I would like to track certain designated giving to achieve certain objectives.

Suppose we have only one fund (fund in the accounting sense of "Fund Accounting" as frequently used prior to FASB 116, 117, and still used by some of us today).  Yet, we allow designated giving to offset non budgeted but approved [contingent on funds being donated to pay for those expenditures].  Consider this example: 

A donor says, "I'll contribute money to send your controller to the next Blackbaud conference.  Tell me how much it is."  So, the controller says "it will cost $X."  The donor then contributes $X.  (Yes, this is a restricted gift, but that is irrelevant for purposes of this discussion, I think.) 

How is the donation best booked (mechanically)?  You could set up a new GL account for unbudgeted giving toward specific expenses, and / or you could create a Project.  There could be other ways also.  (Post your preferred method.)  The goal (for me) is to keep the "income" out of budgeted income categories, so that when I compare budgeted income to actual income, this particular donation is ignored.

Similarly, how is the expense best booked (mechanically)?  You might want to keep the same account structure you have (travel expenses, continuing professional education, etc.) but you want to be able to keep the figures out of the usual budget reports since it will inflate your expenditures unfairly.  Again, should the Project be used?  (Post your preferred method.)

I would think I'm not the only one interested in this solution, but I'm hoping some of you have actually implemented something like this.  I look forward to your posts.

I fall into two categories on your poll so I’ll describe what we do.  We tend to get a lot of gifts like this so I set up an entirely different fund entitled ‘Temporarily Restricted Fund” with one account number for contributions and one account number for expenses.  This keeps the income and expense separate from the operating fund.  Within the TR Fund I also use project codes.  Each specifically designated gift receives a separate project code.  The contributions and related expenses run through that particular project code.  I can run a project report at any time that gives me the income, expense, and balance remaining for each gift.     

In assigning a number/name for the temporarily restricted project codes I use the prefix TR on all of them so I know it’s a temporarily restricted gift.  For instance, I will assign the next number in line such as TR34, TR35, etc to the next gift received.

All expenses run through one account in the TR fund, but are assigned a different project codes according to the gift.  I might have $80,000 in the TR expense account but it’s for 20 different project codes.      

I also keep an Excel spreadsheet by project code and gift name that I balance to the TR Fund Trial balance each month.   I send a copy of this report monthly to the departments affected by the gift.    For instance, someone may give a gift the Middle School for something so I send a copy to the MS head.  This lets them know how much they have left to spend and also keeps the gift from being overlooked or forgotten, which sometimes happens. 

We follow somewhat of the same method as you do, Linda. Our dilemma though is that we also use project codes for other identifying factors and management wants to be able to see our restricted expenses with the project code that the expense generally would have been recorded with as well.

Thank you, Linda and Alexandra for your responses.  Since my original post above, I have implemented attributes for my GL accounts.  I think I named the tabel "Budget Category" and listed "Extra Budgetary" for my table entry, so that when creating the transaction either recording the donation or the expense, we apply the attribute "Extra Budgetary" to the income or expense transaction.  [The drawback (to me) of this method is that there is no guarantee we will remember to actually code the transaction that way.] 

Using attributes means that you can produce FE reports that either include these transactions or exclude these transactions (and cases can be made for doing both for different purposes).

We already use the Project field for another purpose, and I didn't really want to clutter the list of projects unnecessarily.  Yet, the choice is more complex than simply this one issue.  We use RE and post all income through RE.  Consequently, when we are speaking of a designation in RE, we need to identify a "Fund" in RE through which the transactions can be channelled.  Readers using RE and directly posting to FE will quickly realize what a mess this would be if one created a separate RE "Fund" for each specific donation of the kind about which we are speaking.  So, we chose to create an RE "Fund" that posts the gift to a FE GL suspense account.  Then, I review the suspense account transactions and create an appropriate JE to remove it from the suspense account and book it to the proper GL income account.  Since we have multiple locations (each with separate divisions within our Chart of Accounts), this gives us the flexibility we need -- at the cost of needing to remember to put the attribute on the transaction.  We can (but don't always choose to) add other attributes in addition to "Extra Budgetary" if we need to more specifically tie a contribution and an expense.

I have used Funds in the GL (I'm plenty old enough to remember the pre-FASB 116 etc. days when multiple funds (especially a General and a Designated) were used, and may give this some further thought in our organization.

Again, thanks for the feedback.