Vicki Boatright is a bookkeeper for churches (and other nonprofits). I have found her blog posts at Free Church Accounting and ebooks very helpful as I advise homeschool groups.
Gift cards as thank you gifts
In a blog post on FreeChurchAccounting.com, Vicki explains how to record gift cards that your organization may be buying and then passing out as gifts to volunteers or as benevolent gifts to a needy family.
Gift Cards: Were any gift cards purchased for staff, gifts/prizes, or benevolence? Those have to be “tracked”! We try to watch and catch them as soon as the church purchases them, so we can set up as a “cash on hand” account in their accounting system. We then have to manually enter the “expense” each time a card is used or given away.
Lisa London, has a great article on how to handle gift cards on her “accountant beside you” site and provides a free log that you can use to track those gift cards!
So in your homeschool group, you probably buy some gift cards to hand out as thank you gifts at the end of the year. You enter these purchases of gift cards as “Appreciation expense” probably as a General and Administrative expense in your bookkeeping.
If you purchase a stack of gift cards and don’t give them all away right away, then they need to be recorded as an asset just like cash in the bank. This could be called a “gift cards on hand” asset account. That’s what Vicki is talking about in her blog post I quoted above.
For more information on money management in a homeschool organization purchase my book Money Management in a Homeschool Organization.
Gift cards to a needy family
If you are helping needy families with gift cards, I condemned you! But be sure that you have clearly stated in your Articles of Incorporation, bylaws and IRS 501c3 Application that you have a charitable purpose as well as a educational purpose. You see, helping a needy family with a gift card is not in accordance with an educational purpose; it is a charitable act.
If your organizational documents and your IRS application only states your group has a educational purpose than you must stick to educational discounts to help a needy family.
Read this story of a homeschool group that I had to advise to stop their charitable activities. I didn’t like telling them that, but I didn’t want them to get in trouble with the IRS!
Can a homeschool group be charitable? Maybe not!
Carol Topp, CPA
HomeschoolCPA.com