It’s all up to the donor…  If a donor makes no stipulation to set up a separate bank account, then you don’t have to.

In fact, our advice is usually to not set up separate accounts.  Here’s why.

• First, maintaining multiple bank accounts means multiple bank reconciliations increasing the workload of the church’s administrative staff.  We have repeatedly seen this type of situation result in late or incomplete monthly financial reports.
• Second, the administration is further complicated by the presence of multiple bank accounts.  Church members making donations to both the budget funds and restricted purposes seldom split their contribution between two or more checks.  Instead, they write one check with instructions on the check or offering envelope on how the gift is to be allocated.  This requires the staff to make transfers from one account to another.  Excessive transfers can lead to multiple journal entries and often multiple confusion!
• The final reason why we discourage multiple accounts is related to the previous warning.  Multiple bank accounts, along with multiple journal entries can turn out to be “embezzler heaven”.  In the interest of security (making sure funds are safe by placing them in their own bank accounts) the establishment of multiple bank accounts creates just the opposite – a huge smokescreen (or shell game) where a thief can take what is not his and not get caught.

If our answers only raise more questions (which is typical for CPAs) feel free to post a question on the blog or email me at verne.hargrave@pskcpa.com