In December, a number of members will want to prepay some or all of their pledge for the following year for tax reasons. To handle this, you need a special income account set up as follows:
| Name: Prepayment of Next Year Pledge |
| Accounting Grouping Category: 17: Prepayment of Next Year Pledge |
| Fund: General Operations Fund |
You will use this Income Account to record all such donations in one year against the next year's pledges. This income will be reported on the donors' statements as current year donations. In the processing of these donations, they will be summed and posted to the donors' Giver Summary Table records for the following year as "Prepaid Pledge from Last Year". The donations will not be counted as assessment-qualifying in the current year.
In January, you will process two Journal Entries for the sum of the donations made in the prior year:
| From: Zero Family |
| For: Prepaid Pledges |
| Amount: (negative) the total amount |
| How: Journal Entry |
The second J/E:
| From: Zero Family |
| For: Pledged & Unpledged Support |
| Amount: (positive) the total amount |
| How: Journal Entry |
These two transactions will record the amounts as pledges for the new year, and show that amount negatively against the Prepaid Pledges account. The net to the General Operations Fund will be zero. The Pledged amount will be treated as assessable income for the new year.
Some churches like to pre-enter 1/12th of the total in each month of the new year to show a constant flow of income. I don't do that, but it can be done.