Minimum categories (Tier 4)

The Tier 4 standard sets out minimum categories that must be used in preparation of the statement of receipts and payments and statement of resources and commitments.
For each statement these would be:

Statement of Receipts and Payments


Operating receipts categories
  • Donations, fundraising and other similar receipts
  • Fees, subscriptions and other receipts from members
  • Receipts from providing goods or services
  • Interest, dividends and other investment income receipts
  • Other operating receipts
Operating payments categories
  • Payments related to public fundraising
  • Volunteer and employee related payments
  • Payments related to providing goods or services
  • Grants and donations paid
  • Other operating payments

These minimum categories show what must be kept separate in the Statement of Receipts and Payments. They are designed to make it simple for readers of the performance report to quickly and easily understand where money came from and where it was spent. Presenting the information in this way helps to tell your charity’s story.

Statement of Resources and Commitments

Schedule of resources
  • Bank accounts and cash
  • Money held on behalf of others
  • Money owed to the entity
  • Other resources
Schedule of commitments
  • Money payable by the entity
  • Other commitments
  • Guarantees
Schedule of other information
  • Grants or donations with conditions attached (where conditions are not fully met at balance date)
  • Resources used as security for borrowings

These minimum categories show which types of resources, commitments and other information must be separately distinguished.  They are designed to make it clear to readers of your performance report the main types of resources available for use by the charity, commitments which you have to meet, and other information which is important to your charity. Presenting this information provides a picture of the health of your charity at the date of your financial statements.

What if we want to provide more detail?

The notes section of the Performance Report can be used to provide more detailed information. For example, the amount included in the ‘Donations, fundraising and other similar receipts’ category can be broken down into separate fundraising events. These might include street collections, postal appeals, or raffles. A charity may choose to do this so it can compare the success of different fundraising events over time. Similarly, Money Owed to the Entity might be presented in one line on the statement of resources and commitments and then broken down in the notes. This might then be split into unpaid invoices and grants promised but not yet received. Displaying this information can make it clear how much outstanding money has been derived through the efforts of the charity and how much has been promised by funders.

Can we change or delete the categories?

You can’t change the type of information that must be reported within each category. However, you can split a category or rename it to make it more meaningful for your charity, or to help readers better understand the information.  For example, a charity that provides classes and sells education books, might want to rename the category ‘Receipts from providing goods or services’ and change it to ‘Class fees and book sales’. Or, a charity that only holds inventory as promotional materials for distributions at fundraising events might want to rename the inventory category materials for fundraising events.

A long list of items will make it difficult for readers to understand your overall story, so only make changes which are important and useful to your charity. Remember that the notes section is where you can add extra details.

If a category doesn’t apply to your charity and there is nothing to record, you can simply delete the category. For example, if your charity doesn’t have members, the ‘Fees, subscriptions and other receipts from members’ category will not be relevant and could be deleted.

It is important that any changes you make to the categories are used consistently in the future so that the information can be compared over time.

Examples of Receipt Categories

Operating receipts categories

Type of change

Example of change

Donations, fundraising and other similar receipts

No change

Donations, fundraising and other similar receipts

Fees, subscriptions and other receipts from members

Split

Separates any important aspects within the category 

Membership fees

Other receipts from members

Receipts from providing goods or services

Rename

Makes the category more applicable to the charity

Class fees and book sales

Interest, dividends and other investment income receipts

No change

 Interest, dividends and other investment income receipts

Other operating receipts

Delete

If it is not relevant to the charity and if there are no receipts for the category

 

 

Examples of Resource Categories

Resource categories

Type of change

Example

Bank accounts and Cash

No change

Bank accounts and Cash

Money held on behalf of others

Delete

 

Money owed to the entity

Rename

Invoices issued

Other resources

Split

 

Materials for Fundraising Events

Other resources

 

What types of transactions are included in the categories?

The tier 4 guidance notes and the Tier 4 standard include information about what type of transactions and items should be reported in each of the categories. A charity will need to read this information and use its best judgement to decide which category a particular transaction or item best fits in. What’s important is that information is reported consistently so it can be compared over time.

Here are some examples:

Operating Receipts

Operating Payments

Donations, fundraising and other similar receipts

  • Donations and koha
  • Grants for the general operation of the charity (including for capital purchases)
  • Fundraising received from:
    • Annual appeals
    • Cake stalls and sausage sizzles
    • Lotteries, raffles and auctions
    • Fairs, festivals and galas
    • Fundraising dinners, concerts, quiz and trivia evenings
    • Fundraising sales – chocolates, cookies and calendars
    • Garage sales, jumble sales and car boot sales
  • Pledges and bequests

 

Fees, subscriptions and other receipts from members

  • Membership fees and subscriptions
  • Fundraising received from members
  • Donations, koha or offerings from members
  • Income from sales of goods or services to members (e.g. club merchandise or bar sales)
  • Loans from members

 

Receipts from providing goods or services

  • Income from government contracts
  • Grants that are, in substance, a contract for the delivery of goods or services
  • Income from sales to the public
  • Lease or rental income

 

Interest, dividends and other investment income receipts

  • Interest
  • Dividends

 

Other operating receipts

  • Insurance payouts
  • Royalties received

Payments related to public fundraising

  • Promotion and marketing
  • Venue hire
  • Koha for equipment borrowed
  • Cost of prizes
  • Fees or commissions (e.g. paid to third party fundraisers)

 

Volunteer and employee related costs

  • Salaries and wages
  • Honoraria for board member duties
  • KiwiSaver contributions
  • ACC Levies
  • Staff training and professional development
  • Staff recruitment

 

Payments related to providing goods or services

  • Utilities (rent, rates, power, telephone)
  • IT (computer) costs
  • Insurance, repairs, and maintenance
  • Stationery
  • Photocopying/printing
  • Postage/courier costs
  • Software costs
  • Cleaning

 

Grants and donations paid

  • Grants paid
  • Scholarships paid
  • Donations made
  • Other philanthropic giving

 

Other operating payments

  • Interest costs
  • Affiliation fees
  • Audit fees

 

Resources

Commitments

Other information

Bank accounts and cash

  • Chequing Accounts
  • Savings Accounts
  • Petty Cash

Money payable by the entity

  • Invoices received that aren’t yet paid; wages and salaries including bonuses and honoraria; PAYE, kiwisaver; interest payable; grants approved but not paid; loans payable

Grants or donations with conditions attached (where conditions are not fully met at balance date)

  • A charity receives a grant to build a garden shed to store tools. At the end of the year, the project is 50% complete. The remaining 50% needs to be recorded here

Money held on behalf of others

  • If you have partnered with another organisation to work on a joint project and you are holding the funds

Other commitments

  • Lease or rental agreement; property, plant, equipment etc, that you have committed to pay; commitment to provide loan; cash received for a future event

Resources used as security for borrowings

  • If you took out a loan with a bank and used a building you already owned to secure the loan.

Money owed to the entity

  • Unpaid invoices
  • Interest Due
  • Grants promised but not yet received
  • GST refunds

Guarantees

  • A charity acts as a guarantor for a loan

 

Other resources

  • Tangible resources: Land and buildings, motor vehicles, computers, furniture, office equipment
  • Investments: Share, bonds etc
  • Stock and Inventory: Food or clothing held for distribution, goods held in charity shops