money than receipts and the excess cannot be explained, it has to be credited to 79.. as “cash over.”
5.Count the cheques received where no provisional receipt was written. Add it to the cheque deposit total.
6.Prepare deposit slips for the cash and the cheques.
7.Make copies of the cheques to be deposited.
8.Make the deposit.
9.Attach the receipts and cheque copies to the deposit slips from the bank and indicate the corresponding receipt numbers on them. Prepare a cover sheet (receipt voucher, banking summary) to be used as the main document for the deposit.
10.Stamp the third copy in the receipt block with the word “Deposited,” and include date, bank account (chart of accounts number) and the receipt voucher number.

3. Record in the donation system

Individual donations are entered into the donation system with donor and designation information. The designation defines the responsibility centre for the General ledger. The sources of this information includes:

Cash: Cash log or provisional receipt book
Cheque: Cheque log or provisional receipt book
Bank transfers: Bank statements or deposit notifications from the bank and/or documentation prepared based on this information

4. Record donation batch journal into General ledger

If your ministry uses Dynamics SL for its General ledger, then the data transfer between DonorWise and Dynamics will occur electronically. In this way, your DonorWise and General ledger remain in balance at all times.
If your ministry does not use Dynamics for its General ledger, the Post Batches process produces a paper journal for your use in entering data into your General ledger.
If your General ledger supports data importing, then you can produce an Excel journal from DonorWise and import that into your General ledger.
The General ledger journal created by DonorWise will credit the appropriate income accounts in the appropriate responsibility centres, calculate the entries for the assessments, and place the balancing entry (the gross amount of the funds received) in the clearing account (10xx), as defined at the initial set-up of DonorWise.

5. Record the deposit in the General ledger

The General ledger entry of the actual deposit of the funds received and taken to the bank is debited to 10xx “Bank” and credited to 10xx “Donation System Clearing” in the General ledger.

6. Reconcile the clearing account

Once all steps have been completed as described above, the balance in account 10xx “Donation System Clearing” should be zero. If this is the case, you have proof that:

all receipted cash was recorded in the General ledger
all receipted cash was deposited
all deposited cash was recorded in DonorWise

The clearing account should be reconciled at least at the end of each month and all discrepancies researched, itemized and corrected promptly to ensure that no donations escape the system and that no fictitious donations have been recorded in the donation system.

If the balance does not equal zero, not all cash or cheques may have been deposited, or cash received and deposited has not been correctly recorded in the donation system.

The clearing account is set up during the DonorWise set-up. After that, DonorWise will automatically use it as the offsetting account when posting donation batches into the General ledger .

7. Generate and mail receipts

DonorWise generates final receipts to the donors. These must be mailed promptly to the donors to acknowledge their investment in the ministry.

Receipts must be printed before a month can be closed.

8. Reconcile the suspense account

The “Donation System Suspense” account (23xx) is used where the designation of a donation is unclear. The “Suspense” designation is used in DonorWise.

The balance in this General ledger account must be reconciled on a monthly basis to agree with the balance in the DonorWise “Suspense” designation to ensure that funds are dealt with and distributed accurately on a timely basis.

The suspense account is set up during the DonorWise set-up. After that, DonorWise will automatically use it for suspense items when posting into the General ledger.

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