Non-profit math?

[carriebostic]

I'm not sure if I'm doing the math correctly (am I using the right formula?)

I have a at-home tiny non-profit "business". All proceeds go to charity.

All supplies come out of my own pocket, or from sales. However, I do want to break even at least most of the time. Hence, "proceeds".

That being said, the way that I was calculating it was simply the Owner Contributions minus Owner Withdraws, then once I "break even" at 0, everything goes to charity.

However, this just didn't seem right. Because I didn't take into account the sales. Now I'm wondering if I owe the charity (morally speaking), which I will pay if it's the case...

So this is the new formula that makes sense to me:

Sales - (Owner Contribution - Owner Withdraw) - Donations already donated.

So for example, I'll use math friendly numbers.

If I have $100 in sales, bought $75 in supplies out of my own pocket, was reimbursed $50 of that, and have already donated $20, this is my NEW equation:

$100 - ($75 - $50) - $20 =
$100 - $25 - $20 = $55 still owed to charity

Compared to the OLD equation:
($75 - $50) = $25 owed to me

However, with my new equation, I'm not breaking even either!

I might even be wrong on BOTH of these. Please, if you could, help me. I've tried to find the answer (seems like it would be a common question), but I've found nothing helpful.

Thanks

 

[ArcSine]

Multiple ways to handle it, but one "formulaic" way (such as you're attempting) that doesn't use some form of double-entry accounting, uses two formulas. First some notation...

OTC: Owed To Charity
OTO: Owed To Owner
OE: Owner Expenditures (amounts you've spent out of your own pocket).
OR: Owner Reimbursements (amounts you've been reimbursed for out-of-pockets).
S: Sales
D: Donations turned over to the charity.

Then the two formulas:
OTC = S - OE - D
OTO = OE - OR

This assumes that you always use cumulative amounts for the variables. The sum of these two amounts at any given moment (OTC + OTO) should always equal the balance in the checking account.

Using your illustrative numbers (Sales to date = 100; OE to date = 75; OR to date = 50; and D to date = 20), the formulas give...
OTC = 100 - 75 - 20 = 5
OTO = 75 - 50 = 25

And the sum (30) agrees with what should be presently in the account: Sales (100) less the reimbursements (50) and less the donations (20).

 

[Triest123]

I'm not sure if I'm doing the math correctly (am I using the right formula?)

I have a at-home tiny non-profit "business". All proceeds go to charity.

Thanks

$100 - ($75 - $50) - $20
$100 - $25 - $20 = $55 still owed to charity


=> Your calculation is wrong, as you only consider the cost of the supplies is $25 only.
In other words, the supplies is partly subsidized by you for $50.

Actually, you owe to charity is $5 only.

See this simple calcuation

Sales - Cost of Supplies - Donation = Profit (owed to charity)
100 - 75 - 20 = $5

The supplies is paid by you personally, the company's cash position is

Sales proceeds $100
Less : Donation ($20)
Reimbursements ($50)=> the partial payment of supplies
Cash in hand $30
Less : Owed to Owner ($25)=> the balance payment of supplies
Net cash balance $5=> own to charity