Configuring QuickBooks for Use in a Nonprofit: Using "Customer/Jobs" and "Classes" Utilities
By: Mark McCallick
December 22, 2010
Editor's Note: This series is was written in the US and contains some US-specific content that does not apply in Canada.
This is the third blog of my series on configuring QuickBooks for use in a nonprofit organization. In my first blog,
I mentioned that the very first step in configuring QuickBooks is to
have a QuickBooks implementation meeting, and I recommended using a
questionnaire to facilitate the meeting and act as a centerpiece. My second blog
dealt with setting up the chart of accounts in a nonprofit environment.
This blog will cover step 3 (using the "Customer/Jobs" utility) and
step 4 (using the "Classes" utility).
QuickBooks is a relational database, and as such it offers a few ways to flag (or relate) transactions such as invoices, cash receipts, bills, cash disbursements, and journal entries to Customer/Jobs (funding sources) and Classes (programs). By flagging a transaction (i.e., relating the transaction to a particular grant or program), QuickBooks can then quickly pull the related data into relevant reports by a particular grant or program. QuickBooks offers the user two utilities that can be assigned to each of the transactions mentioned above. The first of these is the "Customer/Jobs" utility.
The QuickBooks "Customer/Jobs" Utility
The "Customer/Jobs" utility should be used to keep track of your
nonprofit's funding sources. Let's say that the XYZ Foundation awards
your nonprofit a grant for 2011. In QuickBooks, set up a customer called
"XYZ Foundation." Next, set up a job underneath the XYZ Foundation
called "2011 XYZ Foundation Grant." In database vernacular, the customer
is a "parent" record and the job is a "child" or subordinate record.
They are related to one another, but they are separate records in the
database. By using this hierarchal setup, you will be able to keep track
of all the grants that were awarded to your nonprofit by the XYZ Foundation, and you
can keep track of each individual grant simultaneously. A common error
that many nonprofits make is to create a customer record for each grant
even if it is from the same funding source. Using the setup recommended
here will allow you to see the history of all grants from the same
funding source. The sample implementation questionnaire (mentioned above
and in my second blog)
will assist you in making a list of your customers (funding sources)
and the individual grants (jobs) awarded by those funding sources to
Evaluate your current funding sources and put them in this hierarchical order. Your list should look something like this:
AT&T Foundation (This is a QuickBooks "Customer")
- 2010 AT&T Foundation Grant (This is a QuickBooks "Job")
- 2011 AT&T Foundation Grant
National Endowment for the Humanities
- 2010 NEH Grant
- 2011 NEH Grant
- 2011 XYZ Foundation Grant
This setup allows you to go to your "customer" (funding source) record in QuickBooks and see all activity for that funding source at a glance.
The QuickBooks "Class" Utility
The QuickBooks "Class" utility should be used to manage and report on
your nonprofit's programs. If you read my first two blogs, you will
remember that a nonprofit's programs are defined as "what the nonprofit
does" (and not who funds the nonprofit). If you used the sample implementation questionnaire
that I developed for my nonprofit clients, as your first step in
setting up QuickBooks you and all the stakeholders involved with setting
up QuickBooks should have come to a consensus on what your programs
are, and you should have a list of these programs.
Using the list of programs from your implementation meeting, go to the "lists" option in the QuickBooks database and then click on "Class List." Add each program as a QuickBooks class. If you need help doing this, just click on the help button or the F1 key while you are in the Class List screen, and relevant help will pop up on your screen.
A sample listing of programs for a nonprofit might look something like this:
- Elder Day Care
- Soup Kitchen
- Youth Program
- 2009 5K Run
- 2009 Gala
For an explanation of the concepts in this blog that shows you how to set up "Customer/Jobs" (your funding sources) and "Classes" (your programs), see this short video.
Tying It All Together
My next blog will show you how to tie together the chart of accounts,
funding sources, and programs in transactions within QuickBooks. After
these relationships are built for each transaction (accounts receivable,
cash receipts, accounts payable, cash disbursements, and journal
entries), you will be able to use standard reports in QuickBooks (Profit
& Loss, Profit & Loss by Job and Profit & Loss by Class) to
run reports by grant (funding source or Customer/Job) and by program
The entire series is available here:
- STEP 1 - Planning and Implementation
- STEP 2 - Setting Up the Chart of Accounts in a Nonprofit Environment
- STEP 3 - Setting Up the QuickBooks Customer/Job Utility in a Nonprofit Environment
- STEP 4 - Setting Up the QuickBooks Classes Utility in a Nonprofit Environment
- STEP 5 - Coding Transactions with QuickBooks Customer/Job and Classes Utilities
- STEP 6 - Creating Financial Reports in QuickBooks for a Nonprofit Organization
Mark McCallick, CPA, CITP has a practice dedicated to nonprofit organizations and small business ' see http://www.mac-cpa.biz. He has served nonprofit organizations for over 25 years and is a Certified QuickBooks Pro Advisor. He is also the founder of the website www.nonprofit-connect.com, whose mission is to provide nonprofit organizations with a forum to collaborate with one another and share access to resources and best practices in the nonprofit industry. You can contact Mark McCallick at firstname.lastname@example.org or email@example.com.