Configuring QuickBooks for Use in a Nonprofit: Using "Customer/Jobs" and "Classes" Utilities

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 steps 3 (using the "Customer/Jobs" utility) and 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 (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. An 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 your nonprofit.
 
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 Gran
• National Endowment for the Humanities
  • 2010 NEH Grant
  • 2011 NEH Grant
• XYZ Foundation
  • 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). 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:

• General
• 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 post 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 (Class).

My next blog post in this series is:

• Steps 5 and 6: Coding transactions with QuickBooks "Customer/Job" and "Classes" utilities and Creating financial reports in QuickBooks for a nonprofit organization

Mark McCallick, CPA, CITP has a practice dedicated to nonprofit organizations and small business. He has served nonprofit organizations for over 25 years and is a Certified QuickBooks Pro Advisor. This blog series was updated for our readers in February 2013 by Mr. McCallick.

Editor's note: This blog post was updated in June 2016 to remove broken links.

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