Fund 21 is used to report gifts specified by donor to be used for operating purposes of the district. A donor may be an individual, estate, foundation, non-profit organization, etc inclusive of organizations like booster club and PTO. The donor may or may not restrict the gift to be used for a certain project or program. (i.e. playground equipment, textbooks, school nurse, beautification of school grounds, etc.). When a contribution is not restricted, but rather to be used for general operating costs (district determines the use), fund 21 may still be used.
Fund 21 includes both the expendable and nonexpendable portion of a gift. The district is responsible for tracking separately the expendable portion, but this separation is not required for reporting purposes.
Fund 21 should NOT include gifts received that are held to benefit a private individual or organization not under the control of the school board (i.e. scholarships). These gifts should be reported in fund 72. Fund 21 should NOT include collections of fees or admissions being held and later returned.
Why was fund 21 established?
Gifts reported in fund 10 tend to distort the general operating budget. Contributions cannot be determined when establishing the annual budget and often result in variances between actual to budget comparisons.
Gifts reported in fund 10 become a deductible receipt, so when the gift is not expended in the same year as received, a reduction in shared cost occurs. Reporting gifts in fund 21 has no affect on shared cost or general aid.
Use of fund 21 provides easier tracking of expenditures should the donor request assurance that the gift was spent for its designated purpose. Fund 21 further simplifies the tracking process by allowing a district to track a specific gift by project code when desired.
Should I use fund 21 or another fund?
A gift should be accounted for in the fund most appropriate for its use. Gifts will be allowable in fund 10 if they are expected to be spent within the same fiscal year. The following are examples of gifts that would be reported in the funds identified. These examples are the more commonly used funds and are not inclusive of all funds allowing gifts.
Fund 21: When reporting expenditures in fund 21, the expenditure is not required to occur in the same year as the gift is received. However, the gift must occur either prior to or in the same year as the expenditure is reported because only a positive fund balance is allowed in fund 21 at year end. When project/program costs exceed the total gift amount, the excess expenditure must be reported in fund 10.
Fund 38/39: When a district receives a gift designated to be used for long-term debt payments, it may be reported in the applicable fund 38 or 39.
Fund 49: This fund may be used to report a capital project that is financed by debt issuance and/or gifts. When the costs exceed the financing and/or total gifts, the excess expenditure must be reported in fund 10.
When a capital project is financed by debt issuance and/or gifts, even though the expenditures are incurred prior to resources receipted, the costs may be reported in fund 49. As the financing or gifts are received, they are reported in fund 49 to offset the prior expenditures. Fund 49 will allow recording the expenditure prior to receiving the gift because fund balance may be negative at year end.
When a capital project is funded entirely by gifts and the gifts are received prior to reporting the cost, the fund is allowed to carry a fund balance until costs are incurred.