How to Report Refunded Contributions

ElectaFile Short Summary: Refunded contributions can be tricky and might throw off your account balances at reconciliation. Treat them as two separate transactions and you’ll stay healthy.

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Good morning!

We talked last time about the volume of contributions (a good problem to have!) and how that can lead to under-reporting of donor data.

Today we’ll talk about some core Xs and Os on campaign finance reporting: dealing with refunded contributions.

Refunded contributions are two separate reported transactions even though in many ways its the same money.

First, context by two examples:

Example 1: A donor walks up to the treasurer at a reception and passes a check for a $100 payable to the campaign. 5 minutes later but before the event is over, the donor returns to the treasurer and says “may I have that check back? I forgot that I already mailed a separate $200 donation yesterday.” The treasurer dutifully hands back the $100 check and the reception rocks right along.

Example 2: A donor mails in a $400 check. The check is received and deposited in the campaign bank account. 2 months later the donor calls to say that he’s not happy with the candidate’s position on dog parks and wants his money back. The campaign decides that the better part of valor is to write a return check of $400 from the campaign bank account. The check is written, sent, and deposited. Life goes on.

Example 1 probably doesn’t get reported because the campaign account never had actual constructive possession of the $100 donation. You could say the money was “refunded” but it was never really “had” by the committee anyway. These sorts of things are judgment calls but it would be reasonable to construe the 5 minute mistaken contribution as not being a reportable transaction. If our State Board pros who read this newsletter disagree, we will let you know! By the same token, if you have a different view about the 5 Minute Mistake, let us know…

Example 2 is a textbook refund. And the Treasurer there should have reported two transactions. First, there would have been a contribution of $400 from the donor on the date the check is received. Second, there would have been an expenditure of $400 coded “O” as to Purpose Code and Purpose Description: “Refund of Contribution”. Read more about coding expenses here.

Thus, refunds are theoretically the same dollars reported as two separate transactions.

As we’ve read reports and worked with ElectaFile users, we’ve seen all manner of creativity on refunds. One alternative approach that we don’t think you should do because it is confusing for everyone is listing refunded transactions as “negative contributions”. We think the State Software either does or used to allow this peculiarity. In Example 2 above, you’d have shown a theoretically -$400 contribution. We strongly recommend not taking this approach. We’ve seen it done but we don’t think it is correct. Treat refunds as two transactions. One contribution and one expenditure. Enter them separately and rock right along!

That’s all for today. Go get’em.

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What is ElectaFile.com? ElectaFile offers easy and affordable electronic "click to file" services with the NC State Board and County Boards. ElectaFile is web-based and accessible from Macs and PCs with an internet connection. ElectaFile is transactionally-priced so you only pay a small fee if you file using ElectaFile. If you need a free consultation on your situation, please let us know. If ElectaFile can help, it will. We are not your treasurer or your lawyer. If you need a professional treasurer or an attorney, ElectaFile regularly refers folks to professionals on all sides of the aisle.